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This morning a House-Senate panel in charge of merging two financial reform bills into a final version reached an agreement. Both chambers of Congress still have to approve the compromise legislation, dubbed the Dodd-Frank Act after its main authors, Sen. Chris Dodd and Rep. Barney Frank, before it can go to President Barack Obama for his signature.
Portions of the bill, if it passes, will increase access to credit scores and create winners and losers at the checkout register.
Free credit score with credit denial
If a lender, insurance company, landlord or employer rejects your application or offers you a higher rate because of a credit check, the company must provide you with a free credit score. The score provided must be the score that was used to make the adverse decision. In the case of employers, who can check credit reports but not scores, it remains to be seen what score they must provide.
Winner: People whose application gets denied because of their score will gain insight into the factors hurting their credit rating.
Loser: People with good credit. If they never get rejected or offered nonprime terms, then they won't get a free credit score. Those with high credit ratings still have to pay to see their FICO score.
Change at the register
The Federal Reserve would oversee interchange fees charged for the processing of debit card transactions. These fees must be "reasonable and proportional" to the costs incurred by the payment card network, such as Visa and MasterCard, and issuer in the processing of the payment. The reasonable fee requirement doesn't apply to debit card issuers with less than $10 billion in assets.
Payment networks can't block retailers from offering discounts to customers for using cards tied to a competing payment brand, as long as the discount doesn't discriminate against any issuers. Payment networks also can't restrict retailers from offering incentives for using any general form of payment over another, such as cash instead of cards, or debit cards instead of credit cards. Basically, merchants can offer discounts as long as they those discounts don't discriminate towards cards issued by particular financial institutions.
The bill also says that payment networks can't block merchants from setting minimum and maximum transaction amounts for the acceptance of payment cards, as long as the transaction restrictions apply to all issuers and payment networks.
Winner: Those carrying cash, or the preferred form of payment in their wallet can take advantage of discounts offered by stores for using cheaper forms of payment.
Loser: Anyone not carrying enough cash to make a small purchase at a store that requires a minimum purchase amount to use a card.
What do you think of these reforms?
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The Federal Taciturnity would oversee turn fees charged for the processing of debit separate transactions. These fees must be "valid and proportional" to the costs incurred by the payment card fabric, such as Visa and MasterCard, and issuer in the processing of the defrayment. hey incur a value, they should be allowed to passing at smallest melody of that expenditure on to fill who crusade the cost and help group who don't. It also strikes me as unbalanced that the intermediate consumer has right to near $19,000 in assets on all their cards. Hopefully these new regulations product to change consumers' credit and outlay habits.
It strikes me as odd that for so long, merchants weren't allowed to set minimums for credit card purchases. They incur a cost, they should be allowed to pass at least part of that cost on to people who cause the cost and benefit people who don't. It also strikes me as insane that the average consumer has access to about $19,000 in credit on all their cards. Hopefully these new regulations work to normalize consumers' credit and spending habits.