Yesterday the Senate rejected a proposed amendment to the financial reform bill before Congress that would have imposed states' usury limits on national banks that issue credit cards. Currently, a combination of laws makes credit card interest rate caps null and void. Federally-chartered credit unions have a usury cap of 18 percent for credit cards.
What do you think the interest rate cap should be for credit cards?
Another proposal, which the Senate passed last week, would limit interchange fees charged by Visa and MasterCard on debit transactions. These fees amount to a small percentage of the purchase price, usually 2 percent, and go to the payment processor and card issuer, reducing businesses' profit from transactions paid with plastic. The bill would also allow merchants to refuse card payments for small transactions and offer customers discounts for using less expensive forms of payment, such as cash.
Interchange fees help fund rewards programs, so a consequence of restricting swipe fees could be reduced rewards and/or annual fees for those rewards.
Consumers likely won't see much direct benefit from interchange reform except when issuers offer cash discounts. Businesses don't have to pass on their savings to customers.
The Senate did approve an amendment that packs obvious consumer benefit. The Fair Access to Credit Scores Act from Sen. Mark Udall, D-Colo., would allow consumers to get a free credit score if a credit check resulted in the denial of an application or job. Note: employers check credit reports, not scores.
Currently, the Fair Credit Reporting Act gives you the right to a free credit report if a company makes an adverse decision based on a credit check. (You also have a right to order a free credit report from each credit-reporting agency once every 12 months through AnnualCreditReport.com.) The company must provide a notice of adverse action that includes the contact information of the credit reporting agency that provided the information, and you must request the credit report within 60 days of receiving the notice to obtain it for free.
Would you check your credit score if you were turned down for a loan? Under what circumstances, if any, should people have the right to a free credit score?
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