December 9, 2008
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News: The Future of Plastic
With the precarious nature of our economy and debt, new lifestyles are evolving across America. Layaway is coming back after two long decades of slumber. Consumers are moving back to cash on hand spending, but still clinging tightly to the credit card option. Meanwhile, rumors abound about the credit card industry making it more and more difficult to be a player, though first-hand evidence of this is not yet widespread. The government is finally governing again and signs are starting to look a little brighter in this area. If any good comes from these hardships, it will probably be the realization to the general public that credit is not the same as cash on hand and can become a deep pit. The other good news is that the government is now taking aggressive steps to protect credit card holders better with new regulations governing the credit industry.
It's highly unlikely that credit cards will go away or even take a back seat. Though times may be hard now, Americans have a way of rebounding through difficulties and will always crave having things now instead of waiting. Used wisely, the credit card empowers people to buy their dreams earlier. It has created an artificial life-blood for the world's economy.
How long will the new disciplines learned remain indelled in the mind of the American consumer? Hard to say but at least for now, consumers are concerned enough to no longer abuse credit cards. With the weakened lending banks shoring up for the storm with tightened standards and workers saving ‘acorns' for that rainy day, the lessons learned may last quite a while. Consumers will have no choice but to live within their means. Our ‘debt-fueled' consumer spending has accounted for some 70% of our nation's GDP. So, this is going to slow recovery down somewhat but, we have little choice.