25818 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

1Public Law 111–24, 123 Stat. 1734 (2009). 

including the cost reimbursement limitations 

contained in 48 CFR part 31, as 

supplemented by 48 CFR 970.31; 

(ii) For which the contractor has failed to 

insure or to maintain insurance as required 

by law, this contract, or by the written 

direction of the Contracting Officer; or 

(iii) Which were caused by contractor 

managerial personnel’s— 

(A) Willful misconduct; 

(B) Lack of good faith; or 

(C) Failure to exercise prudent business 

judgment, which means failure to act in the 

same manner as a prudent person in the 

conduct of competitive business; or, in the 

case of a non-profit educational institution, 

failure to act in the manner that a prudent 

person would under the circumstances 

prevailing at the time the decision to incur 

the cost is made. 

(2) The term ‘‘contractor’s managerial 

personnel’’ is defined in the Property clause 

in this contract. 

(g)(1) All litigation costs, including counsel 

fees, judgments and settlements shall be 

segregated and accounted for by the 

contractor separately. If the Contracting 

Officer provisionally disallows such costs, 

then the contractor may not use funds 

advanced by DOE under the contract to 

finance the litigation. 

(2) Punitive damages are not allowable 

unless the act or failure to act which gave rise 

to the liability resulted from compliance with 

specific terms and conditions of the contract 

or written instructions from the Contracting 

Officer. 

(3) The portion of the cost of insurance 

obtained by the contractor that is allocable to 

coverage of liabilities referred to in paragraph 

(f) of this clause is not allowable. 

(h) The contractor may at its own expense 

and not as an allowable cost procure for its 

own protection insurance to compensate the 

contractor for any unallowable or nonreimbursable costs incurred in connection 

with contract performance. 

(End of clause) 

[FR Doc. 2013–10485 Filed 5–2–13; 8:45 am] 

BILLING CODE 6450–01–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

[Docket No. CFPB–2012–0039] 

RIN 3170–AA28 

Truth in Lending (Regulation Z) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule; official 

interpretations. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) issues this 

final rule to amend Regulation Z, which 

implements the Truth in Lending Act 

(TILA), and the official interpretations 

to the regulation. Regulation Z generally 

prohibits a card issuer from opening a 

credit card account for a consumer, or 

increasing the credit limit applicable to 

a credit card account, unless the card 

issuer considers the consumer’s ability 

to make the required payments under 

the terms of such account. Regulation Z 

currently requires that issuers consider 

the consumer’s independent ability to 

pay, regardless of the consumer’s age; in 

contrast, TILA expressly requires 

consideration of an independent ability 

to pay only for applicants who are 

under the age of 21. The final rule 

amends Regulation Z to remove the 

requirement that issuers consider the 

consumer’s independent ability to pay 

for applicants who are 21 or older, and 

permits issuers to consider income and 

assets to which such consumers have a 

reasonable expectation of access. 

DATES: The rule is effective on May 3, 

2013. Compliance with the rule is 

required by November 4, 2013. Card 

issuers may, at their option, comply 

with the final rule prior to this date. 

FOR FURTHER INFORMATION CONTACT: 

Krista P. Ayoub and Andrea Pruitt 

Edmonds, Senior Counsels, Office of 

Regulations, Bureau of Consumer 

Financial Protection, 1700 G Street NW., 

Washington, DC 20552, at (202) 435– 

7000. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Final Rule 

The Credit Card Accountability 

Responsibility and Disclosure Act 

(Credit Card Act) was enacted in 2009 

as an amendment to the Truth in 

Lending Act (TILA) to address concerns 

that certain practices in the credit card 

industry were not transparent or fair to 

consumers. As amended, TILA section 

150 generally prohibits a card issuer 

from opening a credit card account or 

increasing a line of credit for any 

consumer unless it considers the 

consumer’s ability to make the required 

payments under the terms of the 

account. TILA section 127(c)(8) 

establishes special requirements for 

consumers under 21 and, among other 

things, prohibits a card issuer from 

extending credit to younger consumers 

unless the consumer’s written 

application is cosigned by a person 21 

or older with the means to make the 

required payments, or the card issuer 

has financial information that indicates 

the consumer’s independent ability to 

make the required payments under the 

terms of the account. The statutory 

requirements in TILA sections 150 and 

127(c)(8) are implemented in section 

1026.51(a) and (b) of Regulation Z, 

respectively. Notwithstanding TILA’s 

different ability-to-pay standards for 

consumers based on age, Regulation Z 

currently applies the independent 

ability-to-pay standard to all consumers, 

regardless of age. 

The Bureau of Consumer Financial 

Protection (Bureau) is issuing this final 

rule to amend § 1026.51 and the official 

interpretations to the regulation to 

address concerns that, in light of the 

statutory framework established by 

TILA sections 150 and 127(c)(8), current 

§ 1026.51(a) may be unduly limiting the 

ability of certain individuals 21 or older, 

including spouses or partners who do 

not work outside the home, to obtain 

credit. The final rule takes effect on the 

date of publication in the Federal 

Register and all covered persons must 

come into compliance with the final 

rule no later than six months from the 

effective date, although covered persons 

may come into compliance before that 

date. 

The final rule has four main elements. 

First, the final rule generally removes 

references to an ‘‘independent’’ abilityto-pay standard from § 1026.51(a)(1) and 

associated commentary. As a result, 

card issuers are no longer required to 

consider whether consumers age 21 or 

older have an independent ability to 

pay; instead, card issuers are now 

required by Regulation Z to consider the 

consumer’s ability to pay. Second, in 

determining a consumer’s ability to pay, 

the final rule permits issuers to consider 

income or assets to which an applicant 

or accountholder who is 21 or older— 

and thus subject to § 1026.51(a) rather 

than § 1026.51(b) b has a reasonable 

expectation of access. The final rule 

clarifies by examples in the commentary 

those circumstances in which the 

expectation of access is deemed to be 

reasonable or unreasonable. Third, the 

final rule continues to require in 

§ 1026.51(b)(1)(i) that consumers under 

the age of 21 without a cosigner or 

similar party who is 21 years or older 

have an independent ability to pay, 

consistent with TILA section 127(c)(8). 

Finally, the final rule clarifies that 

application of the independent abilityto-pay standard to consumers under 21, 

consistent with Regulation Z, does not 

violate the Regulation B prohibition 

against age-based discrimination. 

II. Background 

The Credit Card Accountability 

Responsibility and Disclosure Act of 

2009 (Credit Card Act) was signed into 

law on May 22, 2009.1 The Credit Card 

Act primarily amended the Truth in 

Lending Act (TILA) and instituted new 

substantive and disclosure requirements 

to establish fair and transparent 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25819 

2 15 U.S.C. 1665e. 

3 15 U.S.C. 1637(c)(8)(A). 

4 15 U.S.C. 1637(c)(8)(B). 

5See 75 FR 7658, 7719–7724, 7818–7819, 7900– 

7901 (Feb. 22, 2010). 

6 Id. at 7818. 

7 Id. 

8 76 FR 22948, 22974–22977 (Apr. 25, 2011). The 

Board proposed this provision for comment in 

November 2010. 75 FR 67458, 67473–67475 (Nov. 

2, 2010). 

9 76 FR 22948, 23020–23021. 

10 Id. at 22948. 

11Public Law 111–203, 124 Stat. 1376 (2010). 

12 76 FR 79768 (Dec. 22, 2011). 

13Accordingly, the provision addressed in this 

proposal is cited as 12 CFR 1026.51. 

14See, e.g., Written Statement of Ashley Boyd, 

MomsRising, U.S. House Subcommittee on 

Financial Institutions and Consumer Credit Hearing 

on ‘‘An Examination of the Federal Reserve’s Final 

Rule on the CARD Act’s ‘Ability to Repay’ 

Requirement’’ (June 6, 2012), available at http:// 

financialservices.house.gov/uploadedfiles/hhrg112-ba15-wstate-aboyd-20120606.pdf; Letter from 

Representatives Maloney, Slaughter, Bachus, and 

Frank to Raj Date (December 5, 2011), available at 

http://maloney.house.gov/press-release/repsmaloney-slaughter-bachus-and-frank-call-cfpbstudy-impact-credit-card-act%E2%80%99s-. 

15See 77 FR 66748 (Nov. 7, 2012). 

practices for open-end consumer credit 

plans. 

The Credit Card Act added TILA 

section 150, which states that ‘‘[a] card 

issuer may not open any credit card 

account for any consumer under an 

open end consumer credit plan, or 

increase any credit limit applicable to 

such account, unless the card issuer 

considers the ability of the consumer to 

make the required payments under the 

terms of such account.’’ 2 The Credit 

Card Act also added TILA section 

127(c)(8), which applies special 

requirements for consumers under the 

age of 21. Section 127(c)(8)(A) provides 

that ‘‘[n]o credit card may be issued to, 

or open end consumer credit plan 

established by or on behalf of, a 

consumer who has not attained the age 

of 21, unless the consumer has 

submitted a written application to the 

card issuer’’ that meets certain specific 

requirements.3 Section 127(c)(8)(B) sets 

forth those requirements and provides 

that ‘‘an application to open a credit 

card account by a consumer who has 

not attained the age of 21 as of the date 

of submission of the application shall 

require . . . (i) the signature of a 

cosigner, including the parent, legal 

guardian, spouse, or any other 

individual who has attained the age of 

21 having a means to repay debts 

incurred by the consumer in connection 

with the account, indicating joint 

liability for debts incurred by the 

consumer in connection with the 

account before the consumer has 

attained the age of 21; or. . . (ii) 

submission by the consumer of financial 

information, including through an 

application, indicating an independent 

means of repaying any obligation arising 

from the proposed extension of credit in 

connection with the account.’’ 4

On January 12, 2010, the Board of 

Governors of the Federal Reserve 

System (Board) issued a final rule 

(January 2010 Final Rule) implementing 

new TILA Sections 150 and 127(c)(8) in 

a new 12 CFR 226.51.5 The general rule 

in § 226.51(a) provided, in part, that ‘‘[a] 

card issuer must not open a credit card 

account for a consumer under an openend (not home-secured) consumer credit 

plan, or increase any limit applicable to 

such account, unless the card issuer 

considers the ability of the consumer to 

make the required minimum periodic 

payments under the terms of the 

account based on the consumer’s 

income or assets and current 

obligations.’’ 6 Consistent with the 

statute, § 226.51(b) set forth a special 

rule for consumers who are less than 21 

years old and provided, in part, that a 

card issuer may not open a credit card 

account for a consumer less than 21 

years old unless the consumer has 

submitted a written application and the 

card issuer has either: (i) Financial 

information indicating the consumer 

has an independent ability to make the 

required minimum periodic payments 

on the proposed extension of credit in 

connection with the account; or (ii) a 

signed agreement of a cosigner, 

guarantor, or joint applicant that meets 

certain conditions.7 Accordingly, 

consistent with the statute, the Board’s 

rule required that consumers under 21 

years of age demonstrate an 

independent ability to pay, while the 

general rule applicable to consumers 21 

or older did not impose a similar 

independence requirement. The Board’s 

rule became effective on February 22, 

2010. 

On March 18, 2011, the Board issued 

a final rule (March 2011 Final Rule) 

amending § 226.51(a) to apply the 

independent ability-to-pay requirement 

to all consumers, regardless of age.8 The 

Board adopted this change, in part, in 

response to concerns regarding card 

issuers prompting applicants to provide 

‘‘household income’’ on credit card 

applications. To address this specific 

concern, in addition to adopting an 

independent ability-to-pay requirement 

for consumers who are age 21 and older, 

the Board clarified in amended 

comment 51(a)(1)–4.iii that 

consideration of information regarding a 

consumer’s household income does not 

by itself satisfy the requirement in 

§ 226.51(a) to consider the consumer’s 

independent ability to pay. The Board 

stated that in its view it would be 

inconsistent with the language and 

intent of TILA section 150 to permit 

card issuers to establish a consumer’s 

ability to pay based on the income or 

assets of individuals who are not 

responsible for making payments on the 

account.9 The Board’s amendments to 

§ 226.51 became effective on October 1, 

2011.10

Rulemaking authority for TILA 

sections 150 and 127(c)(8) transferred to 

the Bureau on July 21, 2011, pursuant 

to the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank Act).11 On December 22, 2011, the 

Bureau issued an interim final rule to 

reflect its assumption of rulemaking 

authority over Regulation Z.12 The 

interim final rule made only technical 

changes to Regulation Z, such as noting 

the Bureau’s authority and renumbering 

Regulation Z as 12 CFR Part 1026.13

Since the Bureau’s assumption of 

responsibility for TILA and Regulation 

Z, members of Congress, card issuers, 

trade associations, and consumers have 

expressed concerns about § 1026.51 and 

the implementation of the ability-to-pay 

provisions of the Credit Card Act. In 

particular, they objected to the Board’s 

extension of the ‘‘independent’’ abilityto-pay standard in TILA section 

127(c)(8) to consumers who are 21 or 

older, and expressed specific concerns 

about the impact of the Board’s March 

2011 Final Rule on the ability of 

spouses and partners who do not work 

outside the home to obtain credit card 

accounts. These groups urged the 

Bureau to further study or reconsider 

the application of the ‘‘independent’’ 

standard set forth in TILA section 

127(c)(8)—which, they noted, the 

statute applies only to consumers who 

are under 21—more generally to 

consumers who are 21 and older.14

In order to address any potential 

unintended adverse impact of the 

current rule on certain individuals age 

21 or older, including spouses and 

partners who do not work outside the 

home, to obtain credit, the Bureau 

published proposed amendments to 

portions of the regulations and 

accompanying commentary on 

November 7, 2012 (November 2012 

Proposal).15 In the proposal, the Bureau 

stated that it believes that the most 

appropriate reading of TILA sections 

150 and 127(c)(8) is that the 

‘‘independent’’ ability-to-pay standard 

set forth in section 127(c)(8) was 

intended to apply only to consumers 

who are under the age of 21. The Bureau 

also stated that it believes that 

§ 1026.51(a), as currently in effect, may 

unduly limit the ability of certain 


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25820 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

16Public Law 111–203, 124 Stat. 1376 (2010), 

section 1061(a)(1). Effective on the designated 

transfer date, the Bureau was also granted ‘‘all 

powers and duties’’ vested in each of the Federal 

agencies, relating to the consumer financial 

protection functions, on the day before the 

designated transfer date. Id. section 1061(b)(1). 

17Public Law 111–203, section 1002(14) (defining 

‘‘Federal consumer financial law’’ to include the 

‘‘enumerated consumer laws’’); id. section 1002(12) 

(defining ‘‘enumerated consumer laws’’ to include 

TILA). 

18Public Law 111–203, section 1100A(2); 15 

U.S.C. 1604(a). 

19 Id. 

20Credit Card Act § 2. 

21TILA section 127(c)(8), which sets forth a 

special rule for consumers who have not attained 

the age of 21, is implemented in § 1026.51(b) of 

Regulation Z. 

22 76 FR 22948, 22976. 

23 Id. 

individuals who are 21 or older to 

obtain credit. The Bureau proposed 

amendments to Regulation Z that it 

believes are more consistent with the 

plain language and intent of the Credit 

Card Act. 

In response to the proposal, the 

Bureau received over 300 comments 

from individual consumers, consumer 

groups, trade groups, retailers, banks, 

credit unions, card issuers, and other 

financial institutions. Based on a review 

of these comments and its own analysis, 

the Bureau adopts the amendments to 

§ 1026.51 substantially as proposed, 

with several edits and clarifications to 

address issues raised by the 

commenters. 

III. Legal Authority 

The Bureau issues this final rule 

pursuant to its authority under TILA, 

the Dodd-Frank Act, and the Credit Card 

Act. Effective July 21, 2011, section 

1061 of the Dodd-Frank Act transferred 

to the Bureau the ‘‘consumer financial 

protection functions’’ previously vested 

in certain other Federal agencies. The 

term ‘‘consumer financial protection 

functions’’ is defined to include ‘‘all 

authority to prescribe rules or issue 

orders or guidelines pursuant to any 

Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 16

TILA is a Federal consumer financial 

law.17 Accordingly, effective July 21, 

2011, except with respect to persons 

excluded from the Bureau’s rulemaking 

authority by sections 1027 and 1029 of 

the Dodd-Frank Act, the authority of the 

Board to issue regulations pursuant to 

TILA transferred to the Bureau. 

TILA, as amended by the Dodd-Frank 

Act, authorizes the Bureau to ‘‘prescribe 

regulations to carry out the purposes of 

[TILA].’’ 18 These ‘‘regulations may 

contain such additional requirements, 

classifications, differentiations, or other 

provisions, and may provide for such 

adjustments and exceptions for any 

class of transactions,’’ that in the 

Bureau’s judgment are ‘‘necessary or 

proper to effectuate the purposes of 

[TILA], to prevent circumvention or 

evasion thereof, or to facilitate 

compliance therewith.’’ 19

The Credit Card Act primarily 

amended TILA. Section 2 of the Credit 

Card Act authorizes the Bureau to 

‘‘issue such rules and publish such 

model forms as it considers necessary to 

carry out this Act and the amendments 

made by this Act.’’ 20

IV. Section-by-Section Analysis 

Section 1026.51 Ability To Pay 

51(a) General Rule 

Overview 

The Bureau is amending 12 CFR 

1026.51 and the official interpretations 

to the regulation in order to address 

concerns that, in light of the statutory 

framework established by TILA sections 

150 and 127(c)(8), current § 1026.51(a) 

may be unduly limiting the ability of 

certain individuals 21 or older, 

including spouses or partners who do 

not work outside the home, to obtain 

credit. 

The Proposal 

Section 1026.51(a) sets forth the 

general ability-to-pay rule that 

implements TILA section 150.21

Currently, § 1026.51(a)(1)(i) provides 

that a card issuer must not open a credit 

card account for a consumer under an 

open-end (not home-secured) consumer 

credit plan, or increase any limit 

applicable to such account, unless the 

card issuer considers the consumer’s 

independent ability to make the 

required minimum periodic payments 

under the terms of the account based on 

the consumer’s income or assets and 

current obligations. Section 

1026.51(a)(1)(ii) further provides that 

card issuers must establish and 

maintain reasonable written policies 

and procedures to consider a 

consumer’s independent income or 

assets and current obligations, and that 

such policies and procedures must 

include consideration of at least one of: 

the ratio of debt obligations to income; 

the ratio of debt obligations to assets; or 

the income the consumer will have after 

paying debt obligations. Finally, 

§ 1026.51(a)(1)(ii) states that it would be 

unreasonable for a card issuer not to 

review any information about a 

consumer’s income or assets and current 

obligations, or to issue a credit card to 

a consumer who does not have any 

independent income or assets. 

Comments 51(a)(1)(i)–1 through 

51(a)(1)(i)–6 set forth additional 

guidance on compliance with the 

requirements of § 1026.51(a)(1). 

The Bureau proposed to amend 

§ 1026.51(a) in two related respects. 

First, the Bureau proposed to remove all 

references to an ‘‘independent’’ ability 

to pay from § 1026.51(a)(1) and the 

associated commentary. Second, the 

Bureau proposed to permit issuers to 

consider income or assets to which an 

applicant or accountholder who is 21 or 

older—and thus subject to § 1026.51(a) 

rather than § 1026.51(b)—has a 

reasonable expectation of access. The 

Bureau’s proposal would have clarified 

by examples in the commentary those 

circumstances in which the expectation 

of access is deemed to be reasonable or 

unreasonable. 

The Bureau’s November 2012 

Proposal noted that the independence 

requirement was added to § 1026.51(a), 

and thus made applicable to applicants 

21 or older, in the Board’s March 2011 

Final Rule. In the SUPPLEMENTARY

INFORMATION to the March 2011 Final 

Rule, the Board acknowledged concerns 

from members of Congress, card issuers, 

trade associations, and consumers that 

application of an ‘‘independent income’’ 

standard might restrict access to credit 

for consumers who do not work outside 

the home, including certain married 

women.22 Ultimately, however, the 

Board concluded that application of this 

standard would not diminish access to 

credit for this population of married 

women and others who do not work 

outside the home.23 In particular, the 

Board suggested that permitting an 

issuer to solicit an applicant’s ‘‘income’’ 

and make credit decisions on that basis 

would protect credit access for these 

populations. 

