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June 15, 2010 Tuesday 5:19 PM EST
SECTION: PERSONAL FINANCE; Personal Finance Daily
LENGTH: 949 words
HEADLINE: New credit-card rules simply move the pain around
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Congress is busy creating a lot of legislative murkiness for consumers to deal with right now.
There’s bank reform — what will the new Consumer Financial Protection Agency look like and how will it work, if and when lawmakers approve it? And, for investors, will lawmakers opt for the House’s provision requiring that brokers abide by a fiduciary standard when they give investment advice, or for the Senate version, which simply calls for studying the issue?
There’s the massive job-creation and tax-break-extension bill — will Congress once again extend emergency unemployment benefits, or not? Is the Cobra payment subsidy coming back anytime soon? Will Democratic Senator Harry Reid’s amendment that would extend the home-buyer tax credit deadline to Sept. 30 (for those who closed on a home by April 30) get attached to the bill, and will it get approved?
It’s confusing, to say the least.
But Tuesday the Federal Reserve stepped in to offer some certainty, at least on the topic of credit-card fees. The Fed set rules capping late and other penalty fees at $25. The cap is even lower for some transactions — the Fed said credit-card companies can’t levy fees higher than the dollar amount of the consumer’s misstep (for instance, if you’re late sending in your $20 minimum payment, the late fee can’t top $20). The Fed rules also prohibit inactivity fees, so if you don’t use your card, you’re OK. The new rules go into effect Aug. 22. Read Jennifer Waters’s story today for more details on the new rules.
It’s good news for consumers, sure. But don’t get too excited. Since the credit-card overhaul passed in 2009, credit-card interest rates have been marching higher. And as our colleagues at SmartMoney note in their story today, you soon may find your rewards programs getting trimmed.
Take away one source of income, and companies will be sure to make it up elsewhere.
— , Personal Finance editor
Federal Reserve caps credit-card penalty fees at $25
Consumers, particularly those who are consistently late in paying their credit-card bills, now can breathe a sigh of relief: The Federal Reserve said Tuesday it is limiting penalty fees to no more than $25 in most cases as well as banning so-called “inactivity” fees.
Could financial reform cap credit-card rewards?
Credit-card rewards programs have long been a staple of the industry, but new legislation could lower the benchmark on such programs by tamping down on a revenue stream that helps fund them – the fees businesses pay to accept plastic.
Dads find work-family juggle a struggle, too
Eager to spend more time with his kids and looking for more on-the-job flexibility, Steve Rosen, a 36-year-old father of two, left his job with Comcast in mid-April, and now helps his wife run her pet-services business, Fur-Get Me Not.
Commentary: Stocks don’t have to suffer in midterm election years
Midterm elections got you down? You’re not alone: Many of the advisers I track are arguing that midterm election years (like 2010) are bad for the stock market. But is there any basis for this suspicion? That’s what I set out to investigate for this column.
Why you shouldn’t convert to a Roth IRA
As 2009 came to a close, financial advisers geared up for an expected flood of clients looking to convert their traditional individual retirement accounts to Roth IRAs this year.
Delta plans a JFK makeover for premium travelers
Delta Air Lines Inc. has hit a significant hurdle in growing premium-passenger revenue out of New York: its lousy terminal at John F. Kennedy International Airport. <p>
Swiss lawmakers approve deal to hand UBS data to U.S.
Swiss law makers reportedly voted Tuesday to approve a deal allowing the names of thousands of UBS customers and suspected tax evaders to be handed to U.S. authorities.
ECONOMY & POLITICS
U.S. data point to wobbly recovery
The mixed bag of economic data released Tuesday shows a wobbly recovery in danger of being toppled over, analysts said.
What Obama won’t tell you tonight
President Obama plans to address the nation from the Oval Office tonight on the Gulf oil disaster. Better power up our baloney shields.
Home builders’ index dives after tax break ends
Pessimism among U.S. home builders grew in June after a tax break for home buyers expired, according to a monthly survey released Tuesday by the National Association of Home Builders.
Commentary: Double-dip recession back on table
Where are the big spenders, now that we really need them? The unexpected decline in May’s retail sales has many economists questioning the strength and durability of the nascent recovery.
Bank reform inches forward
Senate and House lawmakers are set Tuesday to consider moves to water down stricter proposed rules on credit raters, toughen rules for private equity firms and raise insurance fees for big banks as they start to iron out differences in their respective sweeping bank reform bills.
Democrats pound oil companies over safety plans
House Democrats pounded oil companies’ disaster-response plans on Tuesday, lashing out as five firms’ chief executives told lawmakers that they need to keep drilling in U.S. waters even in the wake of the disastrous oil spill in the Gulf of Mexico.
Commentary: Doomsday capitalism virus is spreading
Warning: “Capitalism as we knew it is dead.” What a grabber! A flashing neon sign on Times Square near Morgan Stanley? No, it’s the headline on a promo ad for the new book co-authored by the highly regarded American editor of the world’s leading business magazine, the Economist.
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