Credit Card Statement Changes

Here’s a guest post article written a few weeks ago by Nickel of Five Cent Nickel, he’s been around the PF blogosphere since 2005 (that’s… like dinosaur ages in terms of blogging!) and he wanted to show you how to read your new credit card statement.  Yes, in case you haven’t noticed, they have changed.  The credit card companies are now (by law) supposed to disclose to you more than you used to, so you can actually realize (and have an “ah-ha!” moment) how much debt you’re getting yourself into if you don’t pay it off.  Bad for credit card companies, good for you and your wallet.

Written by Nickel of Five Cent Nickel

Have you received a credit card statement yet this month? If so, did you notice anything different about it? I ask because, as of July 1, your credit card statement has to meet specific formatting guidelines laid out by the Federal Reserve. These requirements are part of a larger set of rules put into place by the Fed back in 2008. According to Randall Kroszner of the Federal Reserve, the goal is to: “…increase transparency and fairness in how credit card and deposit accounts operate, thereby enhancing competition and empowering consumers to better manage their accounts and avoid unnecessary costs. The rules represent a significant step forward in consumer protection. By ensuring fairness and making credit terms easier to understand, these safeguards should allow more consumers to benefit from using credit.” The new reporting requirements include a clear summary of your account activity and payment information, a late payment warning stating any fees or penalty rates that you might trigger, a warning as to how long it will take to pay off your balance (and how much it will cost) if you only make the minimum payments, clear disclosure of any account changes including those related to interest rates, and so on. To better illustrate these changes, we’ve assembled an infographic (below) that highlights the new requirements. Simply hover over a number for details. And if you’d like to see a larger version of the image, simply click on it.

Related posts:

1. Okay, I succumbed to the SPG American Express Credit Card
2. Goodbye American Express SPG Travel Rewards Credit Card (this time for realz)
3. Can Payday Loans Be The Solution To Credit Card Addiction?

I was checking this post by Studenomics that talked about why Twenty Somethings are not saving money and being of the same generation Y/ 20 something category, I got to thinking…

In the past, Canadians have traditionally saved about 10% of their gross income and stashed it away in their piggy banks. Currently, the savings rate is about 0% (or with a net negative percentage). In China, it’s 30%. For some reason, we are not saving money any more!

Really, why AREN’T we 20-somethings saving money? Why IS there a disparity between the savings of Generation X and Generation Y?

I personally have a few hypotheses myself.

Other than the ones mentioned by Studenomics, here are some reasons why I think we are so broke.

I think that one of the main reasons we (we being a generalized term) aren’t saving money is because we are so used to:

• Instant Gratification

Our parents are the baby boomers. They worked really hard to secure the financial security that they have now.  They worked hard to make sure we grew up well and had everything that we wanted or needed (or even not needed!), because when they grew up, they didn’t have anything.  I remember when I was a teenager, I would whine for that $80 pair of jeans to be just like the rest of the “cool crowd”. Our parents spoiled us, really.  What we want, we got.  So that brings us to now, where we still have the mindset of what we want, we get.  Even if that means charging that $300 pair of Rock and Republic Jeans to your card when you have $100 left in your bank account.  Or leasing that expensive sports car when you really can’t afford it.  We live in a society now where you have to flash your cash in material goods.  Or else people think you’re a nobody.

We grew up with television, we grew up with technology, we grew up with computers.   We grew up with images of celebrities and rock stars who have everything.  Louis Vuitton bags, iPhones, $250+ jeans, BMW’s, Mercedes… this is the norm everywhere I go- at least for Vancouver, anyway!  We are programmed to think that we need  and deserve these items to be happy.

The other reason I think we aren’t saving money is because of the use of:

• Credit Card/ Debit Cards

Like Studenomics said, we live in a society now in which we pay for everything by card.  It’s really easy to lose track of how much you’re spending.  I was checking out my credit card statement, and feeling quite proud of myself as I hadn’t had any big purchases on my credit card bill (YET- I haven’t gone Christmas shopping yet) but the bill still added up to $450 because I was purchasing $20 here and there.  Little things really do add up.

That isn’t to say that I would start paying for everything by cash… I love charging things on my credit card because I get points from it!  I guess the main thing to remember is to go over your statements, you have to be AWARE of what you are spending your hard earned money on.  Don’t get trapped into credit card debt- yet sadly we are! According to a recent statistic, the average 18-34 year old has $8200 in credit card debt.

Speaking of debt…

• Student Loans

Generation Y is  super-educated.  We have bachelor’s degrees, master’s degrees, doctorate degrees… MBA’s (phew, that degree can certainly knock a dent in your pocketbook).  We also have super-student loan debt too!  According to a recent statistic, the average student loan debt is $20,000.  We are pretty lucky here in Canada where we don’t have to pay $40,000 a year for school.  Back then, there wasn’t so much emphasis based on post-secondary education, you could succeed without a university degree or further education.  The story’s different now- I know some people graduating from University of British Columbia (kind of an Ivy League school in Canada) with a degree are SOL- some working in retail still because it’s so hard to find a job.  So we end up with high debts and a low paying job.  It sucks.

• Banks are to Blame!

Well, maybe.  (Haha, that’s another trait of Generation Y, we like to blame things on others, but that’s another story).  Back then, you had to have 25% down to buy a house.  Now it’s all different, there’s so many options to choose from.  Nowadays, the banks can lend you a mortgage for 5% down and do a 35 year mortgage even!  This means higher monthly payments and higher interest, and less money in your pocket in the long run, but I guess we don’t really realize it.

don't let this be you, generation Y!

What do you think?  Are there any other reasons out there that us 20 somethings aren’t saving any money other than the ones Studenomics and I mentioned?

Related posts:

1. Top 10 Tips For Avoiding Travel Trauma & Saving Money
2. Saving Money on Contact Lenses and Glasses
3. How to save money and make money with gift cards