The Bureau noted in the November 

2012 Proposal that information made 

available to it after the March 2011 Final 

Rule went into effect raised several 

questions about the Board’s assumption 

in this respect. Specifically, the Bureau 

has become aware that several issuers 

have denied card applications from 

individuals with high credit scores 

based on the applicant’s stated income. 

Credit bureau data, including data 

regarding payment history and size of 

payment obligations, suggested that 

some of these applicants had 

demonstrable access to funding sources. 

Although the Bureau did not have direct 

evidence of precisely who the 

unsuccessful applicants are, indirect 

evidence suggested a meaningful 

proportion of these denials may have 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25821 

24The Bureau noted that TILA section 127(c)(8) 

itself also sets forth two different ability-to-pay 

standards, depending on the age of the individual; 

the Bureau stated that it believes that this further 

suggests that Congress did not intend to apply an 

independent ability-to-pay requirement to 

individuals who are 21 or older. Section 

127(c)(8)(B)(i) sets forth the standard that applies to 

an individual age 21 or older who is serving as a 

cosigner or otherwise assuming liability on an 

account being opened by a consumer who is under 

21. Section 127(c)(8)(B)(i) states that such over-21 

cosigner or similar party must ‘‘hav[e] a means to 

repay debts incurred by the consumer in connection 

with the account. In contract, as discussed above, 

section 127(c)(8)(B)(ii) requires the under-21 

consumer to submit financial information 

‘‘indicating an independent means of repaying any 

obligation arising from the proposed extension of 

credit in connection with the account.’’ 

25See 76 FR 22975. 

26See id. 

27The Bureau also proposed several 

nonsubstantive, technical changes to 

§ 1026.51(a)(1)(ii) for clarity. 

involved applicants who do not work 

outside the home but who have a spouse 

or partner who does work outside the 

home. The Bureau based this conclusion 

on summary data from a number of 

issuers on denials of credit card 

applications from otherwise 

creditworthy individuals due to the 

applicants’ stated income. 

The Bureau also stated that it does not 

believe that TILA section 150 requires 

consideration of the ‘‘independent’’ 

ability to pay for applicants who are 21 

or older. TILA section 150 refers to ‘‘the 

ability of the consumer to make the 

required payments under the terms of 

the account’’ and does not expressly 

include an independence requirement. 

In contrast, TILA section 127(c)(8)(B)(ii), 

which sets forth analogous requirements 

that apply to consumers who are under 

21, expressly requires that the consumer 

submit financial information, through a 

written application, that indicates ‘‘an 

independent means of repaying any 

obligation arising from the proposed 

extension of credit . . . . ’’ The Bureau 

believes that the better reading of TILA 

section 150, in light of TILA section 

127(c)(8), is that it does not impose an 

independence requirement in the 

ability-to-pay provision for consumers 

who are 21 or older.24

The Bureau noted that the Board came 

to the contrary conclusion that, because 

TILA section 150 requires card issuers 

to consider ‘‘the ability of the consumer 

to make the required payments’’ 

(emphasis added), Congress intended 

card issuers to consider only the ability 

to pay of the consumer or consumers 

who are responsible for making 

payments on the account.25 The Board 

further noted that, to the extent that 

card issuers extend credit based on the 

income of persons who are not liable on 

the account, it would be consistent with 

the purposes of TILA section 150 to 

restrict this practice.26

In issuing its proposal, the Bureau 

agreed with the Board that the 

application of an overly broad standard 

under TILA section 150 could 

undermine the purposes of the statute 

by permitting issuers to open accounts 

for consumers based on income or assets 

of other individuals in cases where 

reliance on such income or assets would 

not reasonably reflect the consumer’s 

ability to use such income or assets to 

make payments on a credit card debt. 

Therefore, as discussed below, the 

Bureau proposed additional guidance to 

clarify when reliance on a third party’s 

income or assets would be considered 

unreasonable and, accordingly, could 

not be used to satisfy § 1026.51(a). 

However, the Bureau also believed that 

there are other situations in which card 

issuers could reasonably rely on the 

income or assets of a third party in 

assessing an applicant’s ability to pay. 

The Bureau maintained that nothing in 

the text of TILA section 150 suggests 

that it was intended to impose a blanket 

prohibition on extending credit in the 

latter circumstances; rather, the plain 

language of TILA section 150 suggests 

that it was intended to impose a more 

flexible standard than the independent 

ability-to-pay requirement of TILA 

section 127(c)(8)(B)(ii). 

Accordingly, given the likely impact 

of the Board’s March 2011 Final Rule on 

the access to credit for spouses or 

partners who do not work outside the 

home, and based on the Bureau’s 

statutory interpretation of TILA sections 

127(c)(8) and 150, the proposed rule 

would have removed references to an 

‘‘independent’’ ability to pay from 

§ 1026.51(a)(1) and the commentary to 

§ 1026.51(a)(1). 

Although the Bureau stated that it 

believes that removing the independent 

ability-to-pay requirement from 

§ 1026.51(a)(1) would best promote 

consistency with the statute and would 

help to mitigate any unintended impacts 

of the rule on spouses or partners who 

do not work outside the home, the 

Bureau also stated that it was important 

to clarify in more detail the income or 

assets on which a card issuer may rely 

in order to comply with § 1026.51(a). 

Therefore, the Bureau proposed to 

amend § 1026.51(a)(1)(ii) to clarify that 

the consideration of a consumer’s 

income or assets may include any 

income or assets to which the consumer 

has a reasonable expectation of access. 

The Bureau believes that the purposes 

of TILA section 150 would be best 

effectuated by placing limitations on the 

income or assets on which an issuer 

may rely when opening new credit card 

accounts, or increasing credit limits, for 

consumers who are 21 or older; 

accordingly, the proposed rule and 

proposed commentary would have 

clarified that there are certain sources of 

income or assets on which it would be 

unreasonable for an issuer to rely.27

Current comment 51(a)(1)–4 sets forth 

guidance regarding the consideration of 

income and assets under § 1026.51(a). 

The proposed rule would have replaced 

current comment 51(a)(1)–4 with new 

comments 51(a)(1)–4 through –6; 

current comments 51(a)(1)–5 and –6 

would have been renumbered as 

comments 51(a)(1)–7 and –8. Amended 

comment 51(a)(1)(i)–4 generally would 

have incorporated portions of existing 

comment 51(a)(1)–4.ii, which provides 

guidance on the income or assets that 

may be considered for purposes of 

§ 1026.51(a), with reorganization for 

clarity. In addition, for consistency with 

proposed § 1026.51(a)(1)(ii), proposed 

comment 51(a)(1)–4 would have been 

revised to expressly provide that a card 

issuer may consider any income and 

assets to which an applicant, 

accountholder, cosigner, or guarantor 

who is or will be liable for debts 

incurred on the account has a 

reasonable expectation of access. 

Proposed comment 51(a)(1)–5 

generally would have incorporated 

portions of existing comment 51(a)(1)– 

4.i and –4.iii, which provide guidance 

on the sources of information about a 

consumer’s income and assets on which 

a card issuer may rely. Currently, 

comment 51(a)(1)–4.iii provides that if a 

card issuer requests on its application 

forms that applicants provide their 

income without reference to household 

income (such as by requesting ‘‘income’’ 

or ‘‘salary’’), the card issuer may rely on 

the information provided by applicants 

to satisfy the requirements of 

§ 1026.51(a). Proposed comment 

51(a)(1)–5.i similarly would have 

provided that card issuers may rely on 

information provided by applicants in 

response to a request for ‘‘salary,’’ 

‘‘income,’’ or ‘‘assets.’’ In addition, 

proposed comment 51(a)(1)–5.i would 

have clarified that, for purposes of 

§ 1026.51(a), card issuers also may rely 

on information provided by applicants 

in response to a request for ‘‘available 

income,’’ ‘‘accessible income,’’ or other 

language requesting that the applicant 

provide information regarding current 

or reasonably expected income and/or 

assets or any income and/or assets to 

which the applicant has a reasonable 

expectation of access. 

The Bureau noted that it was retaining 

in proposed comment 51(a)(1)–5.i 


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28For simplicity and ease of reference, the 

proposed examples in comment 51(a)(1)–6 would 

have addressed scenarios involving two individuals 

who reside in the same household (i.e., the 

applicant and another individual). The examples 

referred to the second member of the applicant’s 

household as a ‘‘household member.’’ However, the 

Bureau noted that the proposed rule and 

commentary also would apply to households in 

which more than two individuals reside. 

existing guidance regarding requests by 

issuers for ‘‘household income.’’ 

Proposed comment 51(a)(1)–5.i would 

have stated that card issuers may not 

rely solely on information provided in 

response to a request for ‘‘household 

income’’; rather, the card issuer would 

need to obtain additional information 

about the applicant’s income (such as by 

contacting the applicant). The Bureau 

believed that it would be inappropriate 

to permit an issuer to rely on the income 

of one or more third parties when 

opening a credit card account for a 

consumer merely because the 

applicant(s) and the other individual(s) 

share a residence. For example, a 

household might consist of two 

roommates who do not have access to 

one another’s income or assets. The 

Bureau believed that in this case it 

generally would be inappropriate to 

permit one roommate to rely on the 

income or assets of the other; however, 

given that they share a household, it is 

possible that one roommate applicant 

might interpret the request for 

‘‘household income’’ to include the 

other roommate’s income. 

Proposed comment 51(a)(1)–6 would 

have provided further clarification 

regarding when it is permissible to 

consider a household member’s income 

for purposes of § 1026.51(a).28 Proposed 

comment 51(a)(1)–6 would have set 

forth four illustrative examples 

regarding the consideration of a 

household member’s income. Three of 

the proposed examples would have 

described circumstances in which the 

Bureau believes that the applicant has a 

reasonable expectation of access to a 

household member’s income. Proposed 

comment 51(a)(1)–6.i would have noted 

that if a household member’s salary is 

deposited into a joint account shared 

with the applicant, an issuer is 

permitted to consider that salary as the 

applicant’s income for purposes of 

§ 1026.51(a). Proposed comment 

51(a)(1)–6.ii would have assumed that 

the household member regularly 

transfers a portion of his or her salary, 

which in the first instance is directly 

deposited into an account to which the 

applicant does not have access, from 

that account into a second account to 

which the applicant does have access. 

The applicant then uses the account to 

which he or she has access for the 

payment of household or other 

expenses. Proposed comment 51(a)(1)– 

6.ii would have permitted an issuer to 

consider the portion of the salary 

deposited into the account to which the 

applicant has access as the applicant’s 

income for purposes of § 1026.51(a). The 

third example in proposed comment 

51(a)(1)–6.iii would have assumed that 

no portion of the household member’s 

salary is deposited into an account to 

which the applicant has access. 

However, the household member 

regularly uses that salary to pay for the 

applicant’s expenses. The proposed 

example would have clarified that an 

issuer is permitted to consider the 

household member’s salary as the 

applicant’s income for purposes of 

§ 1026.51(a) because the applicant has a 

reasonable expectation of access to that 

salary. 

The final example in proposed 

comment 51(a)(1)–6.iv would have 

described a situation in which the 

consumer’s expectation of access would 

not be deemed to be reasonable. The 

proposed example would have stated 

that no portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access, the household member does not 

regularly use that salary to pay for the 

applicant’s expenses, and no Federal or 

State statute or regulation grants the 

applicant an ownership interest in that 

salary. The proposed example would 

have clarified that an issuer would not 

be permitted to consider the household 

member’s salary as the applicant’s 

income for purposes of § 1026.51(a). 

The Bureau solicited comment on 

whether the examples set forth in 

proposed comment 51(a)(1)–6 are 

appropriate, as well as on whether there 

are additional examples that should be 

included. Finally, as noted above, the 

proposal would have renumbered 

current comment 51(a)(1)–5—which 

concerns ‘‘current obligations’’—as 

comment 51(a)(1)–7 without further 

change. 

Comments Received 

As noted above, the Bureau received 

over 300 comments from individual 

consumers, consumer groups, banks, 

credit unions, trade groups, card issuers, 

retailers, and other financial 

institutions. The majority of industry 

commenters supported the Bureau’s 

proposal to eliminate the independent 

ability-to-pay requirement for 

consumers 21 or older. One industry 

commenter stated that many of its 

customers have been frustrated and 

disappointed by their inability to obtain 

a credit card because they do not have 

independent income. Another industry 

commenter posited that the current 

standard has reduced access to credit 

not only for married persons and 

partners who do not work outside the 

home, but also for elderly Americans 

who are increasingly dependent on their 

adult children for financial assistance. 

An industry commenter noted the 

impact of the Bureau’s current rules on 

military spouses, who it maintains are 

more likely to be under-employed, 

working part-time, or out of the labor 

force completely. Most industry 

commenters, including banks, credit 

unions, trade groups, card issuers, and 

retailers, similarly supported language 

in proposed § 1026.51(a)(1)(ii) to permit 

card issuers to rely on income or assets 

to which a consumer has a reasonable 

expectation of access, but requested 

certain edits and clarifications, which 

are discussed in more detail below. 

In addition, certain consumer 

commenters, individually and in 

connection with advocacy groups 

representing the interests of women 

(including mothers who do not work 

outside the home), strongly supported 

the Bureau’s proposal and urged the 

Bureau to remove the independent 

ability-to-pay requirement. These 

commenters argued that changing the 

rule is critical to ensuring that stay-athome spouses and partners are able to 

build and retain access to credit in the 

case of abuse, death, or disability of the 

breadwinner. Some consumer 

commenters also noted that having a 

credit card is an essential tool for 

managing a household and is necessary 

for making purchases, travel 

reservations, and bill payments, as well 

as for qualifying for a business or home 

loan. 

Two consumer group commenters 

opposed the Bureau’s proposal, arguing 

that the independent ability-to-pay 

standard could be clarified without 

removing it altogether. These 

commenters stated that the Bureau 

should retain the independent abilityto-pay requirement, but clarify that a 

person can have income or assets that 

do not come from that person’s 

individual wages (e.g., where a nonapplicant’s income is deposited in a 

joint account, or another account to 

which the applicant has access). These 

commenters argued that an issuer’s 

consideration of a consumer’s ability to 

pay should be based solely on the 

income or assets controlled by the 

consumer liable on the account and that 

it is better for consumers to have a 

cosigner on the card account than to 

take on debt based on potentially 

unreliable income. 


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29 15 U.S.C. 1691 et seq. 

30 12 CFR part 1002. 

Several industry commenters stated 

their general opposition to any 

additional rules that would interfere 

with a financial institution’s ability to 

make its own underwriting decisions. 

Other industry commenters expressed 

concern that card issuers relying on 

reasonably expected income as an 

underwriting criterion would have 

difficulty evaluating whether the 

applicant truly has the means to repay 

a debt and, as a result, would inevitably 

make poor decisions. Several industry 

commenters urged the Bureau to make 

it clear that card issuers are not required 

to consider income to which the 

consumer has a reasonable expectation 

of access for applicants 21 or older, but 

instead may consider, for example, the 

consumer’s independent ability to pay. 

Finally, several industry commenters 

requested that the Bureau clarify in the 

rule, commentary, or supplementary 

information that compliance with the 

ability-to-pay options provided in the 

proposal does not give rise to 

discrimination claims based on age, sex, 

or marital status under the Equal Credit 

Opportunity Act (ECOA) 29 and 

Regulation B.30 Specifically, a number 

of industry commenters requested that 

the Bureau clarify that application of 

different ability-to-pay standards to 

consumers based on age does not violate 

ECOA or Regulation B because the 

Credit Card Act, and not the card issuer, 

requires the different treatment. One 

industry commenter requested 

assurances that the continued 

consideration of the independent ability 

to pay for consumers 21 or older does 

not violate Regulation B’s prohibition 

against sex discrimination. Another 

industry commenter expressed concern 

that application of the reasonable 

expectation of access criterion to 

consumers 21 or older may result in a 

potential discriminatory practice based 

on marital status. 

The Final Rule 

The final rule adopts the amendments 

to § 1026.51(a)(1) substantially as 

proposed, with several edits and 

clarifications to address issues raised by 

commenters. In addition, the final rule 

adds comment 51(a)(1)-9, which 

clarifies that issuers may use a single, 

common application for all consumers, 

regardless of age. 

Ability-to-pay standard. As noted 

above, § 1026.51(a)(1)(i) currently 

provides that a card issuer must not 

open a credit card account for a 

consumer under an open-end (not 

home-secured) consumer credit plan, or 

increase any limit applicable to such 

account, unless the card issuer 

considers the consumer’s independent 

ability to make the required minimum 

periodic payments under the terms of 

the account based on the consumer’s 

income or assets and current 

obligations. The Bureau acknowledged 

in the proposal that § 1026.51(a)(1)(i) in 

its current form may unduly limit the 

ability of certain individuals age 21 or 

older to obtain credit. Accordingly, the 

Bureau proposed to eliminate the 

independence standard for these 

consumers and delete all references to 

the term ‘‘independent’’ from 

§ 1026.51(a)(1) and associated 

commentary. 

Based on comments received as 

discussed above and its own analysis, 

the Bureau is adopting its proposal to 

remove references to the independence 

standard in § 1026.51(a)(1) and 

associated commentary. The Bureau 

believes that the removal of the 

independence standard from the abilityto-pay requirement will likely result in 

greater access to credit for stay-at-home 

spouses and partners and is consistent 

with the explicit requirements of TILA 

section 150. As stated above and in the 

proposal, the Bureau has become aware 

of several issuers having denied card 

applications from individuals with high 

credit scores based on the applicant’s 

stated income. In addition, comments 

submitted by industry members and 

consumers corroborate the Bureau’s 

concerns that the current independent 

ability-to-pay standard has resulted in 

card issuers denying credit to 

individuals with high credit scores 

because they do not have an 

independent source of income. For 

example, one industry commenter 

stated that many of its customers have 

been frustrated and disappointed by 

their inability to obtain a credit card 

because they do not have independent 

income. One consumer commenter 

stated that, despite having excellent 

credit, her application for credit was 

denied due to lower income resulting 

from the decision to work only part-time 

to care for a young child. Another 

consumer commenter stated that since 

reentering the workforce after an 

extended period as a stay-at-home 

mother, she has twice been denied a 

credit card because she did not have 

credit in her own name. A trade group 

commenter noted the ‘‘unfair impact’’ of 

the current independent ability-to-pay 

requirement on military spouses and 

their families, who it argued rely on the 

working spouse’s income to a greater 

extent than their civilian counterparts. 

As stated above, the Bureau also does 

not believe that TILA section 150 

requires consideration of the 

‘‘independent’’ ability to pay for 

applicants who are 21 or older. TILA 

section 150 refers to ‘‘the ability of the 

consumer to make the required 

payments under the terms of the 

account’’ and does not expressly 

include an independence requirement. 

In contrast, TILA section 127(c)(8)(B)(ii), 

which sets forth analogous requirements 

that apply to consumers who are under 

21, expressly requires that the consumer 

demonstrate ‘‘an independent means of 

repaying any obligation arising from the 

proposed extension of credit . . ..’’ The 

Bureau believes that the better reading 

of TILA section 150, in light of TILA 

section 127(c)(8), is that it does not 

impose an independence requirement in 

the ability-to-pay provision for 

consumers who are 21 or older. 

As also stated above, the Bureau 

agrees with the Board that the 

application of an overly broad standard 

under TILA section 150 could 

undermine the purposes of the statute 

by permitting issuers to open accounts 

for consumers based on income or assets 

of other individuals in cases where 

reliance on such income or assets would 

not reasonably reflect the consumer’s 

ability to use such income or assets to 

make payments on a credit card debt. 

