New and Simpler Credit Card Agreement

When is the last time you took a look at your credit card agreement? Have you ever actually read through your agreement, word for word? I haven’t, and I’m guessing you haven’t either. The reason we avoid muddling through our credit card agreement is because it is too dense and too difficult for most consumers to understand.

The Winston- Salem Journal has reported on a new and simpler credit card agreement that is being tested. A prototype of a simpler agreement was released Wednesday by The Consumer Financial Protection Bureau. The current average length for a credit card agreement is 5,000 words, packed with fine print and legalese. In contrast, the new prototype agreement is 1,000 words and organized into three key sections- costs, changes, and additional information. It is written in plain English in hopes of making it easier for consumers to understand a card’s costs and terms.

The form will be tested over the first half of 2012 with credit card applicants at the Pentagon Federal Credit Union. Some applicants will receive the existing version of the card agreement and some will receive the prototype, so that the agency can compare feedback. In addition to testing the credit card agreement, the agency is testing simplified forms for mortgages.

You can also provide feedback, after reviewing the form here. Would this form make it easier for you to understand your credit card agreement? Let us know what you think!

The Shrinking Middle Class

Over the last few years, you have probably heard talk of the “shrinking middle class.”  Sabrina Tavernise from The New York Times  recently reported on a study conducted by Stanford University that takes a closer look at the rising income inequality in America. The study found that the portion of Americans living in middle income neighborhoods has declined significantly since the 1970’s.

Over the past four decades the map of prosperity in America has changed quite drastically, with larger patches of affluence and poverty and a shrinking middle. The study covered 1970 through 2007. In 2007, 44% of families lived in neighborhoods that were defined as middle income which is down from 65% in 1970. At the same time, the study found that in 2007 one third of Americans were living in poverty or affluence, compared to just 15% in 1970.

The shift involves more than just income. There is also increased residential sorting by income, with the wealthy flocking to the new exurbs and gentrified pockets in which lower and middle income families cannot afford to live. Our neighboring city, Greensboro, NC, experienced one of the largest increases in income segregation over the past decade.

Sean Rearden, author of the study, argues that these shifts have far reaching implications. Children raised in mostly poor neighborhoods have less access to high-quality schools, child care, and preschool. It also means that the prosperous have less interaction with people from other income groups, which jeopardizes the likelihood that they will support projects- such as parks, schools, and public transportation- that benefit the public good. There is also a growing gap in standardized test scores of rich and poor students and a growing gap in rates of college completion.

The full study can be found here.

At a time of growing concern over income inequality, this study raises a few questions. For example, does increased income inequality impede social mobility? What implications does income segregation have on schools and quality of education? Does increased income segregation matter? Should we do anything about it? Let us know what you think!

           

Veteran Gets New Home Through IDA Program

In case you haven’t already seen it, be sure to check out this great story that aired last night about New Century IDA! It is a great reminder of how New Century can change people’s lives and empower them to accomplish things they never dreamed possible.

Randy Myers is a Desert Storm veteran who experienced homelessness but was determined to make a better life for himself. Randy got a job at the VA and eventually learned about New Century IDA. He graduated from the program in September, closed on his home last week, and is in the process of moving in! Watch this video to see Randy moving into his new home and to share in the excitement! Congratulations, Randy!