Financial changes you need to know about for 2011

imageBy Shay Olivarria

Welcome to 2011. There are some great changes taking place on the financial landscape. I’m going to give you the skinny on some that you might not be aware of.

College students will not longer be able to get credit cards
Due to the Credit Card Accountability, Responsibility, and Disclosure Act or CARD Act for short, people under 21 years old will no longer be able to get credit cards unless they can prove that they have enough income to pay back the debt or they get a co-signer. The biggest group that this will affect is college students. This will help stop young people from racking up debt that they don’t understand and can’t pay off.

Banks are no longer able to automatically enroll customers in over-draft protection
When you signed up for a checking account a few years ago you were automatically enrolled in the bank’s overdraft protection program. It sounds helpful, but many customers found out that banks were arranging transactions, making sure the largest transactions go through first, to make sure that they could rack up overdraft fees when several smaller purchases went through and the account was already overdrawn. New banking regulations make sure that banks can no longer automatically enroll customers in overdraft checking.

You can still enroll in overdraft protection if you want it, but you have to make the effort. With overdraft fees averaging $35 per item in 2010, customers will have to choose to keep a better eye on their finances or pay to the use the service, but from now on it will be your choice.

Full retirement age is now 67 years old
According to the Social Security Administration, “Full retirement age (also called “normal retirement age”) had been 65 for many years. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959.” That means that the average American will have to work two years longer than they may have thought before they can access Social Security benefits. Check here to find out what your full retirement age is.

Free checking is over
Now that there are more restrictions on how banks can earn fees, the time of free checking is over. Many banks such as Bank of America, Wells Fargo, and Chase are charging, on average, $15 per month account maintenance fees. You may still be able to get free checking if you agree to a minimum amount of debit card transactions, direct deposit, and minimum balance requirements. If you’re not sure if you can fulfill these requirements, a great option is to open a checking and savings account at a credit union.

Credit unions are exactly the same as banks, but when you are a part of a credit union you own part of the financial institution. This enables the credit union to offer lower loan rates and better customer service. You can join a credit union if you live in a particular county, work at a job that has a credit union, or worship at a religious center that has a credit union. Find a credit union by clicking here.

401k contributions may become mandatory
Due the current financial crisis, the government is considering making employee contributions to 401ks mandatory. That means that from the first day on a new job, employees would be enrolled in an automatic plan to invest at least three percent of your earnings in employer-sponsored retirement plan. Those plans would, more than likely, be target date mutual funds, increase contributions one percentage point each year until your contribution was 15 percent on your pre-tax income, be vested (that means you could take the money you contribute and the money your employer contributed from day one) from the first day you open the account, and you wouldn’t be able to take the money out until you reached retirement age.

Like most things in life, everything has good and bad aspects. It’s important to know what’s going on so you can choose how you incorporate these changes into your life.

Shay Olivarria is a professional speaker and the author of 10 Things College Students Need to Know About Money. Join her on Facebook.