Therefore, as discussed below, the 

Bureau is providing additional guidance 

to clarify when reliance on a third 

party’s income or assets would be 

considered unreasonable and, 

accordingly, could not be used to satisfy 

§ 1026.51(a). However, the Bureau also 

believes that there are other situations 

in which card issuers could reasonably 

rely on the income or assets of a third 

party in assessing an applicant’s ability 

to pay. Nothing in the text of TILA 

section 150 suggests that it was 

intended to impose a blanket 

prohibition on extending credit in the 

latter circumstances. Rather, the plain 

language of TILA section 150 suggests 

that it was intended to impose a more 

flexible regulatory standard than the 

independent ability-to-pay requirement 

of TILA section 127(c)(8)(B)(ii). 

Accordingly, given the likely impact 

of existing § 1026.51(a) on the access to 

credit for spouses or partners who do 

not work outside the home, and based 

on the Bureau’s statutory interpretation 

of TILA sections 127(c)(8) and 150, the 

final rule removes all references to an 

‘‘independent’’ ability-to-pay standard 

from § 1026.51(a)(1) and comments 

51(a)–1 and –2. However, as discussed 

below, the final rule states in 

§ 1026.51(a)(1)(ii) that it would be 

reasonable for a card issuer to consider 

a consumer’s independent income or 

assets in its consideration of the 


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31Several commenters described this option as 

‘‘continuing’’ to use the current ‘‘independent 

ability-to-pay standard.’’ Strictly speaking, 

however, that regulatory standard no longer exists 

under the final rule; it has been replaced with the 

ability-to-pay standard. It is thus more accurate to 

describe this option as using an independentincome-or-assets underwriting criterion to satisfy 

the ability-to-pay regulatory standard. 

32Although not addressed in the proposal, 

consumer group commenters urged the Bureau to 

ban deferred interest plans on credit card accounts, 

where such plans promote ‘‘no interest’’ until a 

certain date, but then retroactively access that 

interest starting from the purchase date if the 

consumer does not pay off the entire balance by the 

specified date. These commenters believed these 

types of deferred interest plans are unfair and 

deceptive. Because deferred interest plans are 

outside the scope of this rulemaking, the comments 

are not further addressed in this final rule. 

consumer’s ability to pay. This 

provision is consistent with the 

approach clarified in the final rule to 

permit card issuers the flexibility to rely 

on a consumer’s independent income or 

assets, or as an alternative, income or 

assets to which a consumer has a 

reasonable expectation of access. The 

final rule also makes a non-substantive, 

technical change in § 1026.51(a)(1)(i) for 

consistency and clarity. 

Reasonable expectation of access. As 

discussed above, in conjunction with 

the proposal to amend § 1026.51(a)(1)(i) 

by removing the term ‘‘independent’’ 

from the ability-to-pay requirement, the 

Bureau proposed to amend 

§ 1026.51(a)(1)(ii) to add new language 

clarifying that the consideration of a 

consumer’s current income or assets 

may include any income or assets to 

which the consumer has a reasonable 

expectation of access. The Bureau also 

proposed several non-substantive, 

technical changes to § 1026.51(a)(1)(ii) 

for clarity. 

As noted above, most industry 

commenters supported the Bureau’s 

proposal in § 1026.51(a)(1)(ii) to permit 

card issuers to rely on income or assets 

to which a consumer has a reasonable 

expectation of access, but suggested 

certain edits and clarifications as 

discussed in more detail below. 

Numerous consumer commenters also 

supported the Bureau’s proposal and 

posited that changing the ability-to-pay 

rules is critical to ensuring that nonworking spouses and partners have 

access to credit in the event of abuse, 

death, or disability of the primary 

breadwinner. 

The consumer group commenters, 

however, argued that a card issuer 

should not be permitted to allow a 

person to take on debt based on income 

to which the consumer merely has 

access, which they view as unreliable 

income. Instead, these commenters 

argued that the card issuer should 

require a joint applicant or cosigner on 

the account if the applicant does not 

have sufficient current or reasonably 

expected income or assets to satisfy the 

independent ability-to-pay requirement. 

Several industry commenters also 

expressed concern that issuers relying 

on a consumer’s reasonable expectation 

of access to income or assets would 

have difficulty evaluating whether the 

applicant truly has the means to repay 

a debt and, as a result, would inevitably 

make poor decisions. One industry 

commenter argued that the reasonable 

expectation of access criterion would 

present material risks to the 

underwriting process. Some industry 

commenters also expressed concern that 

extending the card issuer’s ability to 

consider reasonably accessible income 

to that of cosigners and guarantors 

would add an additional layer of risk to 

the credit transaction. Several industry 

commenters urged the Bureau to make 

clear that card issuers are not required 

to consider income to which the 

consumer has a reasonable expectation 

of access, but instead may consider, for 

example, the consumer’s independent 

ability to pay. 

Based on careful consideration of the 

comments submitted and its own 

analysis, the Bureau adopts 

substantially as proposed amendments 

to § 1026.51(a)(1)(ii). The final rule 

retains in § 1026.51(a)(1)(ii) the 

requirement that card issuers establish 

and maintain reasonable written 

policies and procedures to consider the 

consumer’s ability to make the required 

minimum payments under the terms of 

the account based on the income or 

assets and current obligations of card 

applicants. As amended, this paragraph 

now provides that such policies and 

procedures include treating any income 

and assets to which the consumer has a 

reasonable expectation of access as the 

consumer’s income or assets, or limiting 

consideration of the consumer’s income 

or assets to the consumer’s independent 

income and assets. In other words, a 

card issuer may consider income and 

assets to which an applicant has a 

reasonable expectation of access, but is 

not required to do so. A card issuer has 

the option of limiting its consideration 

of an applicant’s income and assets to 

his or her independent income and 

assets.31

The Bureau also adopts its proposal to 

conform § 1026.51(a)(1)(ii) to amended 

§ 1026.51(a)(1)(i) by revising it to state 

that it would be unreasonable for a card 

issuer not to review any information 

about a consumer’s income or assets and 

current obligations—rather than the 

consumer’s ‘‘independent’’ income or 

assets, as stated in the current rule. 

Although some commenters 

expressed concern that the new 

reasonable expectation of access 

criterion may result in riskier 

underwriting and, thus, greater 

incidence of default, no supporting data 

was provided and the Bureau is not 

convinced that would be the case 

should a card issuer decide to 

incorporate a consumer’s reasonable 

expectation of access to income as an 

underwriting criterion. As discussed in 

greater detail below, the Bureau is 

providing in the official commentary 

examples of when it would be 

reasonable or unreasonable for an issuer 

to consider the income or assets of a 

non-applicant to which the applicant 

claims to have a reasonable expectation 

of access. In addition, as one commenter 

noted, the ability-to-pay requirement is 

not a substitute for other asset-liability 

management parameters and 

underwriting criteria used by card 

issuers in determining whether a 

consumer is eligible for an extension of 

credit and may not be evaluated until 

other underwriting criteria have been 

analyzed. The Bureau believes that 

because credit cards are generally 

unsecured, card issuers will be 

motivated to carefully review the risk 

factors available to them regarding a 

consumer’s creditworthiness.32

The Bureau also proposed changes to 

the commentary to § 1026.51(a)(1) to 

reflect the proposed changes to 

§ 1026.51(a)(1). Current comment 

51(a)(1)–4 sets forth guidance regarding 

the consideration of income and assets 

under § 1026.51(a). The proposed rule 

would have replaced current comment 

51(a)(1)–4 with new comments 51(a)(1)– 

4 through –6; current comments 

51(a)(1)–5 and –6 would have been 

renumbered as comments 51(a)(1)–7 and 

–8. The final rule adopts the proposed 

comments substantially as proposed, 

with additional clarification and 

guidance as requested by commenters. 

The final rule also adopts comment 

51(a)(1)–9, which clarifies the 

requirements for issuers using a single, 

common application for all consumers, 

regardless of age. 

Amended comment 51(a)(1)–4, as 

proposed, generally would have 

incorporated portions of existing 

comment 51(a)(1)–4.ii, which provides 

guidance on the income or assets that 

may be considered for purposes of 

§ 1026.51(a), with reorganization for 

clarity. In addition, for consistency with 

proposed § 1026.51(a)(1)(ii), proposed 

comment 51(a)(1)–4 would have been 

revised to expressly provide that a card 

issuer may consider any income or 

assets to which an applicant, 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25825 

accountholder, cosigner, or guarantor 

who is or will be liable for debts 

incurred on the account has a 

reasonable expectation of access. In 

response to the Bureau’s proposal, one 

industry commenter requested that the 

Bureau clarify in the commentary that 

income or assets available to a consumer 

under state community property laws 

should be eligible for consideration as 

income or assets to which a consumer 

has a reasonable expectation of access. 

The Bureau received no other specific 

comments on this aspect of the 

proposal. 

The final rule revises proposed 

comment 51(a)(1)–4 in a number of 

ways in response to comments received 

and to make further clarifications. To 

begin with, the final rule clarifies in 

comment 51(a)(1)–4.i that, for purposes 

of § 1026.51(a), a card issuer may treat 

any income and assets to which an 

applicant has a reasonable expectation 

of access as the consumer’s current or 

reasonably expected income or assets, 

but is not required to do so. The final 

rule further clarifies that a card issuer 

may instead limit its consideration of 

the consumer’s current or reasonably 

expected income or assets to his or her 

independent income and assets, and 

notes that such an issuer may look to 

the guidance provided in comments 

51(b)(1)(i)–1 and 51(b)(2)–2 for the 

purpose of using independent income 

and assets as an underwriting criterion. 

Finally, the final rule corrects an 

inadvertent omission in the proposal by 

adding the term ‘‘joint applicant’’ to 

comment 51(a)(1)–4.i. 

In comment 51(a)(1)–4.ii, the final 

rule clarifies that current or reasonably 

expected income and assets includes 

income that is being deposited regularly 

into an account on which the consumer 

is an accountholder (e.g., an individual 

deposit account or joint account). For 

the reasons discussed below, comment 

51(a)(1)–4.ii also clarifies that proceeds 

from student loans may be treated as 

current or reasonably expected income, 

provided that the card issuer only 

considers the loan proceeds remaining 

after tuition and other expenses have 

been disbursed to the applicant’s 

educational institution. 

Finally, the final rule revises 

comment 51(a)(1)–4.iii. in several ways. 

In response to a request for clarification, 

the final rule includes State community 

property laws as an example of a 

Federal or State statute or regulation 

that grants a consumer an ownership 

interest in the income and assets of 

another person. The final rule also 

clarifies that a card issuer may consider 

the consumer’s current or reasonably 

expected income to include the income 

of authorized users, household 

members, or other persons who are not 

liable for debts incurred on the account 

if that income is regularly deposited 

into an account on which the consumer 

is an accountholder (e.g., an individual 

deposit account or joint account). The 

Bureau believes that such income may 

be considered the consumer’s current or 

reasonably expected income, even 

though it is not the consumer’s 

individual wages, because the consumer 

has access to the non-applicant’s 

income that is being deposited regularly 

into an account on which the consumer 

is an accountholder. As discussed 

below, the final rule revises the 

examples in comment 51(a)(1)–6 to be 

consistent with the revisions to 

comment 51(a)(1)–4.iii. 

Proposed comment 51(a)(1)–5 

generally would have incorporated 

portions of existing comment 51(a)(1)– 

4.i and –4.iii, which provide guidance 

on the sources of information about a 

consumer’s income and assets on which 

a card issuer may rely. Currently, 

comment 51(a)(1)–4.iii provides that, if 

a card issuer requests on its application 

forms that applicants provide their 

income without reference to household 

income (such as by requesting ‘‘income’’ 

or ‘‘salary’’), the card issuer may rely on 

the information provided by applicants 

in response to such prompts to satisfy 

the requirements of § 1026.51(a). 

Proposed comment 51(a)(1)–5.i 

similarly would have provided that card 

issuers may rely on information 

provided by applicants in response to a 

request for ‘‘salary,’’ ‘‘income,’’ or 

‘‘assets.’’ In addition, proposed 

comment 51(a)(1)–5.i would have 

clarified that, for purposes of 

§ 1026.51(a), card issuers also may rely 

on information provided by applicants 

in response to a request for ‘‘available 

income,’’ ‘‘accessible income,’’ or other 

language requesting that the applicant 

provide information regarding current 

or reasonably expected income or assets 

or any income or assets to which the 

applicant has a reasonable expectation 

of access. 

Proposed comment 51(a)(1)–5.i also 

retained existing guidance regarding 

requests by issuers for ‘‘household 

income.’’ Specifically, proposed 

comment 51(a)(1)–5.i would have stated 

that card issuers may not rely solely on 

information provided in response to a 

request for ‘‘household income’’; rather, 

the card issuer would need to obtain 

additional information about the 

applicant’s income (such as by 

contacting the applicant). The Bureau 

stated in the proposal that it believes 

that it would be inappropriate to permit 

an issuer to rely on the income of one 

or more third parties when opening a 

credit card account for a consumer 

merely because the applicant(s) and the 

other individual(s) share a residence. 

For example, a household might consist 

of two roommates who do not have 

access to one another’s income or assets. 

The Bureau also stated that it believes 

that in this case it generally would be 

inappropriate to permit one roommate 

to rely on the income or assets of the 

other; however, given that they share a 

household, it is possible that one 

roommate applicant might interpret the 

request for ‘‘household income’’ to 

include the other roommate’s income. 

Several industry commenters stated 

that it was unclear whether card issuers 

would be required to take additional 

steps to confirm information provided 

as part of an application, and urged the 

Bureau to clarify what, if any, 

verification of applicant information is 

required. One industry commenter 

suggested that the Bureau add the term 

‘‘solely’’ or ‘‘without further inquiry’’ to 

comment 51(a)(1)–5 to better illustrate 

that card issuers are not required to 

verify financial information received in 

response to prompts for ‘‘salary,’’ 

‘‘income,’’ ‘‘assets,’’ ‘‘available income,’’ 

‘‘accessible income,’’ or other language 

requesting that the applicant provide 

information regarding current or 

reasonably expected income or assets or 

any income or assets to which the 

applicant has a reasonable expectation 

of access. The consumer group 

commenters, however, indicated that 

card issuers should be required to 

obtain some verification of whatever 

income source is relied upon. 

Several industry commenters also 

suggested that the card issuer be 

permitted to rely on income information 

provided by the consumer on an 

application in response to prompts for 

‘‘household income’’ without additional 

information. These commenters argued 

that consumers are more familiar with 

the term ‘‘household income’’ than the 

allowable terms suggested in the 

proposal, such as ‘‘accessible income’’ 

and ‘‘available income,’’ and that the 

term elicits the type of income the 

Bureau’s proposal is designed to permit 

issuers to use in ability-to-pay 

considerations. One commenter 

commissioned its own study, which it 

states indicated that ‘‘household 

income’’ is a meaningful term for 

consumers, and that a request for 

‘‘household income’’ elicited the 

appropriate type of income for an 

ability-to-pay determination. The 

commenter also stated that few of the 

respondents in its study provided the 

income of a roommate or similar 

household member when asked for 


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25826 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

33For simplicity and ease of reference, the 

proposed examples in comment 51(a)(1)–6 

addressed scenarios involving two individuals who 

reside in the same household (i.e., the applicant and 

another individual). The examples referred to the 

second member of the applicant’s household as a 

‘‘household member.’’ However, the Bureau noted 

that the proposed rule and commentary also would 

apply to households in which more than two 

individuals reside. 

‘‘household income.’’ The commenter 

suggested that the Bureau allow card 

issuers to rely on information received 

from consumers in response to a prompt 

for income using the term ‘‘household 

income,’’ provided that the request is 

qualified with a phrase such as ‘‘that the 

applicant can access.’’ Another industry 

commenter questioned whether the term 

‘‘accessible household income’’ would 

be more likely than ‘‘available income’’ 

or ‘‘accessible income’’ to elicit a 

response inclusive of a spouse’s or 

partner’s income. 

The final rule adopts comment 

51(a)(1)–5 substantially as proposed 

with additional clarification. First, in 

response to inquiries regarding card 

issuers’ obligations to verify information 

included in applications received from 

consumers, the Bureau clarifies in 

comment 51(a)(1)–5.i that card issuers 

are not required to verify financial 

information received in response to 

prompts for ‘‘salary,’’ ‘‘income,’’ 

‘‘assets,’’ ‘‘available income,’’ 

‘‘accessible income,’’ or other language 

requesting that the applicant provide 

information regarding current or 

reasonably expected income or assets 

and any income or assets to which the 

applicant has a reasonable expectation 

of access. Specifically, the final rule 

revises comment 51(a)(1)–5 to state that 

card issuers may rely without further 

inquiry on information provided by 

applicants in response to prompts for 

financial information that are consistent 

with the guidance in comment 51(a)(1)– 

5.i. The Bureau notes that this 

clarification does not alter the current 

rule, which does not require verification 

of income information provided in 

response to prompts such as ‘‘salary’’ or 

‘‘income.’’ 

The final rule also clarifies in 

comment 51(a)(1)–5.i the circumstances 

under which a card issuer may not rely 

solely on information provided in a 

credit card application. Specifically, 

comment 51(a)(1)–5.i, as adopted, states 

that card issuers may not rely on 

information provided in response to a 

request for ‘‘household income’’; rather, 

the card issuer must obtain additional 

information about the applicant’s 

income, including income to which the 

applicant has a reasonable expectation 

of access (such as by contacting the 

applicant). The Bureau does not believe 

it is appropriate to allow card issuers to 

rely on information provided in 

response to ‘‘household income’’ to 

determine the consumer’s current or 

reasonably expected income for 

purposes of the ability-to-pay standard 

in § 1026.51(a). The Bureau remains 

concerned that the term ‘‘household 

income’’ may generate financial data for 

income to which the applicant has no 

expectation of access. As stated in the 

proposal, the Bureau believes that it 

would be inappropriate to permit a card 

issuer to rely on the income of one or 

more third parties when opening a 

credit card account for a consumer 

merely because the applicant(s) and the 

other individuals share a residence. For 

example, a household might consist of 

two roommates who do not have access 

to one another’s income or assets. The 

Bureau believes that in this case it 

generally would be inappropriate to 

permit one roommate to rely on the 

income or assets of the other; however, 

given that they share a household, it is 

possible that one roommate applicant 

might interpret the request for 

‘‘household income’’ to include the 

other roommate’s income. As noted 

above, one industry commenter relied 

on a study of prospective and current 

cardholders in urging the Bureau to 

permit card issuers to rely on 

information provided in response to a 

request for ‘‘household income.’’ 

However, it is not clear whether 

prompting respondents for ‘‘income’’ or 

another allowable term would have 

produced different information than 

was received in response to a request for 

‘‘household income.’’ Further, it appears 

that some respondents indicated that 

they might include a roommate’s 

income in response to a request for 

‘‘household income.’’ Thus, the Bureau 

does not believe that the study warrants 

revising the treatment of household 

income. Accordingly, the final rule 

retains in comment 51(a)(1)–5.i the 

requirement that card issuers obtain 

additional information about an 

applicant’s income (such as by 

contacting the applicant) in response to 

a request for ‘‘household income.’’ 

Comment 51(a)(1)–5.i as adopted also 

clarifies that if a card issuer chooses to 

prompt consumers for financial 

information using the term ‘‘household 

income’’ on credit card applications, a 

card issuer may use the guidance in 

comments 51(a)(1)–4, –5 and –6 when 

collecting additional information to 

determine the consumer’s current or 

reasonably expected income under 

§ 1026.51(a). 

