(07/21/2010) Today President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. This multifaceted financial overhaul aims at various parts of the financial sector, some parts directed toward big banks and others toward consumer protection. What does this new legislation mean for consumers? Here are a few aspects of the new law (as reported by the Associated Press) that may affect your personal finances.
The Creation of a Consumer Protection Bureau
According to the new law, there will be a Consumer Protection Bureau created. This organization will oversee financial products and services, such as mortgages, credit cards, and private student loans. However, education and information may be the best consumer protection around. Take the time to educate yourself on finance basics. Also, check online rate tables to quickly shop for the best local rates and stay informed of what deals are currently being offered.
Fed Limits Debit Card Transaction Fees
The Fed can limit the fees charged on debit card transactions. However, this restriction reportedly only applies to large financial institutions, not other card-issuers, such as Visa or Mastercard.
Free Credit Score for Denied Borrowers
Upon not being approved for a mortgage, credit card, or auto loan due to a poor credit score, the new law states that lenders must deliver consumers their credit score free of charge. This should make it a little easier for consumers to be aware of why they are not approved for various types of credit. This new focus on maintaining a healthy credit score should help many consumers qualify for the best rates on mortgages, credit cards, and other personal finance products.
Fed Also Sets Minimum Credit Card Transaction Limit
The new law states that retailers can set minimum credit card transactions to no higher than $10. Furthermore, only the Federal Reserve can change this threshold.
More Requirements for Mortgages
Lenders will be held more accountable for determining whether a borrower is capable of paying back their mortgage. When this reform goes into affect, lenders will need to verify borrower income, credit history, and employment before approving them for a loan. Furthermore, they will be required to disclose the highest possible payment a borrower may face on an adjustable rate mortgage.