2010 means new bank, credit card, and financial regulations for consumers. Many of the regulations that will go into effect have the consumer in mind, unfortunately, they’ll also cause the banks and credit card companies to lose a around $50 billion in revenue that they’ll need to make up somewhere else.
It’s important that all consumers know where the banks and credit card companies will be losing money this year, and where they’ll attempt to make it up so we don’t get gauged with hidden charges.
The Wall Street Journal goes more into depth about the specifics that consumers should expect in 2010 in a must-read article for any consumer.
So what actions should consumers take to make sure they’re ready for the new legislation in 2010?
Here are 5 to keep you ahead of the game.
- Get efficient with your accounts
As banks and credit card companies attempt to trim their account sheets, they may impose charges for inactive accounts.
The new year is the perfect time for a fresh start, so go through your financial accounts (checking, savings, debit, credit) and find any that haven’t been used for more than a year.
Closing checking and savings accounts is easy, but closing dormant credit cards is a little more difficult because you have to judge the effect it will have on your credit score.
If it’s your oldest credit card – keep it. Closing it will lower your credit score because it will lower the length of your credit history.
If it’s your card with the highest limit – keep it. The amount of credit you have is also a positive in terms of credit scores. Closing this account will only set your credit back a few years.
Any other inactive card – close it. The effect the closing will have on your credit score is very small and you should be able to fully recover in no time. You won’t have to worry about the card getting charged with an inactive fee and your accounts will be that much more efficient which is always a good thing.
- Switch all statements to online statements
Part of the legislation demands that credit card companies be more up front with the specifics of the consumer’s credit card. This will create more paper for the credit card companies, and they’ll probably start charging you for paper statements.
Now is the time to switch to online statements if you already haven’t. Not only will you save cash, but you’ll help the environment and unclutter your life of unnecessary paper bills.
Make it easy for yourself and switch every account you have to online statements. Sign into every one of your financial accounts (banks, credit cards, investing accounts, insurance, etc.) and switch to online statements. This way you’ll know all of your statements will be arriving in your email inbox, instead of just your credit card statement.
- Open a free checking account while you still can
Banks will soon have to receive the consent of the consumer before they can charge overdraft fees on checking accounts. Because this will cause a huge loss in revenue – the Fed estimates banks receive $25 to $38 billion a year in overdraft fees – free checking accounts may quickly disappear.
The legislation hasn’t gone into effect yet, so you can still get a free checking account today. Go to the bank that is closest to your house and sign up for their simplest free checking account.
Later this year, the banks will start requiring a minimum amount in these checking accounts to avoid a fee, but it’ll be a lot more difficult for them to change existing accounts.
- Say goodbye to easy credit card rewards
Credit card rewards for the average credit card user will be cut. It’s not worth it to the credit card companies to provide these rewards to their lower spending customers so don’t be offended when your credit card’s rewards are cut or you can’t find a card with good rewards.
People who use their credit cards for all of their purchases in order to get the rewards will be angry, but once the legislation has some time to breathe, rewards will slowly come back.
- Be prepared for pushy banker sales
Banks will try to get their lost revenue back through a variety of new programs. If you visit your bank, don’t be surprised if they attempt to sell you on new a new debit card, a savings account, or even a mortgage. Just say no and walk away. They’ll get the hint.
If they repeatedly disrespect you as their customer, consider moving all of your accounts to an online bank like ING Direct.
Online banks provide checking and savings accounts. You can get a debit card, have your paychecks deposited their, send in money slips, have access to ATMs, and you won’t get hassled by pushy salespeople. These online banks are getting better and better so take a look at them if you’re not liking your brick and mortar bank.
The credit card legislation will go into effect in February and the banking legislation will be spread out across 2010. Be prepared as a consumer and you should have no problems dominating your money this year.
For more reading about the new legislation, check out this Google News link which provides around 25 articles and blog posts on the topic.
Are you happy to see this legislation pass? Will it help your finances in 2010?
Photo by peasap