As discussed above, several consumer 

groups indicated that card issuers 

should be required to obtain some 

verification of whatever income source 

is stated on the application. As also 

discussed above, the final rule generally 

does not require that card issuers verify 

the income information that an 

applicant indicates on an application 

(i.e., except in the circumstances 

discussed in comment 51(a)(1)–5). The 

Bureau notes that TILA section 150 does 

not require verification of a consumer’s 

ability to make required payments. 

Moreover, credit card applications are 

usually solicited and received en masse 

and, as one industry commenter noted, 

are usually subject to a heavily 

automated process. To require 

verification of information from masses 

of applications received at once would 

likely increase approval times, resulting 

in greater consumer inconvenience and 

costs to card issuers. As a result, the 

Bureau believes that card issuers should 

be afforded the flexibility to determine 

instances when they need to verify 

information. Furthermore, because these 

accounts are generally unsecured, the 

Bureau believes that card issuers have 

business reasons to seek supplemental 

information or clarification when either 

the information supplied by the 

applicant is inconsistent with the data 

the card issuers already have or are able 

to gather on the consumer or when the 

risk in the amount of the credit line 

warrants such follow-up. Nonetheless, 

the Bureau believes it is appropriate to 

require card issuers to collect additional 

information regarding the applicant’s 

current or reasonably expected income 

(such as by contacting the applicant) 

when the application uses the term 

‘‘household income.’’ As discussed 

above, the Bureau believes that this term 

could lead an applicant to overstate the 

applicant’s current or reasonably 

expected income that may be 

considered for purposes of 

§ 1026.51(a)(1). 

Proposed comment 51(a)(1)–6 

provided further guidance on when it is 

permissible to consider a household 

member’s income for purposes of 

§ 1026.51(a).33 Proposed comment 

51(a)(1)–6 set forth four illustrative 

examples regarding the consideration of 

a household member’s income and 

explained how income and assets would 

be treated in those scenarios pursuant to 

the ability-to-pay standard in 

§ 1026.51(a). Proposed comment 

51(a)(1)–6.i noted that if a household 

member’s salary is deposited into a joint 

account shared with the applicant, an 

issuer is permitted to consider that 

salary as the applicant’s income for 

purposes of § 1026.51(a). Proposed 

comment 51(a)(1)–6.ii assumed that the 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25827 

household member regularly transfers a 

portion of his or her salary, which in the 

first instance is directly deposited into 

an account to which the applicant does 

not have access, from that account into 

a second account to which the applicant 

does have access. The applicant then 

uses the account to which he or she has 

access for the payment of household or 

other expenses. An issuer is permitted 

to consider the portion of the salary 

deposited into the account to which the 

applicant has access as the applicant’s 

income for purposes of § 1026.51(a). The 

third example in proposed comment 

51(a)(1)–6.iii assumed that no portion of 

the household member’s salary is 

deposited into an account to which the 

applicant has access. However, the 

household member regularly uses that 

salary to pay for the applicant’s 

expenses. The example clarified that an 

issuer is permitted to consider the 

household member’s salary as the 

applicant’s income for purposes of 

§ 1026.51(a) because the applicant has a 

reasonable expectation of access to that 

salary. 

The final example in proposed 

comment 51(a)(1)–6.iv described a 

situation in which the consumer’s 

expectation of access would not be 

deemed to be reasonable. The example 

stated that no portion of the household 

member’s salary is deposited into an 

account to which the applicant has 

access, the household member does not 

regularly use that salary to pay for the 

applicant’s expenses, and no Federal or 

State statute or regulation grants the 

applicant an ownership interest in that 

salary. The proposed comment clarified 

that an issuer would not be permitted to 

consider the household member’s salary 

as the applicant’s income for purposes 

of § 1026.51(a). 

Several industry commenters 

indicated concern that comment 

51(a)(1)–6 only addresses situations 

involving the salary of a household 

member. These commenters also raised 

concerns about whether card issuers 

could rely on these examples in 

situations where spouses or partners do 

not reside in the same physical location 

(e.g., military spouses, graduate 

students, elderly parents). Several 

industry commenters suggested that the 

comment be revised to indicate that 

residence in the same physical location 

or dwelling is not a prerequisite to be 

considered members of the same 

household. Another industry 

commenter suggested that the Bureau 

replace the term ‘‘household member’’ 

with ‘‘non-applicant’’ or, in the 

alternative, add examples to the 

commentary that would apply to 

applicants and non-applicants that do 

not reside in the same household. This 

commenter also suggested defining 

‘‘household’’ in the commentary as ‘‘a 

social unit that shares resources 

regardless of whether the unit shares 

one residence.’’ 

Several industry commenters also 

suggested that the examples in proposed 

comment 51(a)(1)–6 should be revised 

to refer to ‘‘salary or other income’’ so 

that it is clear that the examples also 

address income that may come from a 

variety of sources such as Social 

Security benefits, veteran’s benefits, 

retirement income, and investment 

income. One industry commenter also 

suggested that the examples in proposed 

comment 51(a)(1)–6.ii should be revised 

to delete the reference to ‘‘payment of 

household or other expenses’’ as 

unnecessary. One industry commenter 

was concerned that the language in the 

prelude to the examples in which the 

applicant is described as unemployed 

may lead some to believe that 

unemployment is a prerequisite to 

application of the reasonable 

expectation of access criterion and, 

thus, should be deleted. 

The final rule adopts comment 

51(a)(1)–6 as proposed in substance, but 

makes several amendments in response 

to commenters’ concerns and requests 

for clarification. First, comment 

51(a)(1)–6, as adopted, clarifies that the 

card issuer may consider a consumer’s 

reasonable expectation of access to the 

salary or other income of any nonapplicant, including, but not limited to, 

a household member. Accordingly, the 

final rule removes all references to 

‘‘household members’’ in the examples 

and replaces them with the term ‘‘nonapplicant.’’ In addition, the examples in 

comment 51(a)(1)–6 also refer to the 

non-applicant’s ‘‘salary or other 

income’’ to make clear that the 

examples also address income that may 

come from a variety of sources such as 

Social Security benefits, veteran’s 

benefits, retirement income, and 

investment income. Also, as discussed 

above, the final rule revises comment 

51(a)(1)–6 to make the examples more 

consistent with the interpretations set 

forth in comment 51(a)(1)–4.iii, as 

adopted in the final rule. 

Specifically, as revised in the final 

rule, the example in comment 51(a)(1)– 

6.i assumes that a non-applicant’s salary 

or other income is deposited regularly 

into a joint account shared with the 

applicant. This example clarifies that a 

card issuer is permitted to consider the 

amount of the non-applicant’s income 

that is being deposited regularly into the 

account to be the applicant’s current or 

reasonably expected income for 

purposes of § 1026.51(a). In this case, 

the applicant would have a current or 

expected ownership interest in the nonapplicant’s income that is being 

deposited regularly into the joint 

account. 

The example in comment 51(a)(1)–6.ii 

assumes that the non-applicant’s salary 

or other income is deposited into an 

account to which the applicant does not 

have access. However, the nonapplicant regularly transfers a portion of 

that income into the applicant’s 

individual deposit account. The 

example in comment 51(a)(1)–6.ii 

provides that a card issuer is permitted 

to consider the amount of the nonapplicant’s income that is being 

transferred regularly into the applicant’s 

account to be the applicant’s current or 

reasonably expected income for 

purposes of § 1026.51(a). 

The example in comment 51(a)(1)– 

6.iii assumes that the non-applicant’s 

salary or other income is deposited into 

an account to which the applicant does 

not have access. However, the nonapplicant regularly uses a portion of that 

income to pay for the applicant’s 

expenses. This example clarifies that a 

card issuer is permitted to consider the 

amount of the non-applicant’s income 

that is used regularly to pay for the 

applicant’s expenses to be the 

applicant’s current or reasonably 

expected income for purposes of 

§ 1026.51(a). The Bureau agrees with 

certain commenters that this example is 

important because it makes clear that 

income in which a consumer has a 

reasonable expectation of access 

includes situations where the nonapplicant’s income is not deposited into 

a shared account to which the applicant 

has access. It is possible that a nonworking spouse or partner does not have 

a shared account with the non-applicant 

but regularly receives income from that 

person. 

Finally, the example in comment 

51(a)(1)–6.iv assumes that the nonapplicant’s salary or other income is 

deposited into an account to which the 

applicant does not have access, the nonapplicant does not regularly use that 

income to pay for the applicant’s 

expenses, and no Federal or State 

statute or regulation grants the applicant 

an ownership interest in that income. 

This example clarifies that a card issuer 

is not permitted to consider the nonapplicant’s income as the applicant’s 

current or expected income for purposes 

of § 1026.51(a). 

As discussed above, one industry 

commenter was concerned that the 

language in the prelude to the examples 

in which the applicant is described as 

unemployed may lead some to believe 

that unemployment is a prerequisite to 


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25828 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

application of the reasonable access 

criterion and, thus, should be deleted. 

The final rule retains in comment 

51(a)(1)–6 the language in the prelude to 

the examples in which the applicant is 

described as unemployed. The Bureau 

believes that this language is useful for 

the examples to clarify that the 

applicant does not have income earned 

from his or her own wages. Nonetheless, 

the Bureau notes that a card issuer may 

still rely on the examples in comment 

51(a)(1)–6, even if the applicant is 

employed. 

Single application. The Bureau 

recognized in the proposal that, as a 

practical matter, a card issuer is likely 

to use a single application form for all 

consumers, regardless of age, and 

solicited comment on how, as a 

practical matter, card issuers are likely 

to prompt consumers for income and 

assets in light of the two different 

income criteria that may be used to 

satisfy the ability-to-pay income 

requirements, which would be applied 

to consumers based on age. One 

commenter noted that it has not yet 

determined how it will modify its 

application, but urged the Bureau to 

retain flexibility in the rule so that card 

issuers may rely on income and assets 

information provided in the application 

process. Several commenters similarly 

urged the Bureau to provide card issuers 

with the flexibility to develop the 

application and approaches to be used 

to interact with consumers under the 

revised standard. Some commenters 

urged the Bureau to state in the final 

rule that issuers are permitted to use a 

single application form for all 

consumers, regardless of age. Other 

commenters requested clarification on 

whether issuers would be required or 

permitted to include the commentary 

examples on the credit card application. 

Another commenter stated that issuers 

need the flexibility to develop 

approaches suitable to the context of the 

application, whether it is direct mail, 

point of sale, on-line, or mobile. 

The Bureau agrees with commenters 

that additional clarification regarding 

the type, format, and content of credit 

card applications would be helpful. 

Accordingly, the final rule adopts 

comment 51(a)(1)–9, which clarifies that 

card issuers may use a single, common 

application form or process for all 

consumers, regardless of age. Comment 

51(a)(1)–9 also clarifies that a card 

issuer may prompt applicants, 

regardless of age, using only the term 

‘‘income’’ and satisfy the ability-to-pay 

requirements of both § 1026.51(a) and 

(b). In such cases, additional verification 

of information provided in the 

application would not be required. In 

situations where a card issuer chooses 

not to prompt only for ‘‘income’’ on a 

common application, comment 51(a)(1)– 

9 provides guidance on combinations of 

terms that may be used to elicit the type 

of income information required under 

both ability-to-pay standards. 

Specifically, comment 51(a)(1)–9 

provides as an example a scenario 

where the application form includes 

two line items, one prompting 

applicants for ‘‘personal income,’’ and 

another prompting applicants for 

‘‘available income.’’ The Bureau 

believes that this combination of terms 

would not require additional 

information because the term ‘‘personal 

income’’ would appropriately prompt 

applicants under 21 for individual 

income as required by § 1026.51(b), 

while the term ‘‘available income’’ 

would prompt an applicant for financial 

information that may be considered 

under § 1026.51(a). Consistent with 

comment 51(a)(1)–5.i, comment 

51(a)(1)–9 as adopted in the final rule 

clarifies that combined prompts 

containing terms identified in 

comments 51(a)(1)–5.i and 51(b)(1)(i)– 

2.i, when used in a manner consistent 

with the commentary, do not require 

additional information beyond what is 

provided by the consumer on the 

application. 

Current obligations. As discussed 

above, the proposal would have revised 

§ 1026.51(a)(1)(ii) to provide that card 

issuers must establish and maintain 

reasonable written policies and 

procedures to consider a consumer’s 

income or assets and a consumer’s 

current obligations, which may include 

any income and assets to which the 

consumer has a reasonable expectation 

of access. Reasonable policies and 

procedures to consider a consumer’s 

ability to make the required payments 

include the consideration of at least one 

of the following: The ratio of debt 

obligations to income; the ratio of debt 

obligations to assets; or the income the 

consumer will have after paying debt 

obligations. The proposal stated that it 

would be unreasonable for a card issuer 

not to review any information about a 

consumer’s income or assets or current 

obligations, or to issue a credit card to 

a consumer who does not have any 

income or assets. As noted above, the 

Bureau also renumbered current 

comment 51(a)(1)–5—which concerns 

‘‘current obligations’’—as comment 

51(a)(1)–7 and solicited comment on 

whether additional guidance on this 

subject is appropriate or necessary in 

light of the proposed changes to 

§ 1026.51(a) and the official 

interpretation to that subsection. 

Several consumer groups indicated 

that if the Bureau is going to permit the 

payment of expenses by a household 

member to be considered as ‘‘income’’ 

for an applicant, then it should also 

establish a parallel requirement that 

issuers consider those expenses when 

determining an applicant’s ability to 

pay. In other words, if payment of 

household expenses by another 

constitutes income, then those 

household expenses should be included 

in the analysis required by 

§ 1026.51(a)(1)(ii). These commenters 

indicated that otherwise, an individual 

with high expenses, who receives help 

with those expenses from another 

person, would be deemed inaccurately 

to have sufficient income to pay the 

credit card debt. These commenters also 

indicated that § 1026.51(a)(1)(ii) also 

only appears to require consideration of 

credit obligations, without explicit 

consideration of other non-debt 

expenses, such as food and utilities, and 

urged the Bureau to revise 

§ 1026.51(a)(1)(ii) to provide explicitly 

that issuers must consider household 

expenses in the overall analysis of an 

applicant’s ability to pay. These 

commenters suggested that a simple 

method of approximating household 

expenses for an applicant would be to 

use the Internal Revenue Service’s 

Collection Financial Standards. Another 

commenter argued that the reasonable 

expectation of access standard would 

make it difficult to assess an applicant’s 

creditworthiness because only the 

applicant’s personal debt is required. 

Based on careful review of the 

comments, the Bureau declines to add 

additional requirements for considering 

debt obligations. The Bureau believes 

that the current commentary provides 

card issuers the flexibility to obtain 

information regarding debt obligations 

directly from the consumer or in a 

consumer report and does not prohibit 

a card issuer from considering 

household expenses in evaluating a 

consumer’s current obligations. The 

Bureau also believes it would be unduly 

burdensome to require card issuers to 

consider the debt obligations of a nonapplicant because such information may 

generally not be available to the 

consumer at the time of applying for 

credit and to require such information 

may needlessly result in the denial of 

credit to otherwise creditworthy 

individuals or discourage consumers 

from applying at all. Accordingly, the 

final rule adopts comment 51(a)(1)–7 as 

proposed. 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25829 

51(b) Rules Affecting Young Consumers 

The Proposal 

Section 1026.51(b) implements TILA 

section 127(c)(8) and sets forth special 

ability-to-pay rules for consumers who 

are under the age of 21. Section 

1026.51(b)(1) currently provides that a 

card issuer may not open a credit card 

account under an open-end (not homesecured) consumer credit plan for a 

consumer less than 21 years old unless 

the consumer has submitted a written 

application and the card issuer has 

either: (i) Financial information 

indicating the consumer has an 

independent ability to make the 

required minimum periodic payments 

on the proposed extension of credit in 

connection with the account, consistent 

with § 1026.51(a); or (ii) a signed 

agreement of a cosigner, guarantor, or 

joint applicant, who is at least 21 years 

old, to be either secondarily liable for 

any debt on the account incurred before 

the consumer has attained the age of 21 

or jointly liable with the consumer for 

any debt on the account, and financial 

information indicating that such 

cosigner, guarantor, or joint applicant 

has the independent ability to make the 

required minimum periodic payments 

on such debts, consistent with 

§ 1026.51(a). 

The Bureau proposed several 

amendments to § 1026.51(b) for 

conformity with the proposed 

amendments to § 1026.51(a) discussed 

above. First, § 1026.51(b)(1)(i) currently 

provides that a card issuer may open a 

credit card account for a consumer 

under the age of 21 if the card issuer has 

‘‘[f]inancial information indicating the 

consumer has an independent ability to 

make the required minimum periodic 

payments on the proposed extension of 

credit in connection with the account, 

consistent with paragraph (a) of this 

section.’’ (Emphasis added.) As 

discussed above, the proposal would 

have removed the independence 

standard from the general ability-to-pay 

standard in § 1026.51(a), but proposed 

§ 1026.51(b) would have continued to 

require that consumers under the age of 

21 without a cosigner or similar party 

who is 21 years or older have an 

independent ability to pay, consistent 

with TILA section 127(c)(8). 

Accordingly, the Bureau proposed to 

delete the phrase ‘‘consistent with 

paragraph (a) of this section’’ from 

§ 1026.51(b)(1)(i), to reflect the 

difference in ability-to-pay standards for 

consumers who are 21 or older and 

consumers who are under the age of 21. 

Similarly, the Bureau proposed to delete 

from § 1026.51(b)(1)(ii)(B) a reference to 

the independent ability to pay of a 

cosigner, guarantor, or joint applicant 

who is 21 or older, consistent with 

proposed § 1026.51(a), which would 

have required that consumers who are 

21 or older only have the ability to pay, 

rather than the independent ability to 

pay. 

The Bureau also proposed several 

new comments that would have 

explained specifically how the 

independent ability-to-pay standard 

under § 1026.51(b)(1)(i) differs from the 

more general ability-to-pay standard in 

proposed § 1026.51(a). Proposed 

comment 51(b)(1)(i)–1 generally would 

have addressed sources of income and 

assets that an issuer may consider and 

would have made clear that under the 

independent ability-to-pay standard in 

§ 1026.51(b)(1)(i) a card issuer may not 

consider income and assets to which the 

applicant has only a reasonable 

expectation of access as is permitted 

under the general ability-to-pay 

standard in proposed § 1026.51(a). For 

example, proposed comment 51(b)(1)(i)– 

1.i would have noted that, because 

§ 1026.51(b)(1)(i) requires that the 

consumer who has not attained the age 

of 21 have an independent ability to 

make the required minimum periodic 

payments, the card issuer may only 

consider the current or reasonably 

expected income and assets of an 

applicant or accountholder who is less 

than 21 years old under 

§ 1026.51(b)(1)(i). In addition, proposed 

comment 51(b)(1)(i)–1.i would have 

noted that the card issuer may not 

consider income or assets to which an 

applicant, accountholder, cosigner, or 

guarantor, in each case who is under the 

age of 21 and is or will be liable for 

debts incurred on the account, has only 

a reasonable expectation of access under 

§ 1026.51(b)(1)(i). 

Proposed comment 51(b)(1)(i)–2 

generally would have provided 

interpretations on the sources of 

information on which a card issuer may 

rely for purposes of determining the 

consumer’s current or reasonably 

expected income and assets under 

§ 1026.51(b)(1)(i). For example, 

proposed comment 51(b)(1)(i)–2.i would 

have stated that card issuers may rely on 

information provided by applicants in 

response to a request for ‘‘salary,’’ 

‘‘income,’’ ‘‘assets,’’ or other language 

requesting that the applicant provide 

information regarding current or 

reasonably expected income and/or 

assets. The proposed comment also 

would have provided, however, that 

card issuers may not rely solely on 

information provided in response to a 

request for ‘‘available income,’’ 

‘‘accessible income,’’ or ‘‘household 

income.’’ Instead, the card issuer would 

have needed to obtain additional 

information about an applicant’s income 

(such as by contacting the applicant). In 

addition, proposed comment 51(b)(1)(i)– 

3 would have set forth four factual 

scenarios and would have explained 

how income would be treated in those 

scenarios pursuant to the independent 

ability-to-pay standard in 

§ 1026.51(b)(1)(i). 

