Financial Reform: Good for Street Performers, Bad for Shoppers?

I’m on the financial reform bill (pdf) like a fly to your cookout.

Photo by Patrick Dirden

What’s to Like:

1. Keep up to $250,000 (formerly $100,000) in each bank account and not lose a penny if the bank closes down.

SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE INSURANCE.

(a) PERMANENT INCREASE IN DEPOSIT INSURANCE.—Section 11(a)(1)(E) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)(E)) is amended—

(1) by striking ‘‘$100,000’’ and inserting ‘‘$250,000’’;

2. Receive your credit score when a credit check results in a less-than-perfect outcome. For example, when your credit card interest rates go up or you’re denied a loan or lease.

SEC. 1100F. USE OF CONSUMER REPORTS.

Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is amended—

(1) in subsection (a)— (A) by redesignating paragraphs (2) and

(3) as paragraphs (3) and (4), respectively; (B) by inserting after paragraph (1) the

following:

‘‘(2) provide to the consumer written or elec- tronic disclosure—

‘‘(A) of a numerical credit score as defined in section 609(f)(2)(A) used by such person in

taking any adverse action based in whole or in part on any information in a consumer report;

What’s Scary:

1. Businesses have permission to charge more if you use a credit card instead of cash (“cash discount” makes it sound awesome).

SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.
. . .
‘‘(4) DISCOUNT.—The term ‘discount’— ‘‘(A) means a reduction made from the price that customers are informed is the regular
price; and ‘‘(B) does not include any means of increasing the price that customers are informed is the regular price.

2. Businesses have permission to only accept credit cards on transactions greater than $10.

SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.
. . .

‘‘(3) LIMITATION ON RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.—

‘‘(A) IN GENERAL.—A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability—

‘‘(i) of any person to set a minimum dollar value for the acceptance by that person of credit cards, to the extent that —

‘‘(I) such minimum dollar value does not differentiate between issuers or between payment card networks; and

‘‘(II) such minimum dollar value does not exceed $10.00;

3. Auto dealers not included. Congratulations lobbyists. (3 Auto Dealer Tactics the Overhaul Missed – NYT)

SEC. 1029. EXCLUSION FOR AUTO DEALERS.
(a) SALE, SERVICING, AND LEASING OF MOTOR VEHICLES EXCLUDED.—Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement or any other authority, including any authority to order assessments, over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.

So What?

The restrictions and consequences of using credit cards could change the way we buy. Shoppers may ditch their plastic for wads of cash. Street performers like the idea and so do criminals.

Shopping for Banks

The Internet has revolutionized banking, are you taking advantage?

Photo by Daniel Y. Go

Step 1. Find out what you’re getting now

Visit your bank’s website and look for a link to current rates. Make a note of the interest rates (APY) for all accounts you have, including:
- Savings accounts
- Checking accounts
- Certificates of Deposit (CDs)
- Money Market accounts (MMAs)

Also, comb over the bank’s pages for details on fees. Check the footnotes!

Step 2. What to look for

- Safety
Make sure the institution is insured through the FDIC if it’s a bank, or the NCUA if it’s a credit union. Accounts are insured up to $250,000 until the end of 2013.

- Stability
It can be stressful if your bank fails. Here are a couple of websites that rate how banks and credit unions are performing based on a 5 star sytem:
Bankrate.com Safe & Sound
BauerFinancial

- Interest Rates
Comparing rates has never been easier. For simplicity, compare based on APY numbers. The higher, the better!
Bankrate is a place to start

- Fees & Restrictions
Avoid accounts with fees and minimum balances. Potential pitfalls include:
Minimum balance requirements
Maintenance fees
Overdraft fees
ATM fees
Transfer fees

Step 3. Find the best bank(s) for you
Banking needs vary person to person. However, here are a few ideas:

- Savings accounts
The highest interest rates are at Internet-only banks. A few reputable banks include:
Ally Bank
FNBO Direct
HSBC Direct
ING Direct

- Checking accounts
If you handle checks regularly, you will want to have a checking account at a local bank. Free checking accounts are everywhere but consider “rewards” or “high yield” checking accounts. These accounts pay as much as 6% APY in addition to having no fees. The catch is that you typically need to satisfy these three requirements each month:
1. Make at least 10-15 debit card transactions
2. Set up at least one direct deposit
3. Receive statements electronically

To find a rewards checking account in your area, start with these sites:
High Yield Checking Deals
CheckingFinder

- Fight fees
In the inevitable event that you are charged a fee, dispute it. Call up customer support and politely ask, “How can I have this fee refunded?”.

- Large vs small banks
Big national banks typically charge more fees and give lower rates to cover their costs. On the other hand, community banks and credit unions tend to offer higher rates and fewer fees to lure customers away from the big chains. Asking friends and coworkers about their banking experiences is a great way to discover lesser known institutions.

Go!
Don’t be afraid to switch banks! Contrary to popular belief, opening and closing bank accounts has no effect on your credit rating.

Wouldn’t you like your money to work for you for a change?