The bottom line Effects of new banking rules register with consumers

Published 12:01 pm Wednesday, September 15, 2010

The trickle-down effects of new federal banking industry rules are being felt right here in Vicksburg.

“The (2008 government) bailout of the banks triggered it,” said Dr. Bobbie Shaffett, a Mississippi State University Extension Service professor of family resource management who gave a lecture, “New Rules for Credit Cards, Debit Cards and Gift Cards,” Monday during a Money Mentors session at the Warren County Extension Office.

The regulations, enacted Aug. 22 by the board of governors of the Federal Reserve, the nation’s central banking system, aim to protect credit, debit and gift card users.

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“People were saying, ‘Our government is bailing out the banks, and then the banks are putting it to us,’” Shaffett said. “We needed to do something that will put limits on what they can do to people. All of the rules that are changing are in (the consumer’s) favor.”

Rolled into the new rules are options regarding bank account overdraft protection.

Before Aug. 22, bank customers received letters and likely saw signs, such as the ones at Trustmark, that asked them to “opt-in.”

“Some banks have an overdraft privilege, and some banks give it to consumers right away,” said Debra Kette, senior vice president at RiverHills Bank. “Customers have to opt-in because of the new regulations. We can’t pay on overdrafts unless customers give us the OK to do it.”

Overdraft protection occurs when a bank pays for a transaction, though an account doesn’t contain enough funds to cover it. Banks typically charge an overdraft fee, which varies by institution, Kette said, and has no federal cap.

Under the new rules, credit card companies are restricted on the kinds and the amount of fees being charged.

Prohibited is a late fee of more than $25 unless one of a cardholder’s last six payments was late or the costs incurred can justify a higher fee.

Previously, as much as $39 was charged.

Additionally, credit cards cannot charge late fees that are more than the minimum payment, and cannot charge an inactivity fee for more than one fee for a single event. If a company decides to change fees or interest rates, a 45-day notice must be issued.

Consumer Susan Morang said she is confident the rules will benefit the public.

“The old rules have been hidden,” said Morang, who attended the Extension’s Money Mentors session. “Consumers definitely need this protection. I think the new rules are wonderful.”