Finally, the Bureau proposed to 

amend existing comment 51(b)(1)–2 and 

to redesignate it as comment 

51(b)(1)(ii)–1. Existing comment 

51(b)(1)–2 states that information 

regarding income and assets that 

satisfies the requirements of § 1026.51(a) 

satisfies the requirements of 

§ 1026.51(b)(1). In the supplementary 

information to the proposal, the Bureau 

noted that, as proposed, income and 

assets that satisfy the requirements of 

§ 1026.51(a) might no longer satisfy the 

requirements under § 1026.51(b) for an 

applicant who is under the age of 21; 

however, income and assets that satisfy 

the requirements of § 1026.51(a) would 

satisfy the ability-to-pay requirements of 

§ 1026.51(b)(1)(ii)(B) (i.e., those that 

apply to a cosigner, guarantor, or joint 

applicant who is 21 or older). Proposed 

comment 51(b)(1)(ii)–1 accordingly 

would have stated that information 

regarding income and assets that 

satisfies the requirements of § 1026.51(a) 

also satisfies the requirements of 

§ 1026.51(b)(1)(ii)(B). 

In the supplementary information to 

the proposal, the Bureau noted that one 

consequence of the proposed rule would 

be that a spouse or partner who is 21 or 

older and does not work outside the 

home could rely on income to which 

that consumer has a reasonable 

expectation of access. In many cases, 

spouses or partners who are 21 or older 

who do not work outside the home 

could, accordingly, rely on the income 

of a working spouse or partner and 

could open a new credit card account 

without needing a cosigner, guarantor, 

or joint applicant. However, the 

proposed rule would not have permitted 

an applicant who is under the age of 21 

to rely on income or assets that are 

merely accessible. In the supplementary 

information to the proposal, the Bureau 

explained that it expects that in some 

cases, depending on the specific 

circumstances, non-working spouses or 

partners under the age of 21 may need 

to apply jointly with their incomeearning spouse or partner or to offer that 

spouse or partner as a guarantor on the 

account. The Bureau believes that this 

outcome is consistent with the 

independent ability-to-pay standard that 

TILA section 127(c)(8) applies to 

applicants who have not attained the 


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25830 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

34 15 U.S.C. 1691 et seq.; 12 CFR part 1002. 

35One industry commenter a requested that the 

Bureau specifically exempt secured credit cards 

from the independent ability-to-pay standard set 

forth in § 1026.51(b)(1)(i). The final rule does not 

exempt secured credit card accounts from the 

requirements of § 1026.51(b)(1)(i). The Bureau 

believes that adopting such an exemption is outside 

the scope of the changes considered as part of this 

rulemaking. 

age of 21. At the same time, the Bureau 

understood that the proposed rule may 

result in it being more difficult for 

spouses or partners under 21 who do 

not work outside the home to obtain 

credit, as compared to spouses or 

partners who are 21 or older who do not 

work outside the home. 

In the supplementary information to 

the proposal, the Bureau noted that a 

prohibition on discrimination based on 

marital status is a long-standing and 

fundamental tenet of fair lending law 

and, given that TILA section 127(c)(8) 

imposes a more stringent independent 

ability-to-pay standard on applicants 

who are under the age of 21 than on 

those who are 21 or older, the Bureau 

stated its belief that it would be 

inappropriate to apply the ‘‘reasonable 

expectation of access’’ income criterion 

to all applicants who are under 21. 

However, the Bureau also solicited 

comment on whether additional 

guidance was needed to clarify 

application of the rule to applicants 

under the age of 21, particularly spouses 

or partners who do not work outside the 

home. If such clarification was 

warranted, the Bureau solicited 

comment on how such guidance could 

be provided in a manner consistent with 

TILA section 127(c)(8), ECOA, and 

Regulation B.34

Comments Received 

In response to the proposal, several 

industry commenters urged the Bureau 

to revise existing § 1026.51(b)(1) to 

remove the independent ability-to-pay 

standard for consumers under 21 years 

of age, and instead apply the general 

ability-to-pay standard as proposed in 

§ 1026.51(a) to all consumers. One 

industry commenter also stated that the 

decision to extend credit should be 

based on a card issuer’s risk 

management standards and that the rule 

should not set forth an independent 

ability-to-pay standard for consumers 

under the age of 21. This commenter 

stated that many consumers under the 

age of 21 are married with families, jobs, 

and obligations that necessitate the 

availability of open-end credit. This 

commenter urged the Bureau to provide 

some flexibility for card issuers to apply 

the criterion for applicants that are 21 

or older to applicants under the age of 

21 who have a reasonable expectation of 

access to a household member’s income. 

Another industry commenter urged the 

Bureau to permit card issuers to 

consider the use of all household 

income in the application process, and 

apply rules consistently across all ages, 

which the commenter stated would 

produce a more efficient and fair 

process that is easily understood and 

executed. This commenter also stated 

that such a rule would avoid the 

negative impact to those applicants 

under the age of 21 who have a partner 

or spouse by allowing them to report all 

household income. Another industry 

commenter requested that the Bureau 

amend § 1026.51(b)(1) to permit a card 

issuer to consider the shared income of 

a consumer who is younger than 21 and 

is legally married to a consumer 21 

years or older. 

In addition, several industry 

commenters and consumer groups 

requested that the Bureau consider 

several clarifying revisions to proposed 

commentary that would have 

interpreted § 1026.51(b)(1). Also, several 

industry commenters urged the Bureau 

to state specifically that compliance 

with this final rule does not result in a 

violation of the Regulation B prohibition 

against age-based discrimination. These 

suggestions by commenters are 

discussed in more detail below. 

The Final Rule 

The final rule adopts § 1026.51(b)(1)(i) 

as proposed. As adopted, 

§ 1026.51(b)(1)(i) continues to require 

that consumers under the age of 21 

without a cosigner or similar party who 

is 21 years or older have an independent 

ability to pay, consistent with TILA 

section 127(c)(8).35 As adopted, 

comment 51(b)(1)(i)–1.i notes that, 

because § 1026.51(b)(1)(i) requires that 

the consumer who has not attained the 

age of 21 have an independent ability to 

make the required minimum periodic 

payments, the card issuer may only 

consider the current or reasonably 

expected income or assets of an 

applicant who is less than 21 years old 

under § 1026.51(b)(1)(i). Comment 

51(b)(1)(i)–1.i also notes that under 

§ 1026.51(b)(1)(i), a consumer’s current 

or reasonably expected income may not 

include income to which the consumer 

only has a reasonable expectation of 

access. Comment 51(b)(1)(i)–1.ii 

clarifies the sources of income that may 

be considered as current or reasonably 

expected income and that current or 

reasonably expected income includes 

income regularly deposited into an 

account on which the consumer is an 

accountholder. Under comment 

51(b)(1)(i)–1.iii, an applicant’s current 

or reasonably expected income includes 

not only current or reasonably expected 

income earned by the applicant, but also 

income earned by a non-applicant 

where Federal or State statute or 

regulation grants the applicant an 

ownership interest in such income and 

assets (e.g., joint ownership granted 

under State community property laws), 

or where the non-applicant’s income is 

being deposited regularly into an 

account on which the applicant is an 

accountholder (e.g., an individual 

deposit account or joint account). 

However, comment 51(b)(1)(i)–1.i notes 

that the card issuer may not consider 

under § 1026.51(b)(1)(i) income or assets 

to which an applicant, joint applicant, 

cosigner, or guarantor, in each case who 

is under the age of 21 and is or will be 

liable for debts incurred on the account, 

has only a reasonable expectation of 

access without a current or expected 

ownership interest as discussed above. 

The final rule also adopts 

§ 1026.51(b)(1)(ii)(B) as proposed, which 

provides that where there is a cosigner, 

guarantor, or joint applicant who is 21 

or older, such consumers who are 21 or 

older need only to have an ability to 

pay, consistent with § 1026.51(a) as 

adopted in the final rule, rather than an 

independent ability to pay under 

§ 1026.51(b). In addition, as discussed 

in more detail below, the final rule 

revises § 1026.51(b)(2) to provide that, 

for credit card accounts that were 

opened by consumers under the age of 

21 without a cosigner or similar party 

who is 21 years or older, no increase in 

the credit limit may be made on such 

account before the consumer attains the 

age of 21 unless, at the time of the 

contemplated increase, the consumer 

has an independent ability to make the 

required minimum periodic payments 

on the increased limit, consistent with 

§ 1026.51(b)(1)(i), or a cosigner, 

guarantor or joint applicant who is at 

least 21 years old agrees in writing to 

assume liability for any debt incurred 

on the account, consistent with 

§ 1026.51(b)(1)(ii). 

As discussed above, the Bureau 

recognizes that one consequence of the 

final rule is that a spouse or partner age 

21 or older who does not work outside 

the home could rely on income to which 

that consumer has a reasonable 

expectation of access. In many cases, 

spouses or partners who are 21 or older 

and do not work outside the home 

could, accordingly, rely on the income 

of a working spouse or partner and 

could open a new credit card account 

without needing a cosigner, guarantor, 

or joint applicant. However, the final 

rule does not permit an applicant who 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25831 

is under 21 to rely on income or assets 

that are merely accessible. Instead, the 

final rule implements the independent 

ability-to-pay standard that TILA 

section 127(c)(8) applies to applicants 

who have not attained the age of 21. 

Thus, in some cases, depending on the 

specific circumstances, non-working 

spouses or partners under 21 may need 

to apply jointly with their incomeearning spouse or partner or to offer that 

spouse or partner as a guarantor on the 

account. The Bureau believes this is the 

outcome compelled by the Credit Card 

Act. 

As discussed in more detail below, 

the Bureau notes, however, that the final 

rule in comments 51(b)(1)(i)–1.iii and –3 

provides that a card issuer is permitted 

to consider a non-applicant’s income (or 

portion of that income) to be the 

applicant’s current or reasonably 

expected income where a Federal or 

State statute or regulation either grants 

the applicant an ownership interest in 

such income (e.g., joint ownership 

granted under State community 

property laws) or such income is being 

deposited regularly into an account on 

which the applicant is an accountholder 

(e.g., an individual deposit account or 

joint account). These interpretations 

make clear that card issuers may rely on 

such income of non-working spouses or 

partners under the age of 21 to open a 

new credit card account. 

As discussed above, one industry 

commenter requested that the Bureau 

amend § 1026.51(b)(1) to permit a card 

issuer to consider the shared income of 

a consumer under 21 who is legally 

married to a consumer 21 years or older, 

in obtaining credit. The Bureau does not 

believe it is appropriate to revise 

§ 1026.51(b)(1) to permit certain married 

consumers under the age of 21 to rely 

on income or assets that are merely 

accessible, while requiring all 

consumers under the age of 21 who are 

not married to meet an independent 

ability-to-pay requirement. As discussed 

above, the Bureau believes that a 

prohibition on discrimination based on 

marital status is a long-standing and 

fundamental tenet of fair lending law. 

And while TILA section 127(c)(8) 

imposes a more stringent independent 

ability-to-pay standard on applicants 

who are under 21 than on those who are 

21 or older, it does not make the same 

distinction based on marital status. For 

that reason, the Bureau believes that it 

would be inappropriate to allow card 

issuers to employ the general ability-topay standard, which permits the 

consideration of income to which the 

applicant has a reasonable expectation 

of access, to certain applicants who are 

under 21 and married, while applying 

the independent ability-to-pay standard 

to all applicants who are under 21 and 

not married. 

Independent ability-to-pay standard. 

As discussed above, the Bureau 

proposed several new comments that 

would have explained specifically how 

the independent ability-to-pay standard 

under § 1026.51(b)(1)(i) differs from the 

more general ability-to-pay standard in 

proposed § 1026.51(a). For example, 

proposed comment 51(b)(1)(i)–1.i would 

have provided that a card issuer may 

consider any current or reasonably 

expected income and assets of the 

consumer or consumers who are 

applying for a new account or will be 

liable for debts incurred on that 

account, including a cosigner or 

guarantor. In addition, proposed 

comment 51(b)(1)–1.i would have 

specified that when a card issuer is 

considering whether to increase the 

credit limit on an existing account, the 

card issuer may consider any current or 

reasonably expected income and assets 

of the consumer or consumers who are 

accountholders, cosigners, or guarantors 

and are liable for debts incurred on that 

account. Proposed comment 51(b)(1)(i)– 

1.i also would have noted that, because 

§ 1026.51(b)(1)(i) requires that the 

consumer who has not attained the age 

of 21 have an independent ability to 

make the required minimum periodic 

payments, the card issuer may only 

consider the current or reasonably 

expected income and assets of an 

applicant or accountholder who is less 

than 21 years old under 

§ 1026.51(b)(1)(i). In addition, proposed 

comment 51(b)(1)(i)–1.i would have 

noted that the card issuer may not 

consider income or assets to which an 

applicant, accountholder, cosigner, or 

guarantor, in each case who is under the 

age of 21 and is or will be liable for 

debts incurred on the account, has only 

a reasonable expectation of access under 

§ 1026.51(b)(1)(i). Proposed comment 

51(b)(1)(i)–1.ii would have provided 

examples of current or reasonably 

expected income and assets. 

The final rule adopts comment 

51(b)(1)(i)–1.i and .ii substantively as 

proposed, except that provisions in 

comment 51(b)(1)(i)–1.i relating to 

credit limit increases have been moved 

to comment 51(b)(2)–2, as discussed in 

more detail below. Several consumer 

groups suggested that the Bureau should 

clarify that student loan proceeds are 

not an applicant’s current or reasonably 

expected income for purposes of the 

independent ability-to-pay standard in 

§ 1026.51(b)(1)(i). These commenters 

referenced news articles that indicated 

that students are reporting a college loan 

as income and some card issuers are 

accepting that claim. These commenters 

indicated that, at a minimum, the 

Bureau should exclude any student loan 

proceeds up to the amount of the 

consumer’s college tuition from being 

considered the applicant’s current or 

reasonably expected income. 

Based on careful consideration of the 

commenters’ concerns, the final rule 

clarifies in comment 51(b)(1)(i)–1.ii that 

proceeds from student loans may be 

treated as current or reasonably 

expected income, provided that the card 

issuer only considers the loan proceeds 

remaining after tuition and other 

expenses have been disbursed to the 

applicant’s educational institution. The 

Bureau believes that many students, 

particularly those in graduate programs, 

rely on student loan proceeds to finance 

their living expenses. The Bureau notes 

that the current rule does not 

specifically exclude student loan 

proceeds from being considered an 

applicant’s current or reasonably 

expected income for purposes of the 

independent ability-to-pay standard in 

§ 1026.51(b)(1)(i). And while the final 

rule permits consideration of certain 

student loan proceeds, 

§ 1026.51(a)(1)(ii) also requires card 

issuers to establish and maintain 

reasonable written policies and 

procedures to consider a consumer’s 

income or assets, and current debt. 

Thus, if a card issuer prompts a 

consumer to include, or otherwise has 

reason to know that a consumer has 

included, student loan proceeds as 

income on an application, it would be 

unreasonable for the card issuer not to 

exclude the portion of those proceeds 

that are unavailable to make payments 

on the account because they will be 

paid to the applicant’s educational 

institution for tuition and other 

expenses. 

Proposed comment 51(b)(1)(i)–1.iii 

would have explained that 

consideration of the income and assets 

of authorized users, household 

members, or other persons who are not 

liable for debts incurred on the account 

does not satisfy the requirement to 

consider the consumer’s income or 

assets, unless a Federal or State statute 

or regulation grants a consumer who is 

liable for debts incurred on the account 

an ownership interest in such income 

and assets. Several industry commenters 

suggested that the Bureau revise 

proposed comment 51(b)(1)(i)–1.iii to 

refer specifically to community property 

laws as an example of a State statute or 

regulation that grants a consumer who 

is liable for debts incurred on the 

account an ownership interest in a nonapplicant’s income or assets. 


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25832 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

The final rule adopts comment 

51(b)(1)(i)–1.iii substantially as 

proposed with two clarifications. First, 

the final rule revises proposed comment 

51(b)(1)(i)–1.iii to refer specifically to 

community property laws as discussed 

above. In addition, the final rule revises 

proposed comment 51(b)(1)(i)–1.iii to 

provide that a card issuer may consider 

a consumer’s current or reasonably 

expected income to include any income 

of a person who is not liable for debts 

incurred on the account that is being 

deposited regularly into an account on 

which the consumer is an 

accountholder. The Bureau believes that 

such income may be considered the 

consumer’s current or reasonably 

expected income, even though it is not 

the consumer’s individual wages, 

because the income is being deposited 

regularly into the consumer’s own 

account. The Bureau believes that these 

interpretations are consistent with the 

independent ability-to-pay standard set 

forth in TILA section 127(c)(8) because, 

in these circumstances, the applicant 

has a current or reasonably expected 

ownership interest in the nonapplicant’s income. As discussed below, 

the final rule also revises the examples 

in comment 51(b)(1)(i)–3 to be 

consistent with the revisions to 

comment 51(b)(1)(i)–1.iii. 

Proposed comment 51(b)(1)(i)–2 

generally would have provided 

interpretations on the sources of 

information on which a card issuer may 

rely for purposes of determining the 

consumer’s current or reasonably 

expected income and assets under 

§ 1026.51(b)(1)(i). For example, 

proposed comment 51(b)(1)(i)–2.i would 

have stated that card issuers may rely on 

information provided by applicants in 

response to a request for ‘‘salary,’’ 

‘‘income,’’ ‘‘assets,’’ or other language 

requesting that the applicant provide 

information regarding current or 

reasonably expected income or assets. 

The proposed comment also would have 

provided, however, that card issuers 

may not rely solely on information 

provided in response to a request for 

‘‘available income,’’ ‘‘accessible 

income,’’ or ‘‘household income.’’ 

Instead, the card issuer would have 

needed to obtain additional information 

about an applicant’s income (such as by 

contacting the applicant). 

As discussed in the section-by-section 

analysis for § 1026.51(a), several 

industry commenters urged the Bureau 

to clarify that credit card issuers may 

rely on an applicant’s stated income 

without additional inquiry or 

verification in response to a request for 

‘‘salary,’’ ‘‘income,’’ ‘‘assets,’’ or other 

language requesting that the applicant 

provide information regarding current 

or reasonably expected income or assets. 

One commenter indicated that a 

consumer study conducted by it 

regarding the best way to ask consumers 

about income for purposes of the abilityto-pay determinations did not reveal a 

single most effective way to request 

income from applicants under 21 years 

of age, although a substantial number of 

consumer respondents found ‘‘personal 

income’’ and ‘‘individual income’’ to be 

clearest, but were confused by the 

meaning of the term ‘‘independent.’’ 

The final rule adopts comment 

51(b)(1)(i)–2 as proposed with several 

revisions. The final rule revises 

proposed comment 51(b)(1)(i)–2.i to 

make clear that credit card issuers may 

rely on an applicant’s stated income 

without further inquiry in response to a 

request for ‘‘salary,’’ ‘‘income,’’ 

‘‘personal income,’’ ‘‘individual 

income,’’ ‘‘assets,’’ or other language 

requesting that the applicant provide 

information regarding his or her current 

or reasonably expected income or assets. 

As proposed and adopted, comment 

51(b)(1)(i)–2.i also provides that card 

issuers may not rely solely on 

information provided in response to a 

request for ‘‘household income.’’ Nor 

may card issuers rely solely on 

information provided in response to a 

request for ‘‘available income,’’ 

‘‘accessible income,’’ or other language 

prompting an applicant to provide 

income or assets to which the applicant 

only has a reasonable expectation of 

access. In those cases, the card issuer 

would need to obtain additional 

information about an applicant’s current 

or reasonably expected income (such as 

by contacting the applicant). The final 

rule also revises proposed comment 

51(b)(1)(i)–2.i to cross reference new 

comment 51(a)(1)–9, which clarifies that 

card issuers may use a single, common 

application form or process for all credit 

card applicants, regardless of age. See 

the section-by-section analysis of 

§ 1026.51(a) for a discussion of 

comment 51(a)(1)–9. 

