April 05, 2010
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Credit Card Debt; You Ask?, Pt.4
And hence, the Credit CARD Act 2009.Renowned author and consumer finance and education expert, Dr. Robert Manning, says that consumers were at one time able to distinguish between appropriate and inappropriate credit card debt; however, with a change in the core values of today's society, consumers have lost the penny saved, penny earned premise. Manning is the Research Professor and Director of the Center for Consumer Financial Services at Rochester Institute of Technology. He said that as a result, the banking industry altered its credit card marketing strategies to meet the needs of today's consumer and to realize increased profits. Many lenders have marketed the premise that "It's my right to have whatever I want." Partner this with increased aggressive marketing strategies aimed at our youth, suddenly credit had lost its claim to being an earned privilege. A new generation was now taught to believe that credit was a right rather than having to demonstrate reliability in repaying credit card debt.
Mr. Manning's opponents believed differently. They say a changing social norm is a myth and that excessive consumer spending didn't just happen in the 1990's, it existed way before then. They believe it's the manner in which the credit is now owed that is different. Consumers don't owe the baker, the butcher, or doctor; they now use their credit cards to pay these expenses. Manning's opponents agree that financial values have changed, but they say the media and government adversaries are just seeking to put the blame on the financial industry. Nevertheless, something had to change. As a result, lawmakers took matters into their own hands. After a great deal of debate and controversy, Washington passed the Credit Card Accountability Responsibility and Disclosure Act of 2009.
The new law prohibits many of the abusive practices that the financial industry imposed on credit card consumers and brought a greater awareness of the irresponsible spending of Americans. As a result, many consumers have reduced card spending have taken a moral and concerted effort to change their spending habits and reduce debt. Banks haven't been overly enthusiastic about making change and many have done so only under the pressure of the law.