Red Phoenix Freaks!!!! What's going on out there?!?!? Holy Dodd Frank and Frank Dodd Act!!! However you want to think about it, its a ton of stuff! I won't go into the regulations about investments and insurance and blah, blah, blah, but I will tell you about what will directly affect you everyday! But first the good news! They are thinking about setting up a consumer hotline to report bad business practices! Can you imagine what that will be like? Who the hell are they going to hire to answer or even know what the Act covers? Probably outsourced for your frustration! More great ideas from the brain trust that created the housing CRUSH! What? Yes their is a gentleman who helped create the housing bubble who has a hand in this act. You have two guesses, and his name might be in the Act! :)
Bank Fees, swipe fees and what else, oh ya the impact as I see it! Here is a bit of a break down and the numbers aren't put into stone yet. Right now the average merchant card fee is about 44 cents per time you swipe your card to pay for products. The new deal is that will be reduced to 12 cents per swipe. That's more than a couple bucks, especially considering who really owns those merchant card machines. The banks own them with 4 banks owning the majority of the market share. That will be billions of more dollars lost, especially considering the now reduced over draft fees banks profited on. How will they make up the difference? No more free checking accounts for one, especially for those who keep lower balances.(most of the US) Also you will see fees if you write a real check, receive paper statements and there is a good chance you will have an annual fee for you check card. You can also say goodbye to other perks that go with your bank account and credit cards.
Now to the meat of it my friends! As a small business owner, my business bank account has fees associated with it as well. Small business will take a greater hit to their accounts with higher fees and it seems that business accounts won't be allowed to earn interest. So prices will go up to cover fees if you are going to use your card or overall. Banks will also charge a business for deposits, meaning if they have to count cash and checks, basic adding and counting there will be a fee. Then you're thinking maybe I'll get as much cash back using my debit card to avoid ATM's and just pay straight up cash. A business will reduce the amount of cash you can get back to offset that. Yes its been thought of already. If small business is going to get charged more, guess who ends up getting charged more again? You got it, US! So now you get hit for fees from your bank, and now the places of business you frequent will be charging you more if you use your card. The banks have to make it up somewhere and they always do! Don't you love regulations? I'm not even scratching the surface, I don't want to go to crazy in my simple blog but I'm telling you this deal is big. I've seen a lot of changes in the financial industry, there is always one constant. No matter how the government thinks they will control or regulate financial institutions, they are bringing a knife to a gun fight. The financial institutions found a way to profit and pay bonuses with the bail outs, and they will find a way to keep their profits again. Always have, always will and it will come to the cost of the consumer as always.
What can we as consumers do about this? Vote for one, but second we have to learn to manage our own economy within our lives and take control. Using credit wisely so we can take advantage of low interest rates and leverage our fragile hard earned dollar. If you need me friends, you know how to find me. I'm always around...
john@redphoenixco.com
twitter @deletebadcredit
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