As discussed in more detail in the 

section-by-section analysis of 

§ 1026.51(a), several consumer groups 

indicated that card issuers should be 

required to obtain some verification of 

whatever income source is relied upon. 

For the same reasons discussed in more 

detail in the section-by-section analysis 

of § 1026.51(a), the final rule does not 

require that card issuers verify the 

income information provided by an 

applicant under 21 on an application 

form, except under the circumstances 

discussed in comment 51(b)(1)(i)–2.i. 

Proposed comment 51(b)(1)(i)–3 set 

forth four factual scenarios and 

explained how income would be treated 

in those scenarios pursuant to the 

independent ability-to-pay standard in 

§ 1026.51(b)(1)(i). Specifically, proposed 

comment 51(b)(1)(i)–3.i provided that if 

a household member’s salary is 

deposited into a joint account shared 

with the applicant, a card issuer may 

consider that salary to be the applicant’s 

income for purposes of 

§ 1026.51(b)(1)(i). Proposed comment 

51(b)(1)(i)–3.ii discussed an example 

where the household member’s salary is 

deposited into an account to which the 

applicant does not have access. 

However, the household member 

regularly transfers a portion of that 

salary into an account to which the 

applicant does have access, which the 

applicant uses for the payment of 

household or other expenses. Proposed 

comment 51(b)(1)(i)–3.ii would have 

clarified that whether a card issuer may 

consider the portion of the salary that is 

deposited into the account to be the 

applicant’s income for purposes of 

§ 1026.51(b)(1)(i) depends on whether a 

Federal or state Statute or regulation 

grants the applicant an ownership 

interest in the account to which the 

applicant has access. Proposed 

comment 51(b)(1)(i)–3.iii discussed an 

example where no portion of the 

household member’s salary is deposited 

into an account to which the applicant 

has access. However, the household 

member regularly uses that salary to pay 

for the applicant’s expenses. Proposed 

comment 51(b)(1)(i)–3 would have 

provided that under these 

circumstances a card issuer may not 

consider the household member’s salary 

as the applicant’s income for purposes 

of § 1026.51(b)(1)(i) because the salary is 

not current or reasonably expected 

income of the applicant. Proposed 

comment 51(b)(1)(i)–3.iv discussed an 

example where no portion of the 

household member’s salary is deposited 

into an account to which the applicant 

has access, the household member does 

not regularly use that salary to pay for 

the applicant’s expenses, and no Federal 

or State statute or regulation grants the 

applicant an ownership interest in that 

salary. Proposed comment 51(b)(1)(i)– 

3.iv would have provided that the card 

issuer may not consider the household 

member’s salary to be the applicant’s 

income for purposes of 

§ 1026.51(b)(1)(i). The Bureau solicited 

comment on whether the examples set 

forth in proposed comment 51(b)(1)(i)– 

3 are appropriate, as well as on whether 

there are additional examples that 

should be included. 

As discussed in more detail in the 

section-by-section analysis of 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25833 

§ 1026.51(a), several industry 

commenters requested that the Bureau 

make several clarifying revisions to 

comment 51(b)(1)(i)–3, such as making 

clear that the examples apply in 

situations where spouses or partners do 

not reside in the same physical location 

(e.g., military spouses, graduate 

students, elderly parents), and apply to 

‘‘salary and other income’’ to address 

income that may come from a variety of 

sources such as Social Security benefits, 

veteran’s benefits, retirement income, 

and investment income. One industry 

commenter also suggested that the 

proposed comment be revised to make 

clear that the examples in proposed 

comment 51(b)(1)(i)–3.i and .ii are 

examples of a consumer’s current or 

reasonably expected income that may be 

considered by a card issuer in 

determining whether a consumer meets 

the independent ability-to-pay standard 

in § 1026.51(b)(1)(i). 

The final rule adopts comment 

51(b)(1)(i)–3 in substance as proposed, 

with several revisions to clarify the 

intent of the examples. As discussed 

above, the final rule revises comment 

51(b)(1)(i)–1.iii to provide that 

consideration of the income and assets 

of authorized users, household 

members, or other persons who are not 

liable for debts incurred on the account 

does not satisfy the requirement to 

consider the consumer’s current or 

reasonably expected income or assets, 

unless a Federal or State statute or 

regulation grants a consumer who is 

liable for debts incurred on the account 

an ownership interest in such income 

and assets (e.g., joint ownership granted 

under State community property laws), 

or such income is being deposited 

regularly into an account on which the 

consumer is an accountholder (e.g., an 

individual deposit account or a joint 

account). 

The final rule revises the examples in 

comment 51(b)(1)(i)–3 to be more 

consistent with comment 51(b)(1)(i)– 

1.iii as adopted in the final rule, and to 

address concerns raised by commenters. 

As adopted in the final rule, the 

examples in comment 51(b)(1)(i)–3 

demonstrate the general interpretations 

set forth in comment 51(b)(1)(i)–1.iii 

that a card issuer is permitted to 

consider a non-applicant’s income to be 

the applicant’s current or reasonably 

expected income for purposes of the 

independent ability-to-pay standard in 

§ 1026.51(b)(1)(i) if the applicant has a 

current or reasonably expected 

ownership interest in the nonapplicant’s income, or the income is 

being deposited regularly into an 

account on which the applicant is an 

accountholder. However, a card issuer is 

not permitted to consider the nonapplicant’s income to be the applicant’s 

current or reasonably expected income 

for purposes of the independent abilityto-pay standard in § 1026.51(b)(1)(i) 

when the applicant has only a 

reasonable expectation of access to the 

income. 

Specifically, as adopted in the final 

rule, comment 51(b)(1)(i)–3 provides 

several examples assuming that an 

applicant is not employed and the 

applicant is under the age of 21 so 

§ 1026.51(b) applies. Comment 

51(b)(1)(i)–3.i provides that if a nonapplicant’s salary or other income is 

deposited regularly into a joint account 

shared with the applicant, a card issuer 

is permitted to consider the amount of 

the non-applicant’s income that is being 

deposited regularly into the account to 

be the applicant’s current or reasonably 

expected income for purposes of 

§ 1026.51(b)(1)(i). This is because the 

non-applicant’s income is being 

deposited regularly into an account on 

which the applicant is an 

accountholder. 

Comment 51(b)(1)(i)–3.ii discusses an 

example where the non-applicant’s 

salary or other income is deposited into 

an account to which the applicant does 

not have access, but the non-applicant 

regularly transfers a portion of that 

income into the applicant’s individual 

deposit account. Comment 51(b)(1)(i)– 

3.ii provides that a card issuer is 

permitted to consider the amount of the 

non-applicant’s income that is being 

deposited regularly into the applicant’s 

individual deposit account to be the 

applicant’s current or reasonably 

expected income for purposes of 

§ 1026.51(b)(1)(i). Again, in this case, 

because the income is being deposited 

into an account on which the applicant 

is an accountholder, the card issuer is 

permitted to consider this income for 

purposes of the independent ability-topay standard under § 1026.51(b)(1)(i). 

Comment 51(b)(i)–3.iii discusses an 

example where the non-applicant’s 

salary or other income is deposited into 

an account to which the applicant does 

not have access; however, the nonapplicant regularly uses that income to 

pay for the applicant’s expenses. The 

comment provides that a card issuer is 

not permitted to consider the nonapplicant’s income that is used regularly 

to pay for the applicant’s expenses as 

the applicant’s current or reasonably 

expected income for purposes of 

§ 1026.51(b)(1)(i), unless a Federal or 

State statute or regulation grants the 

applicant an ownership interest in such 

income. Although the applicant would 

have a reasonable expectation of access 

to the non-applicant’s income that is 

being used regularly to pay for the 

applicant’s expenses, the applicant does 

not have a reasonably expected 

ownership interest in such income 

unless a Federal or State statute or 

regulation grants the applicant an 

ownership interest in such income (e.g., 

joint ownership granted under State 

community property laws). 

Comment 51(b)(1)(i)–3.iv discusses an 

example where the non-applicant’s 

salary or income is deposited into an 

account to which the applicant does not 

have access, the non-applicant does not 

regularly use that income to pay for the 

applicant’s expenses, and no Federal or 

State statute or regulation grants the 

applicant an ownership interest in that 

income. The comment provides that the 

card issuer is not permitted to consider 

the non-applicant’s income to be the 

applicant’s current or reasonably 

expected income for purposes of 

§ 1026.51(b)(1)(i). In this case, the 

applicant does not have a reasonably 

expected ownership interest in the nonapplicant’s income. 

Credit limit increases for consumers 

who are under 21. Currently, 

§ 1026.51(b)(2) addresses credit limit 

increases for young consumers. 

Specifically, § 1026.51(b)(2) prohibits 

credit line increases for accounts 

opened pursuant to § 1026.51(b)(1)(ii) 

unless the cosigner, guarantor, or joint 

accountholder liable on the account 

agrees in writing to accept liability for 

the line increase. Current comments 

51(b)–1 and 51(b)(2)–1 provide 

clarification of this provision. 

Section 1026.51(b)(2) does not 

expressly address credit limit increases 

for accounts opened under 

§ 1026.51(b)(1)(i) (i.e., those based on 

the underage consumer’s independent 

ability to pay). However, in proposed 

comment 51(b)(1)(i)–1.i, the Bureau 

clarified that ‘‘when a card issuer is 

considering whether to increase the 

credit limit on an existing account, the 

card issuer . . . may not consider 

income or assets to which an applicant, 

accountholder, cosigner, or guarantor, in 

each case who is under the age of 21 

and is or will be liable for debts 

incurred on the account, has only a 

reasonable expectation of access’’ 

because ‘‘§ 1026.51(b)(1)(i) requires that 

the consumer who has not attained the 

age of 21 have an independent ability to 

make the required minimum periodic 

payments.’’ To remove any doubt that 

the independent ability-to-pay standard 

applies to credit line increases for 

accounts opened pursuant to 

§ 1026.51(b)(1)(i), the final rule amends 

§ 1026.51(b)(2) to provide in 

§ 1026.51(b)(2)(i) that where a credit 

card account has been opened pursuant 


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25834 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

to § 1026.51(b)(1)(i), no increase in the 

credit limit may be made on such 

account before the consumer attains the 

age of 21 unless the consumer has an 

independent ability to make the 

required minimum periodic payments 

on the increased limit, consistent with 

§ 1026.51(b)(1)(i), or a cosigner or 

similar party who is 21 or older agrees 

in writing to assume liability for any 

debt incurred on the account, consistent 

with § 1026.51(b)(1)(ii). The final rule 

clarifies that a card issuer may not 

consider income or assets to which an 

accountholder, cosigner, or guarantor 

who is under 21 and assumes liability 

for debts incurred on the account only 

has a reasonable expectation of access, 

but may consider income or assets to 

which the same category of individuals 

who have attained the age of 21 have a 

reasonable expectation of access. The 

final rule moves commentary on these 

credit limit increases from proposed 

comment 51(b)(1)(i)–1.i to comment 

51(b)(2)–2. In addition, comment 

51(b)(2)–2 provides that information 

regarding income and assets that 

satisfies the requirements of 

§ 1026.51(b)(1)(i) also satisfies the 

requirements of § 1026.51(b)(2)(i)(A) 

and card issuers may rely on the 

guidance in the commentary to 

§ 1026.51(b)(1)(i) for purposes of 

determining whether an accountholder 

who is less than 21 years old has the 

independent ability to make the 

required minimum periodic payments 

in accordance with § 1026.51(b)(2)(i)(A). 

Comment 51(b)(2)–2 further provides 

that information regarding income and 

assets that satisfies the requirements of 

§ 1026.51(a) also satisfies the 

requirements of § 1026.51(b)(2)(i)(B) and 

card issuers may rely on the guidance in 

the commentary to § 1026.51(a)(1) for 

purposes of determining whether an 

accountholder who is 21 or older has 

the ability to make the required 

minimum periodic payments in 

accordance with § 1026.51(b)(2)(i)(B). 

The final rule also redesignates current 

§ 1026.51(b)(2) as § 1026.51(b)(2)(ii). 

Pursuant to its authority under TILA 

section 105(a) and Section 2 of the 

Credit Card Act, the Bureau believes 

that it is necessary to clarify the 

applicability of the independent abilityto-pay standard to credit limit increases 

on accounts that were opened by 

consumers under the age of 21 without 

a cosigner or similar party who is 21 

years or older, and where the consumers 

are still under the age of 21 at the time 

the credit limit increase is being 

considered, to prevent circumvention of 

the rules in § 1026.51(b)(1)(i). For 

example, if the ability-to-pay standard 

in § 1026.51(a)(1), as adopted in the 

final rule, applied to such credit limit 

increases, a card issuer could collect 

information about ‘‘accessible income’’ 

from the consumer who is younger than 

21 years of age at application. While the 

card issuer could not rely on that 

income in meeting the independent 

ability-to-pay standard under 

§ 1026.51(b)(1)(i) to open the credit card 

account for such consumer, the card 

issuer could consider this ‘‘accessible 

income’’ after account opening pursuant 

to § 1026.51(a)(1) and increase the credit 

limit on the account, even if the 

consumer remained under the age of 21 

at the time. To prevent this type of 

circumvention, the final rule makes 

clear in § 1026.51(b)(2)(i)(A) that the 

independent ability-to-pay standard 

applies to credit limit increases on 

accounts that were opened by 

consumers under the age of 21 without 

a cosigner or similar party who is 21 

years or older, and where the consumers 

are still under the age of 21 at the time 

the credit limit increase is being 

considered. 

Current obligations. Existing comment 

51(a)(1)–5 provides that a card issuer 

may consider the consumer’s current 

obligations based on information 

provided by the consumer or in a 

consumer report. In evaluating a 

consumer’s current obligations, a card 

issuer need not assume that credit lines 

for other obligations are fully utilized. 

The Bureau proposed to renumber 

current comment 51(a)(1)–5 as comment 

51(a)(1)–7. Several industry commenters 

indicated that the interpretations in 

proposed comment 51(a)(1)–7 also 

should apply to the consideration of the 

consumer’s current obligations for 

purposes of § 1026.51(b)(1). The final 

rule adds comment 51(b)–5 to provide 

the same interpretations for considering 

the consumer’s current obligations for 

purposes of § 1026.51(b)(1) and (2)(i), as 

adopted in comment 51(a)(1)–7. 

Joint applicants or joint 

accountholders. Existing comment 

51(a)(1)–6 provides that with respect to 

the opening of a joint account for two 

or more consumers or a credit line 

increase on such an account, the card 

issuer may consider the collective 

ability of all persons who are or will be 

liable for debts incurred on the account 

to make the required payments. The 

Bureau proposed to renumber current 

comment 51(a)(1)–6 as comment 

51(a)(1)–8. Several industry commenters 

indicated that the same interpretations 

in proposed comment 51(a)(1)–8 also 

should apply to the consideration of 

joint applications or joint accounts 

under § 1026.51(b)(1). Accordingly, the 

final rule adds comment 51(b)–6 to 

clarify that, with respect to the opening 

of a joint account for two or more 

consumers under § 1026.51(b)(1) or a 

credit line increase on such an account 

under § 1026.51(b)(2)(i), the card issuer 

may consider the collective ability of all 

persons who are or will be liable for 

debts incurred on the account to make 

the required payments. New comment 

51(b)–6 also would cross-reference the 

commentary to § 1026.51(b)(1)(i) and 

§ 1026.51(b)(2) for information on 

income and assets that may be 

considered for joint applicants, joint 

accountholders, cosigners, or guarantors 

who are under the age of 21, and the 

commentary to § 1026.51(b)(1)(ii) for 

information on income and assets that 

may be considered for joint applicants, 

joint accountholders, cosigners, or 

guarantors who are at least 21 years old. 

Cosigner, guarantor, or joint applicant 

who is 21 or older. Existing comment 

51(b)(1)–2 states that information 

regarding income and assets that 

satisfies the requirements of § 1026.51(a) 

satisfies the requirements of 

§ 1026.51(b)(1). The Bureau notes that, 

under the final rule, income and assets 

that satisfy the requirements of 

§ 1026.51(a) might no longer satisfy the 

requirements under § 1026.51(b) for an 

applicant who is under the age of 21; 

however, income and assets that satisfy 

the requirements of § 1026.51(a) would 

satisfy the ability-to-pay requirements of 

§ 1026.51(b)(1)(ii)(B) (i.e., those that 

apply to a cosigner, guarantor, or joint 

applicant who is 21 or older). As 

proposed, the final rule amends existing 

comment 51(b)(1)–2 and redesignates it 

as comment 51(b)(1)(ii)–1. As adopted, 

comment 51(b)(1)(ii)–1 states that 

information regarding income and assets 

that satisfies the requirements of 

§ 1026.51(a) also satisfies the 

requirements of § 1026.51(b)(1)(ii)(B). 

ECOA and Regulation B 

As discussed above, a number of 

commenters requested that the Bureau 

clarify in the final rule that a card 

issuer’s compliance with the amended 

ability-to-pay requirements does not 

violate ECOA and Regulation B. These 

commenters were concerned that absent 

an explicit safe harbor, card issuers 

would be subject to claims of potential 

violations of ECOA’s and Regulation B’s 

prohibition against discrimination based 

on age, sex, and marital status. 

Several industry commenters 

requested that the Bureau clarify in the 

regulation or commentary, or at a 

minimum, the supplementary 

information to the final rule, that 

compliance with the stricter ability-topay requirement for consumers under 

the age of 21 does not give rise to age 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25835 

36Although the proposal did not expressly solicit 

comment on an appropriate implementation period, 

one industry member submitted comment on this 

issue. This commenter expressed concern that the 

new requirements would impose an onerous 

regulatory burden on affected parties, particularly 

credit unions and urged the Bureau to delay the 

effective date of any changes to Regulation Z, but 

did not indicate a specific timeframe for 

implementation of the final rule. 

37Specifically, section 1022(b)(2)(A) of the DoddFrank Act calls for the Bureau to consider the 

potential benefits and costs of a regulation to 

consumers and covered persons, including the 

potential reduction of access by consumers to 

consumer financial products or services; the impact 

on insured depository institutions and credit 

unions with $10 billion or less in total assets as 

described in section 1026 of the Act; and the impact 

on consumers in rural areas. This discussion 

considers the impacts of the proposed rule relative 

to existing law. 

discrimination by an issuer under ECOA 

or Regulation B, since TILA section 

127(c)(8), as implemented by 

§ 1026.51(b), requires the distinction. To 

minimize the risk of potential claims of 

age-based discrimination, a few industry 

commenters urged the Bureau to apply 

the reasonable expectation of access 

criterion to all consumers, regardless of 

age. In addition, some commenters were 

concerned that the business decision to 

apply the independent ability-to-pay 

criterion to consumers age 21 or older 

may give rise to claims of potential 

discrimination based on sex. One 

commenter was concerned that the 

reasonable expectation of access 

criterion creates a potentially 

discriminatory practice based on marital 

status. 

As stated above, the Bureau believes 

that TILA section 127(c)(8) requires the 

distinction in ability-to-pay 

requirements between consumers under 

the age of 21 and consumers age 21 or 

older. The Bureau agrees that a card 

issuer would not be in violation of 

ECOA or Regulation B merely by not 

considering income to which a 

consumer under the age of 21 only has 

a reasonable expectation of access (as it 

is prohibited from doing under TILA 

section 127(c)(8) as implemented by 

§ 1026.51(b)), even though the card 

issuer may consider that income to be 

the consumer’s income for consumers 

who are 21 or older. Accordingly, the 

final rule revises comment 51(b)(1)–1 to 

clarify that a card issuer would not 

violate Regulation B by virtue of 

complying with § 1026.51(b). The final 

rule also redesignates current comment 

51(b)(1)–1 as comment 51(b)–7 and 

current comment 51(b)(1)–2 as comment 

51(b)(1)–1 for organizational purposes. 

