If you are like most Americans, reading a summary of the Wall Street Reform and Consumer Protection Act might better serve as an alternative to sleeping pills. So what does the bill mean to you?
1. Limited Use of Debit/Credit Cards. You may start seeing minimum charge amounts for debit and credit cards. Visa and MasterCard rules are being loosened up to allow retailers to reject unprofitable transactions. Often using your debit card for a $1.00 can of soda can cost the retailer more to process the transaction that the purchase is worth.
2. Home Mortgages Will Change. Most pre-payment penalties will be eliminated. Complex mortgage products will need to pass through the new Consumer Protection Bureau. Lenders are required to ensure that borrowers can pay the loans that they sell and the bill prohibits lenders from steering borrowers to more expensive loan options. Refinancing fees will also be reduced.
3. Access to Your Credit Score. You'll be able to see your credit "score" free if you are refused for a mortgage. Currently you have the right to see your credit report free once per year, but until now you had to pay to see your credit score.
4. Beware Car Loans. Read your loans carefully as car lenders are exempt from oversight by the Consumer Protection Bureau.
5. Higher limits on Deposit Insurance. Effectively immediately, the FDIC has permanently raised the limit from $100,000 on insured individual deposits to $250,000.
6. No more $30 fee for a $2.00 overdraft. You'll need to "opt-in" to expensive bank overdraft programs. Banks can no longer automatically charge you high fees for overdrafts. You will probably start seeing letters from your bank disclosing how overdraft fees are calculated and asking for your permission (opt-in) to their overdraft policy.
7. Lower Prices? The Federal Reserve will try to ensure that fees charged to merchants by credit and debit card companies are reasonable and in proportion to the cost of processing the transaction. Because of this, you may see more discounts for cash payments OR even lower prices as merchants pass their credit card expense savings back to you.
8. Emergency Mortgage Relief. The bill provides for $1 billion in bridge loans to qualified unemployed homeowners with reasonable prospects for re-employment to help cover mortgage payments until the homeowner is re-employed.
9. New Bank Fees? You will need to review your bank's fee structure. Because banks will be losing some current revenue streams, expect banks to start looking for fees elsewhere. Be on the lookout for new fees, such as charges for checking accounts or online banking.
10. No More Nasty Letters Required. If the "Act" is correct, you'll no longer have to send nasty letters to your representatives regarding taxpayer bailouts. If institutions gamble and fail, they can no longer look to us to make them whole.