Credit card interest rates, ATM fees among proposals tied to financial overhaul
The planned creation of a consumer financial protection agency isn’t the only aspect of regulatory reform that could affect your wallet.
Although much of the legislation working its way through the Senate is aimed at Wall Street, among nearly 200 proposed amendments are dozens that address consumer issues. From capping credit card interest rates and ATM fees, to limiting third-party access to your credit report, senators have put forth an array of proposals that could affect your financial life.
Here are some of the most notable:
■ Free credit scores. One of few amendments that has bipartisan backing is a requirement that each of the three credit reporting agencies provide a free credit score once a year, the same way they must now provide a free annual credit report. Reasonable fees could be charged for further scores.
■ Make FDIC insurance increase permanent. As part of the government’s response to the financial crisis, the limit on Federal Deposit Insurance Corp. coverage for individual accounts was raised to $250,000 from $100,000 in an attempt to calm depositor’s fears and prevent runs on banks. The extension expires on Jan. 1, 2014. This amendment would make the higher limit permanent. Supported by both the banking industry and consumer advocates, it’s likely this amendment will make it through.
■ Ban the use of credit checks for employment. Lawmakers in at least 16 states have proposed prohibiting current or prospective employers from using credit checks for employment purposes, even if an individual consents. This amendment would make such a ban federal law — with exceptions for certain jobs related to national security, working with specified state or local government agencies, or handling customer funds or company financial accounts.
■ Exclude nonfinancial merchants. Several amendments would exempt businesses that extend credit — but that aren’t banks or credit unions — from the protections on consumer lending. One amendment excludes auto dealers and another small retailers that offer credit. There’s likely to be heated debate over which businesses should be covered by the law and which get a pass.
■ Credit card interest rate caps. One proposal would limit credit card interest rates to a maximum 15 percent. The amendment would also prohibit card companies from charging other fees, not considered finance charges, to evade that limit. The amendment would cap the total sum of such fees so that they don’t exceed the interest charges.
■ ATM fee cap. This amendment would require fees charged for transactions done at ATMs to “bear a reasonable relation to the cost of processing the transaction,’’ and would be capped at 50 cents per transaction. The proposal would cut into the profits of independent ATM operators, along with banks. It has just a handful of liberal sponsors and faces an uphill battle to pass.
Eileen AJ Connolly is a personal finance writer for Associated Press.