As noted above, one trade association 

expressed concern that issuers who 

decide to use only the independent 

ability-to-pay criterion for applicants 

age 21 or older might risk violating 

ECOA and Regulation B—on the theory 

that doing so would disadvantage nonworking spouses, who are likely to be 

predominantly female, while another 

industry commenter expressed concern 

that application of the reasonable 

expectation of access criterion may 

result in potential ECOA and Regulation 

B violations based on marital status. As 

discussed above, the final rule permits 

card issuers the flexibility to consider a 

consumer’s ability to pay using the 

reasonable expectation of access 

criterion adopted in the final rule or 

instead using the independent abilityto-pay criterion. The Bureau recognizes 

that, depending on their business 

models, some card issuers may decide 

to use the independent ability-to-pay 

criterion. The Bureau understands that 

card issuers regularly make decisions 

about their tolerance for repayment risk 

and that such decisions are a proper and 

entirely appropriate consideration in 

crafting underwriting decisions. The 

final rule specifically provides 

flexibility on this point. The Bureau 

expects that card issuers will give 

careful consideration to how to use the 

discretion allowed under the rule’s 

flexible approach, in light of the issuers’ 

loss experiences, risk appetites, and 

other pertinent factors, including the 

potential effect of the decision on an 

ECOA protected class. The Bureau does 

not expect that issuers will necessarily 

have conducted a quantitative analysis 

in support of those decisions, but that 

they will be able to explain the 

reasoning that went into their decisions 

and the effects of those decisions. The 

Bureau is committed to engaging with 

stakeholders as they implement the new 

rule. 

V. Effective Date 

This rule is effective on the date of 

publication in the Federal Register.36

Covered parties may begin to comply 

with the final rule as of the effective 

date, but no later than six months from 

the effective date. 

The Bureau believes that the flexible 

effective date adopted in the final rule 

appropriately balances the needs of 

industry to determine their preferred 

method for meeting ability-to-pay 

requirements for consumers 21 or older 

with the goal of providing consumers 

the benefits of greater access to credit as 

soon as practical. The Bureau believes 

the flexible effective date provided in 

the final rule is appropriate for several 

reasons. First, based on comments 

received in response to the proposed 

rule, the Bureau expects that certain 

card issuers will continue with existing 

practices and, thus, will not require 

additional time to change or update 

their systems, application materials, or 

policies. Second, it recognizes that 

many card issuers may wish to apply 

the less restrictive ability-to-pay 

standard set forth in § 1026.51(a) as 

soon as possible. Finally, the Bureau 

recognizes that the flexibility afforded to 

issuers by § 1026.51(a) may require 

some card issuers to review their 

existing systems, policies, and practices 

to determine which of the permissible 

underwriting criteria—reasonable 

expectation of access or independent 

income or assets—meets their business 

needs. The Bureau believes that, in such 

instances, six months is an adequate 

amount of time. 

VI. Section 1022(b)(2) of the DoddFrank Act 

In developing the final rule, the 

Bureau has considered potential 

benefits, costs, and impacts,37 and has 

consulted or offered to consult with the 

prudential regulators and the Federal 

Trade Commission, including regarding 

consistency with any prudential, 

market, or systemic objectives 

administered by such agencies. The 

Bureau also requested comments on the 

potential benefits, costs, and impacts of 

the proposal. 

The final rule amends § 1026.51(a) to 

permit the consideration, for applicants 

21 or older, of income and assets to 

which the applicant has a reasonable 

expectation of access. Currently, 

§ 1026.51(a) requires that issuers 

consider the consumer’s independent 

ability to make the required minimum 

periodic payments under the terms of 

the account, based on the consumer’s 

income or assets. 

The final rule allows issuers to extend 

credit (either open credit card accounts 

under open-end consumer credit plans, 

or increase credit limits applicable to 

such accounts) in circumstances where 

they are currently prohibited from doing 

so, notably in opening credit card 

accounts or increasing credit limits for 

consumers 21 or older based on income 

or assets to which the applicant has a 

reasonable expectation of access. As one 

industry commenter noted, the abilityto-pay requirement is not the only 

underwriting standard used by card 

issuers and may not be evaluated until 

other underwriting criteria have been 

analyzed. In considering the costs and 

benefits of the final rule, the Bureau 

notes that the final rule does not require 

that card issuers in opening a credit 

card account, or increasing the credit 

line on such an account, for a consumer 

who is 21 years or older to consider 

income to which that consumer has 

only a reasonable expectation of access, 


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25836 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

38 5 U.S.C. 601 et seq. The Bureau is not aware 

of any governmental units or not-for-profit 

organizations to which the proposal would apply. 

39 5 U.S.C. 601(3). The Bureau may establish an 

alternative definition after consultation with the 

Small Business Administration and an opportunity 

for public comment. Id. 

40 5 U.S.C. 603–605. 

41 5 U.S.C. 609. 

but permits card issuers to do so. 

Issuers, therefore, are not required to 

make any changes in their practices as 

a result of the final rule. 

Extensions of credit based on the 

consideration of such income or assets 

would likely benefit both covered 

persons (the creditors) and consumers 

(the applicants) since, in most 

circumstances, creditors would not 

extend credit nor would adult 

applicants accept the offer were it not in 

the mutual interest of both parties. 

While certain consumer and issuer 

behaviors could lead to situations where 

consumers enter into credit contracts 

that are harmful to their own financial 

situation, it is unlikely that preventing 

creditors from extending credit in such 

situations would prevent many such 

cases, while it may prevent many 

mutually beneficial transactions. For the 

proposal, the Bureau did not have data 

with which to quantify the relative 

credit performance of applicants who 

received credit on the basis of income 

or assets to which the applicant had 

only a reasonable expectation of access 

compared to other types of applicants. 

In the proposal, the Bureau sought data 

on the prevalence of such applications 

and evidence regarding the performance 

of such loans, but did not receive 

specific data regarding default rates 

from commenters. 

As noted in the section-by-section 

analysis, the Bureau received comments 

from several entities who expressed 

concern about the potential risks 

associated with applying the reasonable 

expectation of access standard to 

consumers 21 or older. For example, 

some industry commenters argued that 

the reasonable expectation of access 

standard presents material risks to the 

underwriting process, while others 

expressed concern that card issuers 

relying on the standard would have 

difficulty evaluating whether the 

applicant truly has the means to repay 

a debt, and as a result, would inevitably 

make poor decisions. As noted above, 

however, the Bureau did not receive 

supporting data in the record to 

substantiate claims that the new 

standard may result in riskier 

underwriting and, thus, greater 

incidence of default. In any event, the 

final rule does not mandate that card 

issuers base their consideration of an 

applicant’s ability pay on the reasonable 

expectation of access criterion. As an 

alternative, card issuers retain the 

option of evaluating an applicant’s 

independent income or assets in 

considering the applicant’s ability to 

pay. The Bureau believes that because 

credit cards are generally unsecured, 

card issuers will be motivated to 

carefully review the risk factors 

associated with the income sources 

provided by consumers and other 

information available to them regarding 

a consumer’s creditworthiness. 

Moreover, the final rule includes in the 

official commentary examples of when 

it would be reasonable or unreasonable 

for an issuer to consider the income or 

assets of an individual to whose income 

the applicant claims to have a 

reasonable expectation of access. 

Finally, the final rule would have no 

unique impact on insured depository 

institutions or insured credit unions 

with $10 billion or less in assets as 

described in section 1026 of the DoddFrank Act, nor would the final rule have 

a unique impact on rural consumers. 

VII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations.38

The RFA defines a ‘‘small business’’ as 

a business that meets the size standard 

developed by the Small Business 

Administration pursuant to the Small 

Business Act.39

The RFA generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) and a final 

regulatory flexibility analysis (FRFA) of 

any rule subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.40

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.41

The Bureau did not conduct an IRFA 

for the November 2012 Proposal because 

the Bureau concluded that the proposed 

rule, if finalized, would not have a 

significant economic impact on any 

small entities. The Bureau reasoned that 

it did not expect the proposal to impose 

costs on covered persons because if the 

Bureau adopted the proposal as written, 

all methods of compliance under 

current law would remain available to 

small entities. The undersigned 

therefore certified that the proposed rule 

would not have a significant economic 

impact on a substantial number of small 

entities. The Bureau received one 

comment regarding the impact of the 

proposed rule on small entities. An 

industry commenter urged the Bureau to 

require card issuers that rely on income 

models to demonstrate over time that 

the issuer has seen substantially the 

same results with modeled income and 

actual income. The commenter also 

requested that smaller card issuers be 

given additional time and flexibility to 

develop income models and be allowed 

to use models developed by other 

entities. 

The Bureau reiterates its previous 

conclusion that it does not expect the 

final rule to impose costs on covered 

persons because all methods of 

compliance under current law will 

remain available to small entities. With 

respect to income models, the final rule 

makes no changes to the requirements 

for the use of income models and 

continues to permit card issuers to rely 

on empirically derived, demonstrably 

and statistically sound models to 

estimate a consumer’s income or assets. 

Accordingly, the undersigned certifies 

that this final rule will not have a 

significant impact on a substantial 

number of small entities. 

VIII. Paperwork Reduction Act 

This final rule amends Regulation Z, 

12 CFR part 1026. The collections of 

information related to Regulation Z have 

been previously reviewed and approved 

by the Office of Management and 

Budget (OMB) in accordance with the 

Paperwork Reduction Act of 1995 (PRA) 

and assigned OMB Control Number 

3170–0015. Under the PRA and 

notwithstanding any other provisions of 

law, the Bureau may not conduct or 

sponsor, and a person is not required to 

respond to, an information collection 

unless the information collection 

displays a valid control number 

assigned by OMB. As discussed in the 

November 2012 Proposal, the Bureau 

does not believe that this final rule will 

impose any new information collection 

requirements or substantively or 

materially revise existing collections of 

information as contained in Regulation 

Z. The Bureau did not receive any 

comments regarding this determination. 

List of Subjects in 12 CFR Part 1026 

Advertising, Consumer protection, 

Credit, Credit unions, Mortgages, 

National banks, Reporting and 

recordkeeping requirements, Savings 

associations, Truth in lending. 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25837 

Authority and Issuance 

For the reasons set forth in the 

preamble above, the Bureau amends 

Regulation Z, Part 1026 of Chapter X in 

Title 12 of the Code of Federal 

Regulations as follows: 

PART 1026—TRUTH IN LENDING 

(REGULATION Z) 

■ 1. The authority citation for Part 1026 

continues to read as follows: 

Authority: 12 U.S.C. 2601; 2603–2605, 

2607, 2609, 2617, 5511, 5512, 5532, 5581; 15 

U.S.C. 1601 et seq. 

Subpart G—Special Rules Applicable 

to Credit Card Accounts and Open-End 

Credit Offered to College Students 

■ 2. Section 1026.51 is amended by 

revising paragraphs (a)(1) and (b) to read 

as follows: 

§ 1026.51 Ability to pay. 

(a) General rule—(1)(i) Consideration 

of ability to pay. A card issuer must not 

open a credit card account for a 

consumer under an open-end (not 

home-secured) consumer credit plan, or 

increase any credit limit applicable to 

such account, unless the card issuer 

considers the consumer’s ability to 

make the required minimum periodic 

payments under the terms of the 

account based on the consumer’s 

income or assets and the consumer’s 

current obligations. 

(ii) Reasonable policies and 

procedures. Card issuers must establish 

and maintain reasonable written 

policies and procedures to consider the 

consumer’s ability to make the required 

minimum payments under the terms of 

the account based on a consumer’s 

income or assets and a consumer’s 

current obligations. Reasonable policies 

and procedures include treating any 

income and assets to which the 

consumer has a reasonable expectation 

of access as the consumer’s income or 

assets, or limiting consideration of the 

consumer’s income or assets to the 

consumer’s independent income and 

assets. Reasonable policies and 

procedures also include consideration 

of at least one of the following: The ratio 

of debt obligations to income; the ratio 

of debt obligations to assets; or the 

income the consumer will have after 

paying debt obligations. It would be 

unreasonable for a card issuer not to 

review any information about a 

consumer’s income or assets and current 

obligations, or to issue a credit card to 

a consumer who does not have any 

income or assets. 

* * * * * 

(b) Rules affecting young consumers— 

(1) Applications from young 

consumers. A card issuer may not open 

a credit card account under an open-end 

(not home-secured) consumer credit 

plan for a consumer less than 21 years 

old, unless the consumer has submitted 

a written application and the card issuer 

has: 

(i) Financial information indicating 

the consumer has an independent 

ability to make the required minimum 

periodic payments on the proposed 

extension of credit in connection with 

the account; or 

(ii)(A) A signed agreement of a 

cosigner, guarantor, or joint applicant 

who is at least 21 years old to be either 

secondarily liable for any debt on the 

account incurred by the consumer 

before the consumer has attained the age 

of 21 or jointly liable with the consumer 

for any debt on the account; and 

(B) Financial information indicating 

such cosigner, guarantor, or joint 

applicant has the ability to make the 

required minimum periodic payments 

on such debts, consistent with 

paragraph (a) of this section. 

(2) Credit line increases for young 

consumers. (i) If a credit card account 

has been opened pursuant to paragraph 

(b)(1)(i) of this section, no increase in 

the credit limit may be made on such 

account before the consumer attains the 

age of 21 unless: 

(A) At the time of the contemplated 

increase, the consumer has an 

independent ability to make the 

required minimum periodic payments 

on the increased limit consistent with 

paragraph (b)(1)(i) of this section; or 

(B) A cosigner, guarantor, or joint 

applicant who is at least 21 years old 

agrees in writing to assume liability for 

any debt incurred on the account, 

consistent with paragraph (b)(1)(ii) of 

this section. 

(ii) If a credit card account has been 

opened pursuant to paragraph (b)(1)(ii) 

of this section, no increase in the credit 

limit may be made on such account 

before the consumer attains the age of 

21 unless the cosigner, guarantor, or 

joint accountholder who assumed 

liability at account opening agrees in 

writing to assume liability on the 

increase. 

* * * * * 

■ 3. In Supplement I to Part 1026 under 

Section 1026.51 Ability to Pay: 

■ A. Under subheading 51(a) General 

rule and subheading 51(a)(1)(i) 

Consideration of ability to pay: 

■ i. Paragraphs 1, 2, and 4 are revised; 

■ ii. Paragraphs 5 and 6 are redesignated 

as paragraphs 7 and 8, respectively; and 

■ iii. New paragraphs 5, 6 and 9 are 

added. 

■ B. Under subheading 51(b) Rules 

affecting young consumers: 

■ i. New paragraphs 5 and 6 are added; 

■ ii. Paragraph 1 under subheading 

51(b)(1) Applications from young 

consumers is redesignated as paragraph 

7 under subheading 51(b) Rules 

affecting young consumers and revised; 

■ iii. Under subheading 51(b)(1) 

Applications from young consumers, 

paragraph 2 is removed; 

■ iv. Subheading Paragraph 51(b)(1)(i) 

and paragraphs 1 through 3 are added; 

■ v. Subheading Paragraph 51(b)(1)(ii) 

and paragraph 1 are added; and 

■ vi. Under subheading 51(b)(2) Credit 

line increases for young consumers, 

paragraph 2 is added. 

Supplement I to Part 1026—Official 

Interpretations 

* * * * * 

Section 1026.51—Ability to Pay 

51(a) General rule. 

51(a)(1)(i) Consideration of ability to pay. 

1. Consideration of additional factors. 

Section 1026.51(a) requires a card issuer to 

consider a consumer’s ability to make the 

required minimum periodic payments under 

the terms of an account based on the 

consumer’s income or assets and current 

obligations. The card issuer may also 

consider consumer reports, credit scores, and 

other factors, consistent with Regulation B 

(12 CFR part 1002). 

2. Ability to pay as of application or 

consideration of increase. A card issuer 

complies with § 1026.51(a) if it bases its 

consideration of a consumer’s ability to make 

the required minimum periodic payments on 

the facts and circumstances known to the 

card issuer at the time the consumer applies 

to open the credit card account or when the 

card issuer considers increasing the credit 

line on an existing account. 

* * * * * 

4. Consideration of income and assets. For 

purposes of § 1026.51(a): 

i. A card issuer may consider any current 

or reasonably expected income or assets of 

the consumer or consumers who are applying 

for a new account or will be liable for debts 

incurred on that account, including a 

cosigner or guarantor. Similarly, when a card 

issuer is considering whether to increase the 

credit limit on an existing account, the card 

issuer may consider any current or 

reasonably expected income or assets of the 

consumer or consumers who are 

accountholders, cosigners, or guarantors, and 

are liable for debts incurred on that account. 

In both of these circumstances, a card issuer 

may treat any income and assets to which an 

applicant, accountholder, joint applicant, 

cosigner, or guarantor who is or will be liable 

for debts incurred on the account has a 

reasonable expectation of access as the 

applicant’s current or reasonably expected 

income—but is not required to do so. A card 

issuer may instead limit its consideration of 

a consumer’s current or reasonably expected 

income or assets to the consumer’s 

independent income or assets as discussed in 


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25838 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

comments 51(b)(1)(i)–1 and 51(b)(2)–2. 

Although these comments clarify the 

independent ability-to-pay requirement that 

governs applications from consumers under 

21, they provide guidance regarding the use 

of ‘‘independent income and assets’’ as an 

underwriting criterion under § 1026.51(a). 

For example, comment 51(b)(1)(i)–1 explains 

that card issuers may not consider income or 

assets to which applicants under 21 have 

only a reasonable expectation of access. An 

issuer who chooses to comply with 

§ 1026.51(a) by limiting its consideration to 

applicants’ independent income and assets 

likewise would not consider income or assets 

to which applicants 21 or older have only a 

reasonable expectation of access. 

ii. Current or reasonably expected income 

includes, for example, current or expected 

salary, wages, bonus pay, tips, and 

commissions. Employment may be full-time, 

part-time, seasonal, irregular, military, or 

self-employment. Other sources of income 

include interest or dividends, retirement 

benefits, public assistance, alimony, child 

support, and separate maintenance 

payments. Proceeds from student loans may 

be considered as current or reasonably 

expected income only to the extent that those 

proceeds exceed the amount disbursed or 

owed to an educational institution for tuition 

and other expenses. Current or reasonably 

expected income also includes income that is 

being deposited regularly into an account on 

which the consumer is an accountholder 

(e.g., an individual deposit account or joint 

account). Assets include, for example, 

savings accounts and investments. 

iii. Consideration of the income or assets 

of authorized users, household members, or 

other persons who are not liable for debts 

incurred on the account does not satisfy the 

requirement to consider the consumer’s 

current or reasonably expected income or 

assets, unless a Federal or State statute or 

regulation grants a consumer who is liable for 

debts incurred on the account an ownership 

interest in such income and assets (e.g., joint 

ownership granted under State community 

property laws), such income is being 

deposited regularly into an account on which 

the consumer is an accountholder (e.g., an 

individual deposit account or a joint 

account), or the consumer has a reasonable 

expectation of access to such income or 

assets even though the consumer does not 

have a current or expected ownership 

interest in the income or assets. See comment 

51(a)(1)-6 for examples of non-applicant 

income to which a consumer has a 

reasonable expectation of access. 

