Financial Literacy - Credit savvy
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The evolution of credit cards

"I would think that consumers would probably switch to using credit cards, but paying their bill off at the end of the month. Or not using credit cards and using debit cards or using some other payment option that doesn't involve financing," he says.

Bankrate's recent credit card poll backs up that hypothesis. Though half of Americans with credit cards said they don't plan to change the way they use them in 2009, 32 percent plan to charge less and 15 percent say they won't use credit cards at all

Even as credit cards take a less prominent place in our collective wallets, new technologies could be on their way that will make credit cards easier and more convenient to use than ever.

"I think magnetic stripes will be replaced with other digital mediums that are much more secure," says Mandell. "In places like Japan, people can already buy stuff utilizing their phones."

"I think actually the widespread use of debit cards at point of sale has eroded some of the business that might have gone to credit cards, and I think that the notion of a debit card with a line of credit in back of the account is a very good substitute for credit cards and something that will be used more in the future," he says.

"Banks might even be able to relate it to some collateral, like a home equity line. They are doing this already, but it tends not to be widely used at this point," says Mandell.

However, as the use of credit evolves, the cards themselves likely will be more useful.

"Credit cards are going to become increasingly a mechanism for information transfer. As American credit cards catch up with their use in other parts of the world, the smart card technology will be used in many different ways. So I think the credit card will become far more multifaceted and multifunctional," says Manning.

Smart card technology has been around since the 1970s, but the current form has been used in Europe and Asia for about a decade. They are just beginning to gain acceptance in the United States.

Instead of using a magnetic strip to store information, smart cards contain a microprocessor that stores loads of information. They can be used for security, as bank or credit cards, ID cards and to store health insurance information. They don't even have to be cards. As mentioned above, the Japanese are finding that phones make an ideal medium.

"It will have all your different financial service accounts that you can go back and forth with, it could keep track of transactions and it will interface with other store databases. There are so many possibilities in the future," says Manning.

The near-term outlook for credit cards may be somewhat grim, but the long term holds promise for the industry, and for consumers who are savvy about how they use them.

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