A new reform bill known as Dodd Financial Reform Bill have been passed to give better protection to consumers. The bill mainly focuses on regulations for Wall Street, and gives more power to the Federal Reserve. Also a new monitoring institution has been designed to focus on the various credit and lending institutions.

The 5 Changes are:

1. The market gets a new monitor: The market gets a new monitor, the Consumer Financial Protection Bureau (CFPB) who will monitor over the lending institutions and the process. This new agency has been created to provide added protection to the consumers. CFPB is also supposed to provide education to the consumers through the Office of Financial Literacy, and take complaints by the consumers against illegal financial practices.

2. Regulation on private student loan: Government took over the power of government student lending (subsidized government loans) in 2009 but private student lending remained mostly the same. Generally, private student loans don’t come with the same protections which government student loans provide. This bill aims to bring the private student loan industry under the thrift supervision of CFPB.

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The Federal Reserve introduced new credit card rules which will take effect from 22nd August, 2010.  These rules will limit certain fees on the credit cards and also make it possible to decrease the interest rate. The new rules addresses not only credit cards, but have outlined some rules on gift cards too. These rules will be an addition to the rules on credit cards which were introduced on 22nd February, 2010. This Act will be called Credit Card Accountability, Responsibility and Disclosure (CARD) Act.

Top 5 Rules on credit cards

1. Limit on late payment fee – Before credit card companies could charge you late payment fees as high as $39. Now, according to the new rule if you have not been late in the last six months the card company cannot charge a late fee more than $25. However, if you have been late before too in the last six months the late fee can go up to $35. Also a credit card company can charge you more than $25, in case they can show that they incurring high costs due to the late payments.

2. Late payment fee less than minimum payment – The late payment fee cannot be more than the minimum payment that you are supposed to make on your credit card. If your minimum payment on a card according to the contract is $20, the card company cannot charge you a late fee more than $20.

3. Inactivity fees – A credit card company cannot charge you inactivity fees in case of no activity on the card account.

4. Rate increase explanation – If a credit card company increases the Annual Percentage Rate (APR) on your card they are required to explain you the reason for the increase in the APR. The card company is also required to re-evaluate the rate increase in every six months, and if there are possible reasons they are supposed to reduce the interest rate within 45 days of the re-evaluation.

5. Only one fee – No credit card company can charge you more than one fee on a single transaction that violates the original card contract. Like if you are late on your payment you can be charged only a late payment fee.

Below is the rule on gift card

The credit card companies cannot inactivate a gift card before 5 years from the date of issuance or from the date of last activity on it (whichever applicable).

These credit card rules along with the previous ones will provide additional protection to consumers, and limit the profitability of the credit card companies. These rules will make paying off credit card debt much easier.

It’s great news that your cell phone can be doubled up as payment cards. According to recent reports Verizon and AT&T are together planning to bring a phone payment system, and are said to be tying up with T-Mobile to introduce smart phones as a replacement for your credit cards. In future you may be able to make your payments using your phone instead of your credit card.

Till now there are no exact details on the technicality of this process, according to market strategists customers can make the payments simply by holding their phone infront of an electronic reader. The phone will be emitting a radio wave that will connect with the electronic reader in the shop.

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