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The CFPB Promotes Financial Health and Education

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This article was last updated Oct 09, 2017, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

The Consumer Financial Protection Bureau (CFPB) is a federal financial regulatory agency launched in 2009 to serve as a watchdog over the financial industry. The CFPB is committed to ensuring that consumers of financial products, like credit cards, are treated fairly and that financial institutions exercise integrity and transparency while marketing to the American public.

Over the past few months, the CFPB has taken a number of innovative steps to help consumers. One was the launch of a pilot program, Project Catalyst, intended to find proactive ways to help people avoid credit card defaults. The agency also issued a report on the state of financial literacy in the U.S. The purpose of the report, and the research that went into it, is to pinpoint ways to more effectively educate Americans about consumer finance. The CFPB also created an alliance with leaders of the banking industry to examine ways to promote financial literacy.

Project Catalyst

Normally people only seek credit counseling after they find themselves in financial trouble. Project Catalyst is intended to assess the potential impact of mismanaged finances through early intervention credit counseling. The idea is to experiment with the use of counseling as preemptive strategies to help people better manage credit card debt; before they get so far behind that they miss a payment or go into default.

The CFPB believes that many people who have trouble repaying their credit card obligations can avoid that difficulty if they just had more education and training ahead of time. Project Catalyst will arrange for professional credit counselors to teach people how to take practical steps such as creating and sticking to a budget, tracking their monthly payments and card balances, and understanding the consequences of missing a payment or carrying too much debt.

Barclaycard Will Partner with Clarifi Counseling

Project Catalyst will work with Barclaycard – a major credit card issuer – and Clarifi, a leading consumer credit counseling service. Barclaycard will offer some of its credit card customers an opportunity to enroll in Clarifi’s credit counseling services free of charge. The identities of those consumers who choose to participate in the program will remain anonymous, but the results of the initiative will be shared with the CFPB.

After analyzing the outcome of Project Catalyst, the CFPB can then recommend innovative ways of counseling to help people avoid financial pitfalls, boost credit scores, and improve their overall financial well-being.

CFPB Financial Literacy Report

CFPB released a report on financial literacy that covered topics such as what influences consumer financial behavior and which areas of financial knowledge and education need to be improved.

The report, titled “Financial well-being: The goal of financial education,” revealed some of the CFPB’s early research that was conducted to figure out what specific steps could be taken to improve the financial well-being of Americans. The main focus was to first define the goal of financial education and then measure the effectiveness of various financial literacy strategies at achieving that goal. The report showed that most people define their own financial well-being as follows:

  • In control of their day-to-day and month-to-month finances
  • Have enough of a financial cushion or savings to absorb any unexpected expenses
  • On track to meet their personal financial goals
  • Enjoy financial freedom without constantly worrying about money

The Financial Services Roundtable

The CFPB is also now collaborating with the Financial Services Roundtable for a public-private initiative to promote financial literacy across the United States. The Financial Services Roundtable is comprised of representatives from leading financial services companies that offer banking and other services to American consumers.

The CFPB and members of the Roundtable pledged to work together to facilitate and encourage financial education initiatives in grades K-12 and to also promote financial learning in the workplace and amongst the elderly who are often victims of financial exploitation.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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