5 Ways the Financial Reform Law Changes Your Money Habits

Last Updated Jul 21, 2010 1:48 PM EDT

This post was updated July 21, 2010.
It's official -- President Obama has finally signed the sweeping financial legislation known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. Now some provisions affecting consumers will go into effect within 24 hours. That could change the way you spend and borrow money.

The consumer-related provisions are significant, but not the central thrust of the reform law. The main focus of the legislation was to create a series of circuit breakers, financial industry limits, and federal oversight designed to prevent another epic credit crisis, like the one which occurred at the end of 2008. For what it's worth, former Treasury Secretary Henry Paulson Jr. told The New York Times's Andrew Ross Sorkin that having the bill in place in 2008 would have helped.

But those big-picture reforms come with a slew of provisions aimed more directly at individual banking habits. Here are some changes you can expect:
  • You'll be able to stash more money safely in the bank. And get more back if you lost money in a bank. The FDIC coverage limit gets permanently raised to $250,000, and that increase is retroactive for depositors in banks that were taken over by the FDIC in 2008, before the new limit became effective.
  • You may have to hit up the ATM more often. The legislation allows merchants to set a $10 minimum purchase requirement for credit and debit card transactions.
  • You may not be able to charge thousands in college tuition anymore. That used to be a nice way to pile up credit card rewards, for folks who could afford it. The new law gives both the Fed -- and universities -- the right to decline charges over maximum amounts they can set themselves.
  • You'll be protected from making some bad mortgage decisions. Mortgage brokers will no longer be able to get fat commissions for pushing people into bad loans. Origination fees on mortgages will be limited, and you won't get stuck paying a pre-payment penalty if you can find a way to refinance a bad variable-rate loan.
  • You'll have to read a lot more. Once the new consumer regulatory agency gets up and running, it's expected to focus on consumer education and financial industry disclosure. So, all that mail that you already get from your bank and credit card company? Expect lots more. If all goes as intended, at least it will be easier to understand.
Photo by Jeff Sandquist on Flickr.
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