The Credit Card Act For Young Consumers

Draut distinctly organizes her extract. Each paragraph is constructed from the one prior. Notably, paragraph 2 explains why credit card companies target college students, and paragraph 3 goes on to explain why colleges are initially letting the companies on campus. Draut’s writing style is professional, yet friendly. Through her word choice, Draut presumes to be friendly. Through the application of simple words such as, “stuff” and “buzz,” Draut relates to the targeted audience. “Without bold thinking, America will come to an age that doesn’t reward hard work or good ethics” (par.18). Draut advises young adults about the real cost of credit card debt, exemplifying her concerned style.

James D Scurlock’s “Maxed Out” focused on the revolving use of credit cards to charge now and pay later and the fact that once the credit card was maxed out another one was sent from the credit card companies and the whole process begins all over again. Scurlock’s essay made the reader aware of the downfalls and hardships that can occur when credit cards are constantly used for purchases compared to Kevin O’Donnell’s “Why Won’t Anyone give Me a Credit Card”.

In the early 1980’s the conservative government headed by Margaret Thatcher, began to liberalise the financial industry. This promoted more competition between firms to attract customers, and offer credit facilities to a wider range of consumers. Companies used aggressive marketing to attract customers, but the amount of different products available on the market to customers made it confusing, and many took on loans and credit cards without fully understanding the product they were buying, or the interest rates they would have to pay. This resulted in a wider range of consumers having access to buying goods on

The purpose of usury laws was to regulate the maximum interest rates of loans. This law was created to protect borrowers from excessively high interest rates. It insured that lenders could not put the borrower in a situation where they were not able to fully pay off their debt. However, as said on investopedia.com, “In the United States, individual states are responsible for setting their own usury laws.”

Credit was a new concept, and debt was now fashionable - there’s no question that people would take advantage of it. Unfortunately, this meant that people would place their invisible money on expensive items like cars, washing machines, stocks, etc. This was not the problem; the problem was when the bill came later, and people realized that the money wasn't so imaginary after all. Stock speculation was also a big problem; people would take this credit, or perhaps their little bits of real money, and place it into stocks. The problem? They didn’t really know how the stocks worked. They would just place their money into whatever stock sounded the best, without paying attention to whether or not the stocks were doing well, and at that point they would basically be throwing their money away. “With debt no longer regarded as shameful, people bought on installment,” said author William E. Leuchtenburg, “Three out of every four radios were purchased on the installment plan, 60[%] of all automobiles and furniture. In other words consumers bought goods on installment at a rate faster than their income was expanding…” (Doc 6). Leuchtenburg explains that people used credit to pay for things they couldn’t afford, and they spent more money in credit than they

In “Strapped,” author Tamara Draut explains why today’s young adults have trouble getting financially ahead. Along with student- loan debt, today’s college graduates also leave with a higher risk of credit card debt than previous generations. Draut argues that college campuses aren’t regulating the card companies on campuses, therefore not protecting their students. She reasons that a problem on college campuses across the nation, credit card debt, has spun out of control by credit card pushers leading students into debt and feeling financially held back.

These provisions put two things into effect one being bank companies cannot hike up fees on existing accounts, and making it to where consumers understand exactly the prices, fees, and interest rates so that they can make the best decision financially when it comes to owning a credit card. Not only is this provision beneficial to adults and families who uses credit card, but it is definitely beneficial to college students who get credit cards while they are in college and go into consumer debt and loads of students loans. The Credit Card Act helps people to have a better financial knowledge on owning a credit card.

Attitudes about spending changed drastically. At this point, more people had access to credit cards because credit card companies stopped limiting their customer base to the wealthy, and began issuing cards to people with moderate to low incomes (Garon, 2012, CNN World). This gave Americans a way to purchase goods and services immediately, even if they didn’t have the cash on hand. The seven to eight percent savings rate maintained in the United States from the 1960s to the 1980s plummeted to less than two percent, and remained so until the first decade of the 21st century (Melicher & Norton, 2014, p. 168).

The main argument throughout this documentary is that credit cards are the main cause of the debt crisis, which occurred in 2006 in America. Credit cards are portrayed throughout this documentary to carry negative consequences, aiding in the corruption of the system, and ultimately creating debt problems that America faces as a nation. The main question we are left with is, can we as a nation live without credit cards?

The new consumer protection with this law is that applications such as loan and credit cards must be easy to understand. For example there can’t be any “fine print” that is tricky or hard to understand and there cannot be any hidden fees. Next time banks take big risk and fail the government will no longer bailout them on the reason “too big to fail”. If the bank fails because of their business practices; just like any regular mom and pop store it closes and files bankruptcy.

Bank of America is one of the largest banks in the nation. It is a multinational company and it is recognized by its high revenue value. Unfortunately, Bank of America has endured many complaints and harsh views regarding their lack of ethics. Ethical issues occur when there is a blatant disregard to implement integrity, trust, and responsibility. In some financial institutions, ethical matters are displayed in the way the consumers are treated. Within the past nine years, Bank of America has diminished all of their ethical promises by revealing customer information without their permission; discriminating against consumers based on their race; and manipulating overdraft fees in order to benefit the bank. In order to assess these problems, it is vital to recognize what Bank of America claims to stand for and determine where their most concerning issues are generated from.

Financial literacy is essential in living in today’s society, therefore it should be taught at a young age because people have been going bankrupt more than ever before. According to Kelly Walsh, “Students between ages 18-25 have at least one credit card. By the time they graduate half of them have four or more credit cards that have an average balance of $3,000” (Walsh). If students were taught at a younger age how credit cards actually work; they would better understand the consequences of debt. For instance, if students were to research different credit

Now that you have a better understanding of the risky business of owning credit cards, let us examine who is to blame?

Whilst a critical part of consumer spending, credit card companies are constantly accused of malicious legal contracts and schemes to increase profits. Without heavy regulation, these companies have the power to bankrupt millions of Americans that rely on credit cards in their daily lives. However, after the introduction of The Credit Card Act of 2009, these accusations represent an inability to accept responsibility for financial blunders on the consumer’s behalf. Due largely in part to the government’s strict regulations, credit card companies should not be at fault for the student credit card debt crisis. Credit card companies remain blameless for student credit card debt as a result of

The question of whether credit card companies should market on campuses or not, brings many different opinions, some of which are driven by personal experience and some that are driven by profit. There are those who do not agree with this because they know what they have gone through with credit card debt. There are also those who say they should market on campus because they are adults and contribute to the company’s profit. Even though students are adults and need to earn credit, credit card companies should not market to college students on campus because they are too naive and this results in graduating with too much debt.