New Rule to Protect Your Financial Information

The Consumer Financial Protection Bureau (CFPB) has issued a new rule to help Americans regain control over their financial information. They call it, Personal Financial Data Rights. 

More Control Over Financial Data

As anyone who has tried to switch banks can tell you, it can be difficult because financial institutions don’t necessarily share information. Well, that’s where the new rule comes in. Now, banks, credit unions, credit card companies, and other financial institutions must unlock the consumer’s financial data and move it to another institution at the consumer’s request.

How it works. If a consumer wants that data transferred to another company, the previous company must do so for free. This new rule from the CFPB makes it much easier to change your financial institution and credit cards. The rule also creates competition among financial institutions to keep you from moving your business elsewhere. This may benefit consumers as institutions use incentives in terms of better rates and lower pricing to keep your business. 

Benefits of the New Rule

Young people also stand to benefit from this new rule.

• Access to Credit. Typically, young people have shorter credit histories, with this rule they may have more access to credit or better credit terms, by allowing lenders to provide loans based on the financial information, like income and expenses, held by other institutions, such as information on income and expenses.
• Full Control. Another benefit of Financial Data Rights is that companies won’t be able to use your data for their purposes. You and only you are in control of your information.

Downsides of the New Rule

The only downside of the Personal Financial Data Rights rule is that companies have until 2030 to comply with the ruling.

Do One Thing: Consider a credit freeze to help keep your financial data more secure.

For a full summary go to the CFPB website.