Credit Card Legislation Presentation
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Credit Card Legislation Presentation






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Credit Card Legislation Presentation Credit Card Legislation Presentation Presentation Transcript

  • Credit Card Accountability Responsibility and Disclosure Act of 2009
    Anthony Jones & Matthew Osterstrom
    MBA 512 – Final Presentation
  • History of Credit Cards
    The first widely accepted plastic charge card was issued in 1958 by American Express.
    The first general-use credit card that allowed balances to be paid over time was the BankAmericard (which in 1977 changed its name to Visa), issued in 1959. (Sources: PBS Frontline; American Express, Visa USA)
    How did MasterCard begin? In 1966, a number of banks formed the Interbank Card Association. In 1969, the Interbank Card Association bought the rights to use "Master Charge" from the California Bank Association. It was renamed MasterCard in 1979. (Source:
  • History of the Reform Bill
    Passed quickly with high bipartisan support in Congress
    Signed into law on May 22, 2009 by President Barrack Obama
    Will go into full effect on February 22, 2010
  • Key Components of the Bill
    Requires card companies give cardholders 45 days notice of any interest rate increases.
    Prohibits card companies from charging interest on debt that is paid on time during a grace period. This prevents the so-called "double-cycle billing" practice.
    Gives cardholders time to pay their bills by requiring card companies to mail billing statements 21 calendar days before the due date (14 days is the current minimum).
  • Additional Components
    Prevents card companies from using terms like "fixed rate" & "prime rate" in a misleading manner by establishing single, set definitions of those terms.
    Eliminate over-the-limit “privilege”
    Payments go towards the highest interest rate first 
    Limited to 3 fees per month
    Credit Card Industry has to report to Congress on an annual basis
  • Criticism
    Does not affect existing credit card contracts
    Does not cap interest rates
    Does not apply to business or corporate credit cards
    The credit card industry said the act would result in higher interest and annual fees, and lowered credit limits for customers with bad credit.
  • Background Statistics
    78% of Americans about 91.1 million had credit cards in 2008. (Source: Nilson Report, April 2009)
    The top 10 credit card issuers controlled 88% market in 2006
    Visa cardholders alone conduct more than $1 trillion in annual volume.
    In 2006, the Census Bureau determined that there were 1.5 billion credit cards in the U.S. A stack of all those credit cards would reach more than 70 miles into space and be as tall as 13 Mt Everests.
  • Debt Statistics
    At the end of 2008, Americans' credit card debt reached $972.73 billion, up 1.12% from 2007. 
    Average credit card debt per household was $8,329 at the end of 2008. (Source: Nilson Report, April 2009)
    Undergraduates are carrying record balances. The mean balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004’s $946 to $1,645. 21% of undergraduates had balances of between $3,000 and $7,000 (Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009)
  • Exploration
    Goal: To determine if pending credit card legislation would in any way affect future consumer spending.
    13 Survey Questions Online and Manual
    Link to relevant topic information
    Unaware Individuals
  • Hypothesis Statement
    Hypothesis Statement:  This new legislation may slow consumer purchasing and only reward the individuals that do not make their payments.  This could considerably affect the future economy, pending its outcome and credit card firm response.
  • Target Audience
    Credit Card Users
    All types
    Marriage Status
    Employment Status
    Past /Future spending habits
    Debt and Amount
    Will this benefit you?
  • Data Preparation
  • Overall Awareness
  • Spending Habits
  • Age
  • Employment Status
  • Household Income
  • Marital Status
  • Education
  • Gender
  • Debt
  • Debt Amount
  • Benefits of this Legislation
  • Hypothesis Testing
  • Hypothesis Test #1
  • Hypothesis Test #2
  • Hypothesis Test #3
  • Hypothesis Results
    Hypothesis 1
    People are aware of the credit card legislation
    Hypothesis 2
    The majority of respondents do not fit into the data statistic of approximately $8000 in credit card debt.
    Hypothesis 3
    The majority of respondents feel this legislation will not benefit them
  • Regression Analysis
  • Regression Analysis
    Do you have debt?
    0= No
    Do you feel this legislation will benefit you?
    0= Don’t Know
    2= Yes
    Correlation Coefficient= 8.3%
    R^2= 0.007
    Standard Error= 0.489
    Slope= -0.046
    Y-Intercept= 0.694
    P-Value= 0.65
    T-OBS= -0.45
  • Regression Results
    P-Value is morethan the A-Level.
    Do not Reject the null
    There is a weakrelationship
    Individuals with debt will likely support the legislation
  • Multiple Regression
    Correlation Coefficient= 19.1%
    Adjusted R= -6.7%
    Standard Error= 0.52
    T-OBS = 2.25
    Intercept = 0.509
    Slope = 0.23
    P-Value = 0.33
    F-Value = 0.79
    Y-Variable = Gender
    Employment Status
    Do they have debt?
    Will the law benefit them?
    Employment status, debt, and potential benefits can be predicted by gender
  • Recommendations
    Cafeteria Surveys?
    Income category question
    Additional/Different questions
    Probe different spending characteristics/categories
    Spending patterns with economic trends
    Tactical topic questions
    Quantity of survey responses
    Email “BCC” Entry Field
    Actual data amounts for calculation
    Numerical data entry fields
  • Questions?