by Ryan Almodovar
You are probably sick and tired of hearing about the recession and the financial industry. As you know, they contributed primarily through the bundling and the re-selling of subprime mortgages, which of course began a domino effect of financial strife, bailouts, tea partiers with poorly spelled signs, and a new slew of regulations being placed by the government.
Out of the regulations put into place, perhaps one of the most comprehensive was the Dodd-Frank Act. The act, written by Senators Chris Dodd and Barney Frank, sought to put restrictions on an industry that was beginning to spiral out of control. For example, credit card companies now have to be transparent on their billing statements, clearly noting the penalties for late payments and removing financial jargon. The law also created Regulation E, which states that you, the customer, must agree in advance before you are allowed to overdraw a deposit account with your check card. You can call your bank right now and request yourself ‘opted out,’ which essentially means you are limited to the amount of funds accessible on your ATM/Debit card – the banks can’t tag you with overdraft fees.
As Dodd-Frank took care of the average consumer, there were also changes that are still set to affect the banks themselves. One provision of the act mandated that banks reduce their ‘per swipe’ card fees to merchants, meaning that small business owners who would use a card machine would no longer get gouged for their services. The typical charge to the business for ‘swiping’ a card was averaging 40 cents, but as of July 21st, a new provision takes effect that reduces that fee up to 70%.
Great news for the small business person, right?
The truth is that the banks are about to take a hit in their pockets, and they will do everything they can to pass the difference off on the consumer. For example, your bank might start seeing some radical changes. The idea of a ‘free’ checking account can very well be a thing of the past, with more and more banks leaning towards monthly maintenance fees and even an annual fee for debit cards. ATM fees have already skyrocketed, with $5 fees being tested in certain markets. Any sort of rewards program that you had before might be shut down to save on costs.
So what can you do to prepare yourself? If you see your institution hiking up their rates, shop around. You are still likely to find something cheaper, especially if you go with a smaller local bank or even a credit union. If you still need your national bank, get smart about ATM usages. Buy a pack of gum at a convenience store and get cash back. No fees for doing this, and it’ll keep your breath minty fresh. These changes are quickly approaching, and like the banking industry changes, we need to change as well to be smart consumers and stay in the black.
For more information about Ryan, visit Awkward and Dangerous.
Disclaimer: The views and opinions expressed in this article are solely those
of the author and should not be understood to be shared by Being Latino, Inc.