Fine print, Living with credit

Taking Charge turns 4: a look back at the progress

Connie Prater

Four years ago today, the Taking Charge blog posted its first entry.

I blogged about my daughter, a middle-schooler at the time, who was discovering the convenience of plastic payment cards.

She was a newbie at the school and had not yet gotten her school ID card, which also doubles as the lunch payment card. So, she pulled out cash at the lunch counter and slowed the whole line down. Lesson learned: Plastic is faster and doesn’t anger the folks in line behind you.

That was four years ago. The payment card world has changed dramatically since then.

More mobile
Mobile payments have emerged more prominently, thanks in large part to Apple’s iPhone and the clones that followed it. Applications to help cell phone users pay for everything from lattes to jeans and movie tickets are now standard features.

Less debt
Americans have shed credit card debt in record amounts over the past four years. According to revolving debt statistics released each month
by the Federal Reserve Board, consumers owed $183 billion less in August
2011 than they did in September 2008, when revolving balances peaked at
$972.2 billion.

The two most dramatic developments have been in the area of consumer protection. The Credit CARD Act of 2009 ushered in a wave of safeguards to help credit card holders avoid surprise interest rate hikes, unfair late fees and other credit card “gotchas.”

For young people like my daughter, it meant they wouldn’t be bombarded with offers for credit cards while they are still in school. The law makes it illegal to send credit card offers to people under 21 and requires that new applicants (or those seeking to raise their credit limits) show proof that they can actually repay their credit card loans if they want cards in their own names. Minors can still get credit cards if an adult over 21 co-signs on the account to accept responsibility for payment. Minors can also become authorized users on their parents’ credit card accounts.

More protection
There’s also a major new player in the financial services landscape. As of July 21, 2011, the Consumer Financial Protection Bureau (CFPB) began policing large banks, credit unions and other lenders with an eye toward making sure that credit cards, mortgages, student loans and other financial services aren’t unfair, deceptive or abusive to consumers.

Since the agency is a start-up, it isn’t performing all of its watchdog duties. Banking industry reps are lamenting the additional regulation and oversight, saying the added burden of meeting all of the different new requirements will add to their operating costs and force them to lay off workers or increase fees for consumers. That has already happened. Free checking is going the way of the dodo bird and new fees on things such as debit card use are becoming more common.

Consumer groups, however, are cheering the new watchdog agency and tougher banking laws. They blame lax oversight by regulators for the home mortgage fiasco that led to the 2008 Wall Street meltdown.

This young generation of payment card users has a lot in store for them over the next four years. Some are predicting another global economic downturn that may test everyone’s ability to live comfortably on less. How will they handle it? Time will tell.

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