Tuesday, February 23, 2010

The Future of Money, via Pay Pal

The Credit Card Accountability Responsibility and Disclosure Act of 2009 went into effect on Monday, but hidden and deceptive fees still lurk in the small print of many (if not most) cards. And in the months leading up to the new law, many credit card companies dramatically increased their interest rates. Borrower beware!

I called Target (for example) to cancel my card when they initiated an across-the-board interest increase to 23.24% on purchases (with Target Visa), or 25.24% (with the Target card). The representative I spoke with said that "the recession has been hard on Target." I am not an economist, but imagine the brand loyalty that would result if Target had sent out a letter telling card holders it was lowering rates, in their interest? Instead, this somewhat more savvy retailer comes off as yet another greed machine. I found the rate hike so disturbing that I made a decision to not shop there (or at any other big box retailer) until things change. Sorry, Target – was always kind of fond of you in the past! Here's more about changes to the law.

Check out this article in the latest issue of Wired magazine, on the ways in which PayPal is reshaping the way money changes hands. The trick is to bypass using credit cards, which take unearned big bites from consumers and businesses. PayPal is using an open source developer network to imagine lots of ways people could source capital, pay for products and services, and simplify transactions, perhaps while learning something about fiscal realities along the way. This article is getting a lot of attention on Twitter, too: it's so interesting to see how ideas spread.

The image on the cover of the current issue of Wired, shown at the top here, appeals to my paper-cutting and shaping sensibilities. It reminds me of the time when (at age 5) our ingenious friend Liam stealthily invented the $55 dollar bill, craftily merging two $5 banknotes, using scissors and glue.


ArtSparker said...

I wonder what career Liam went into? He sounds very imaginative.

Daughter Number Three said...

I promise to read the Wired article, but in the meantime, did you see the Daily Show tonight (Tuesday)? They had a great segment on the bank/credit card changes, including Wyatt Cenac interviewing a former leg-breaker for the mob, who pointed out that while they would break your fingers, they would never jack up your interest rate or take your house.

elena said...

!! I'll check that out, DN3.

Liam is now 9 years old: he's a "watch this space" kind of youngster. There's a photo of him somewhere on elenabella, receiving signals from yellow squash held to his ears...

elena said...

Here's an earlier tribute to the ingenious and ever-optimistic Liam. When I saw him last year he was busy figuring out how to build a leprechaun trap – he built a very promising one, but the leprechaun (for the moment) outwitted him. It's a great battle of Leprechaun vs. Elf at this point.