Credit Cards For Less Than Perfect Credit

The jumbo financial reform legislation sitting on the Senate floor has 200+ proposed amendments to overhaul Wall Street as well as Main Street. It’s aimed at regulating financial institutions and protecting consumer issues to avoid future financial meltdowns and better protect consumer interests. The legislation addresses everything from the creation of a consumer financial protection agency to safeguards against big bank bailouts. If it passes, how will this epic financial reform proposal affect the everyday consumer?

1. Free Credit Scores For Certain Consumers. A consumer’s credit score must be provided to him or her for free by a lender or financial institution if it was used to deny credit, resulted in a higher interest rate on a loan, or prevented a job applicant from being hired.
2. Consumer Protection Regulatory Committee. This body will centralize regulatory activity to a single agency with the sole purpose of protecting consumer interests, such as ensuring consumers are informed about financial products and banning exorbitant fees such as mortgage prepayment penalties (a penalty for paying off your mortgage early).
3. Higher FDIC insurance increase. The FDIC coverage limit for individual accounts was raised from $250,000 from $100,000 in the midst of the financial crisis, a change that is set to expire in January 2014. This provision will make the FDIC insurance coverage increase permanent.
4. “In the best interest of the customer”. Brokers, dealers, and investment advisers must act “in the best interest of the customer” when giving personal investment advice, which means they must disclose conflicts of interest, sell suitable investments, and inform consumers when they sell a limited range of products.
5. No more bailouts. This set of reforms will protect taxpayers from bearing the brunt of government bailouts of so-called “too-big-to-fail” banks, and includes provisions such as raising the level of capital requirements for banks by 2 to 4 percentage points. This would ensure that “U.S financial institutions hold sufficient capital to absorb losses during future periods of financial stress”.
6. No more credit checks for employment purposes. There are some exceptions to this reform, such as jobs related to national security, local and state government agencies, or jobs handling financial accounts.
7. Regulate payday loans. Payday loans (short term loans that carry high interest rates) will be federally regulated. Limits include restricting consumers to 6 payday loans within a 12 month period and requiring lenders to offer extended repayment plans if a borrower can’t pay.
8. Credit card interest rate cap. Finally! The CARD Act required notifications to consumers about interest rate hikes, but never capped rates. This provision limits interest rates to 15 percent. It also prohibits issuers from charging additional fees that evade the cap on finance charges.
9. Preemption. U.S states will be given expanded authority to regulate national banks. Currently, states have no right to enforce federal protections. The amendment also makes it easier for banking regulators to block state officials from pursuing some consumer protection cases—even those not covered by federal law.
10. ATM fee cap. ATM transaction fees must “bear a reasonable relation to the cost of processing the transaction,” and will be capped at 50 cents per transaction.

    (Sources: MyBankTracker, MSNBC, BNET)

This financial reform will undergo some gutting, cutting, and compromise before its passed on the Senate floor, and will still need to be reconciled with the House’s bill before it lands on Obama’s desk. This is not the final draft of the landmark legislation as there are still some talks underway and some amendments on the chopping block. But by the time this bill passes all of Capitol Hill’s hoops, it will soon change the way financial institutions operate and consumer finances are protected.