5. Information regarding income and 

assets. For purposes of § 1026.51(a), a card 

issuer may consider the consumer’s current 

or reasonably expected income and assets 

based on the following information: 

i. Information provided by the consumer in 

connection with the account, including 

information provided by the consumer 

through the application process. For 

example, card issuers may rely without 

further inquiry on information provided by 

applicants in response to a request for 

‘‘salary,’’ ‘‘income,’’ ‘‘assets,’’ ‘‘available 

income,’’ ‘‘accessible income,’’ or other 

language requesting that the applicant 

provide information regarding current or 

reasonably expected income or assets or any 

income or assets to which the applicant has 

a reasonable expectation of access. However, 

card issuers may not rely solely on 

information provided in response to a request 

for ‘‘household income.’’ In that case, the 

card issuer would need to obtain additional 

information about an applicant’s current or 

reasonably expected income, including 

income and assets to which the applicant has 

a reasonable expectation of access (such as by 

contacting the applicant). See comments 

51(a)(1)–4, –5, and –6 for additional guidance 

on determining the consumer’s current or 

reasonably expected income under 

§ 1026.51(a)(1). See comment 51(a)(1)–9 for 

guidance regarding the use of a single, 

common application form or process for all 

credit card applicants, regardless of age. 

ii. Information provided by the consumer 

in connection with any other financial 

relationship the card issuer or its affiliates 

have with the consumer (subject to any 

applicable information-sharing rules). 

iii. Information obtained through third 

parties (subject to any applicable 

information-sharing rules). 

iv. Information obtained through any 

empirically derived, demonstrably and 

statistically sound model that reasonably 

estimates a consumer’s income or assets, 

including any income or assets to which the 

consumer has a reasonable expectation of 

access. 

6. Examples of considering income. 

Assume that an applicant is not employed 

and that the applicant is age 21 or older so 

§ 1026.51(b) does not apply. 

i. If a non-applicant’s salary or other 

income is deposited regularly into a joint 

account shared with the applicant, a card 

issuer is permitted to consider the amount of 

the non-applicant’s income that is being 

deposited regularly into the account to be the 

applicant’s current or reasonably expected 

income for purposes of § 1026.51(a). 

ii. The non-applicant’s salary or other 

income is deposited into an account to which 

the applicant does not have access. However, 

the non-applicant regularly transfers a 

portion of that income into the applicant’s 

individual deposit account. A card issuer is 

permitted to consider the amount of the nonapplicant’s income that is being transferred 

regularly into the applicant’s account to be 

the applicant’s current or reasonably 

expected income for purposes of § 1026.51(a). 

iii. The non-applicant’s salary or other 

income is deposited into an account to which 

the applicant does not have access. However, 

the non-applicant regularly uses a portion of 

that income to pay for the applicant’s 

expenses. A card issuer is permitted to 

consider the amount of the non-applicant’s 

income that is used regularly to pay for the 

applicant’s expenses to be the applicant’s 

current or reasonably expected income for 

purposes of § 1026.51(a) because the 

applicant has a reasonable expectation of 

access to that income. 

iv. The non-applicant’s salary or other 

income is deposited into an account to which 

the applicant does not have access, the nonapplicant does not regularly use that income 

to pay for the applicant’s expenses, and no 

Federal or State statute or regulation grants 

the applicant an ownership interest in that 

income. A card issuer is not permitted to 

consider the non-applicant’s income as the 

applicant’s current or reasonably expected 

income for purposes of § 1026.51(a) because 

the applicant does not have a reasonable 

expectation of access to the non-applicant’s 

income. 

* * * * * 

9. Single application. A card issuer may 

use a single, common application form or 

process for all credit card applicants, 

regardless of age. A card issuer may rely 

without further verification on income and 

asset information provided by applicants 

through such an application, so long as the 

application questions gather sufficient 

information to allow the card issuer to satisfy 

the requirements of both § 1026.51(a) and (b), 

depending on whether a particular applicant 

has reached the age of 21. For example, a 

card issuer might provide two separate line 

items on its application form, one prompting 

applicants to provide their ‘‘personal 

income,’’ and the other prompting applicants 

for ‘‘available income.’’ A card issuer might 

also prompt applicants, regardless of age, 

using only the term ‘‘income’’ and satisfy the 

requirements of both § 1026.51(a) and (b). 

* * * * * 

51(b) Rules affecting young consumers. 

* * * * * 

5. Current obligations. A card issuer may 

consider the consumer’s current obligations 

under § 1026.51(b)(1) and (b)(2)(i) based on 

information provided by the consumer or in 

a consumer report. In evaluating a 

consumer’s current obligations, a card issuer 

need not assume that credit lines for other 

obligations are fully utilized. 

6. Joint applicants or joint accountholders. 

With respect to the opening of a joint account 

for two or more consumers under 

§ 1026.51(b)(1) or a credit line increase on 

such an account under § 1026.51(b)(2)(i), the 

card issuer may consider the collective 

ability of all persons who are or will be liable 

for debts incurred on the account to make the 

required payments. See commentary to 

§ 1026.51(b)(1)(i) and (b)(2) for information 

on income and assets that may be considered 

for joint applicants, joint accountholders, 

cosigners, or guarantors who are under the 

age of 21, and commentary to 

§ 1026.51(b)(1)(ii) for information on income 

and assets that may be considered for joint 

applicants, joint accountholders, cosigners, 

or guarantors who are at least 21 years old. 

7. Relation to Regulation B. In considering 

an application or credit line increase on the 

credit card account of a consumer who is less 

than 21 years old, card issuers must comply 

with the applicable rules in Regulation B (12 

CFR part 1026). A card issuer does not 

violate Regulation B by complying with the 

requirements in § 1026.51(b). 

51(b)(1) Applications from young 

consumers. 

Paragraph 51(b)(1)(i). 

1. Consideration of income and assets for 

young consumers. For purposes of 

§ 1026.51(b)(1)(i): 

i. A card issuer may consider any current 

or reasonably expected income or assets of 


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Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 25839 

the consumer or consumers who are applying 

for a new account or will be liable for debts 

incurred on that account, including a 

cosigner or guarantor. However, because 

§ 1026.51(b)(1)(i) requires that the consumer 

who has not attained the age of 21 have an 

independent ability to make the required 

minimum periodic payments, the card issuer 

may only consider the applicant’s current or 

reasonably expected income or assets under 

§ 1026.51(b)(1)(i). The card issuer may not 

consider income or assets to which an 

applicant, joint applicant, cosigner, or 

guarantor, in each case who is under the age 

of 21 and is or will be liable for debts 

incurred on the account, has only a 

reasonable expectation of access. 

ii. Current or reasonably expected income 

includes, for example, current or expected 

salary, wages, bonus pay, tips, and 

commissions. Employment may be full-time, 

part-time, seasonal, irregular, military, or 

self-employment. Other sources of income 

include interest or dividends, retirement 

benefits, public assistance, alimony, child 

support, and separate maintenance 

payments. Proceeds from student loans may 

be considered as current or reasonably 

expected income only to the extent that those 

proceeds exceed the amount disbursed or 

owed to an educational institution for tuition 

and other expenses. Current or reasonably 

expected income includes income that is 

being deposited regularly into an account on 

which the consumer is an accountholder 

(e.g., an individual deposit account or a joint 

account). Assets include, for example, 

savings accounts and investments. Current or 

reasonably expected income and assets does 

not include income and assets to which the 

consumer only has a reasonable expectation 

of access. 

iii. Consideration of the income and assets 

of authorized users, household members, or 

other persons who are not liable for debts 

incurred on the account does not satisfy the 

requirement to consider the consumer’s 

current or reasonably expected income or 

assets, unless a Federal or State statute or 

regulation grants a consumer who is liable for 

debts incurred on the account an ownership 

interest in such income or assets (e.g., joint 

ownership granted under State community 

property laws), or the income is being 

deposited regularly into an account on which 

the consumer is an accountholder (e.g., an 

individual deposit account or a joint 

account). See comment 51(b)(1)(i)–3 for 

examples of income that may be relied upon 

as a consumer’s current or reasonably 

expected income. 

2. Information regarding income and assets 

for young consumers. For purposes of 

§ 1026.51(b)(1)(i), a card issuer may consider 

the consumer’s current or reasonably 

expected income and assets based on the 

following information: 

i. Information provided by the consumer in 

connection with the account, including 

information provided by the consumer 

through the application process. For 

example, card issuers may rely without 

further inquiry on information provided by 

applicants in response to a request for 

‘‘salary,’’ ‘‘income,’’ ‘‘personal income,’’ 

‘‘individual income,’’ ‘‘assets,’’ or other 

language requesting that the applicant 

provide information regarding his or her 

current or reasonably expected income or 

assets. However, card issuers may not rely 

solely on information provided in response 

to a request for ‘‘household income.’’ Nor 

may they rely solely on information provided 

in response to a request for ‘‘available 

income,’’ ‘‘accessible income,’’ or other 

language requesting that the applicant 

provide any income or assets to which the 

applicant has a reasonable expectation of 

access. In such cases, the card issuer would 

need to obtain additional information about 

an applicant’s current or reasonably expected 

income (such as by contacting the applicant). 

See comments 51(b)(1)(i)–1, –2, and –3 for 

additional guidance on determining the 

consumer’s current or reasonably expected 

income under § 1026.51(b)(1)(i). See 

comment 51(a)(1)–9 for guidance regarding 

the use of a single, common application for 

all credit card applicants, regardless of age. 

ii. Information provided by the consumer 

in connection with any other financial 

relationship the card issuer or its affiliates 

have with the consumer (subject to any 

applicable information-sharing rules). 

iii. Information obtained through third 

parties (subject to any applicable 

information-sharing rules). 

iv. Information obtained through any 

empirically derived, demonstrably and 

statistically sound model that reasonably 

estimates a consumer’s income or assets. 

3. Examples of considering income for 

young consumers. Assume that an applicant 

is not employed and the applicant is under 

the age of 21 so § 1026.51(b) applies. 

i. If a non-applicant’s salary or other 

income is deposited regularly into a joint 

account shared with the applicant, a card 

issuer is permitted to consider the amount of 

the non-applicant’s income that is being 

deposited regularly into the account to be the 

applicant’s current or reasonably expected 

income for purposes of § 1026.51(b)(1)(i). 

ii. The non-applicant’s salary or other 

income is deposited into an account to which 

the applicant does not have access. However, 

the non-applicant regularly transfers a 

portion of that income into the applicant’s 

individual deposit account. A card issuer is 

permitted to consider the amount of the nonapplicant’s income that is being transferred 

regularly into the applicant’s account to be 

the applicant’s current or reasonably 

expected income for purposes of 

§ 1026.51(b)(1)(i). 

iii. The non-applicant’s salary or other 

income is deposited into an account to which 

the applicant does not have access. However, 

the non-applicant regularly uses that income 

to pay for the applicant’s expenses. A card 

issuer is not permitted to consider the nonapplicant’s income that is used regularly to 

pay for the applicant’s expenses as the 

applicant’s current or reasonably expected 

income for purposes of § 1026.51(b)(1)(i), 

unless a Federal or State statute or regulation 

grants the applicant an ownership interest in 

such income. 

iv. The non-applicant’s salary or other 

income is deposited into an account to which 

the applicant does not have access, the nonapplicant does not regularly use that income 

to pay for the applicant’s expenses, and no 

Federal or State statute or regulation grants 

the applicant an ownership interest in that 

income. The card issuer is not permitted to 

consider the non-applicant’s income to be the 

applicant’s current or reasonably expected 

income for purposes of § 1026.51(b)(1)(i). 

Paragraph 51(b)(1)(ii). 

1. Financial information. Information 

regarding income and assets that satisfies the 

requirements of § 1026.51(a) also satisfies the 

requirements of § 1026.51(b)(1)(ii)(B) and 

card issuers may rely on the guidance in 

comments 51(a)(1)–4, –5, and –6 for purposes 

of determining whether a cosigner, guarantor, 

or joint applicant who is at least 21 years old 

has the ability to make the required 

minimum periodic payments in accordance 

with § 1026.51(b)(1)(ii)(B). 

51(b)(2) Credit line increases for young 

consumers. 

* * * * * 

2. Independent ability-to-pay standard. 

Under § 1026.51(b)(2), if a credit card 

account has been opened pursuant to 

§ 1026.51(b)(1)(i), no increase in the credit 

limit may be made on such account before 

the consumer attains the age of 21 unless, at 

the time of the contemplated increase, the 

consumer has an independent ability to make 

the required minimum periodic payments on 

the increased limit, consistent with 

§ 1026.51(b)(1)(i), or a cosigner, guarantor, or 

joint applicant who is at least 21 years old 

assumes liability for any debt incurred on the 

account, consistent with § 1026.51(b)(1)(ii). 

Thus, when a card issuer is considering 

whether to increase the credit limit on an 

existing account, § 1026.51(b)(2)(i)(A) 

requires that consumers who have not 

attained the age of 21 and do not have a 

cosigner, guarantor, or joint applicant who is 

21 years or older must have an independent 

ability to make the required minimum 

periodic payments as of the time of the 

contemplated increase. Thus, the card issuer 

may not consider income or assets to which 

an accountholder, cosigner, or guarantor, in 

each case who is under the age of 21 and is 

or will be liable for debts incurred on the 

account, has only a reasonable expectation of 

access under § 1026.51(b)(2)(i)(A). The card 

issuer, however, may consider income or 

assets to which an accountholder, cosigner, 

or guarantor, in each case who is age 21 or 

older and is or will be liable for debts 

incurred on the account, has a reasonable 

expectation of access under 

§ 1026.51(b)(2)(i)(B). Information regarding 

income and assets that satisfies the 

requirements of § 1026.51(b)(1)(i) also 

satisfies the requirements of 

§ 1026.51(b)(2)(i)(A) and card issuers may 

rely on the guidance in the commentary to 

§ 1026.51(b)(1)(i) for purposes of determining 

whether an accountholder who is less than 

21 years old has the independent ability to 

make the required minimum periodic 

payments in accordance with 

§ 1026.51(b)(2)(i)(A). Information regarding 

income and assets that satisfies the 

requirements of § 1026.51(a) also satisfies the 

requirements of § 1026.51(b)(2)(i)(B) and card 

issuers may rely on the guidance in 

comments 51(a)(1)–4, –5, and –6 for purposes 

of determining whether a cosigner, guarantor, 


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25840 Federal Register / Vol. 78, No. 86 / Friday, May 3, 2013 / Rules and Regulations 

or joint applicant who is at least 21 years old 

has the ability to make the required 

minimum periodic payments in accordance 

with § 1026.51(b)(2)(i)(B). 

* * * * * 

Dated: April 29, 2013. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2013–10429 Filed 5–2–13; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 25 

[Docket No.: FAA–2010–1175; Amdt. No. 

25–138] 

RIN 2120–AJ83 

Installed Systems and Equipment for 

Use by the Flightcrew 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This rule amends design 

requirements in the airworthiness 

standards for transport category 

airplanes to minimize the occurrence of 

design-related flightcrew errors. The 

new design requirements will enable a 

flightcrew member to detect and manage 

his or her errors when the errors occur. 

Adopting this rule will eliminate 

regulatory differences between the 

airworthiness standards of the United 

States (U.S.) and those of the European 

Aviation Safety Agency (EASA) without 

affecting current industry design 

practices. 

DATES: Effective July 2, 2013. 

ADDRESSES: For information on where to 

obtain copies of rulemaking documents 

and other information related to this 

final rule, see ‘‘How To Obtain 

Additional Information’’ in the 

SUPPLEMENTARY INFORMATION section of 

this document. 

FOR FURTHER INFORMATION CONTACT: For 

technical questions concerning this final 

rule, contact Loran Haworth, Airplane 

and Flightcrew Interface Branch, ANM– 

111, Transport Airplane Directorate, 

Aircraft Certification Service, 1601 Lind 

Avenue SW., Renton, Washington, 

98057–3356; telephone (425) 227–1133; 

facsimile (425) 227–1320; email 

Loran.Haworth@faa.gov. 

For legal questions about this final 

rule, contact Doug Anderson, Office of 

the Regional Counsel (ANM–7), 1601 

Lind Avenue SW., Renton, Washington 

98057–3356; telephone (425) 227–2166; 

facsimile 425–227–1007; email 

Douglas.Anderson@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Authority for This Rulemaking 

The FAA’s authority to issue rules on 

aviation safety is found in Title 49 of the 

United States Code. Subtitle I, Section 

106 describes the authority of the FAA 

Administrator. Subtitle VII, Aviation 

Programs, describes in more detail the 

scope of the agency’s authority. 

This rulemaking is promulgated 

under the authority described in 

Subtitle VII, Part A, Subpart III, Section 

44701, ‘‘General requirements.’’ Under 

that section, the FAA is charged with 

prescribing regulations and minimum 

standards for the design and 

performance of aircraft that the 

Administrator finds necessary for safety 

in air commerce. This regulation is 

within the scope of that authority. It 

prescribes new safety standards for the 

design, production, and operation of 

transport category airplanes. 

List of Abbreviations and Acronyms 

Frequently Used in This Document 

AFM Airplane Flight Manual 

ALPA Air Line Pilots Association, 

International 

ARAC Aviation Rulemaking Advisory 

Committee 

ATC Air Traffic Control 

DER Designated Engineering Representative 

EASA European Aviation Safety Agency 

EFB Electronic Flight Bag 

FAA Federal Aviation Administration 

FMS Flight Management System 

HF Human Factors 

ICAO International Civil Aviation 

Organization 

NPRM Notice of Proposed Rulemaking 

OEM Original Equipment Manufacturer 

RFA Regulatory Flexibility Act 

SBREFA Small Business Regulatory 

Enforcement Fairness Act 

STC Supplemental Type Certificate 

TC Type Certificate 

UM Unit Member 

I. Overview of Final Rule 

This final rule adds § 25.1302 which 

addresses— 

• Design requirements to minimize 

errors made by the flightcrew and 

enable them to detect and manage their 

errors when the errors occur; 

• Flightcrew limitations and control 

requirements not covered by current 

regulations; 

• Flightcrew interactions with the 

equipment that can be reasonably 

expected in service; 

• Uniform standards that address 

design for flightcrew error in transport 

category airplanes; and 

• Harmonization of the United States 

(U.S.) and EASA airworthiness 

standards. 

II. Background 

Accidents often result from a 

sequence or combination of flightcrew 

errors and safety related events. 

Flightcrews contribute positively to the 

safety of the air transportation system by 

using their ability to assess complex 

situations and make reasoned decisions. 

However, even trained, qualified, 

checked, alert flightcrew members can 

make errors. 

Flightcrew errors that could impact 

safety are often detected and mitigated 

in the normal course of events. 

However, accident analyses have 

identified flightcrew performance and 

error as significant factors in a majority 

of accidents involving transport 

category airplanes. Some errors may be 

influenced by the design of the systems 

the flightcrew uses to operate the 

airplane and by the flightcrew interfaces 

of those systems, even those that are 

carefully designed. 

The design of the flight deck and 

other systems may influence flightcrew 

task performance and may also affect 

the rate of occurrence and effects of 

flightcrew errors. 

Human error is generally 

characterized as a deviation from what 

is considered correct in some context. In 

the hindsight of analysis of accidents, 

incidents, or other events of interest, 

these deviations might include an 

inappropriate action, a difference from 

what is expected in a procedure, a 

mistaken decision, a slip of the fingers 

in typing, an omission of some kind, 

and many other examples. 

A. Statement of the Problem 

The FAA tasked the Aviation 

Rulemaking Advisory Committee 

(ARAC) through its Human Factors 

Harmonization Working Group to 

review existing regulations and 

recommend measures to address the 

contribution of design and certification 

of transport category airplane flight 

decks to flightcrew error. The ARAC 

submitted its recommendations to the 

FAA in a report, Human Factors— 

Harmonization Working Group 

(HFHWG) Final Report, dated June 15, 

2004. This final rule implements these 

recommendations. 

The HFHWG acknowledged that 

existing regulations are designed to 

address differing aspects of flightcrew 

performance. Flightcrew capabilities are 

carefully considered through— 

1. Airworthiness standards for the 

issuance of type certificates for 

airplanes (14 CFR part 25); 

2. Airplane operating requirements 

(14 CFR part 121); 

3. Certification and operating 

requirements (14 CFR part 119); and 


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