Financial Literacy Tuesday Tips 
Each week the Iowa Bankers Association (IBA) sends Tuesday Tips on consumer financial literacy to market leading television stations. Bankers, consumers and news reporters may learn how better to use their money.
New credit card reforms to kick off new school year
4 Back-to-School Money Tips for Teens
7 Money-Saving Tips for Back-to-School Shopping
Money-Saving Summer Travel Tips
5 Ideas for Inexpensive Summer Fun
5 Questions to Ask When Deciding Whether to Rent or Buy a Home
Regulation E: What consumers and merchants need to know
5 Financial Tips for College Graduates
Watch Your Child's Savings Sprout
4 Smart Ways to Spend Your Tax Refund in 2010
April is National Financial Literacy Month
Avoid 2010 Census Scams
6 Ways to Save Some Cash This Spring
New Fed Rules give consumers additional overdraft options
Make the Most of Gift Cards
FDIC Insurance Coverages: Seven Tips Small Business Owners Need to Know
Seniors should get the facts before considering a reverse mortgage
Fight identity theft by reviewing your credit reports
Payday loans offer quick cash, but be prepared to pay a hefty price
Be a smart shopper during the holiday shopping season
Improve Your Credit Score
Cashier’s Checks - Good As Cash?
Tips to Help You Keep Your Financial Information Private
When the Economy Cools Down, Financial Scams Heat Up
Understanding the value of FDIC insurance
When can depositors expect to receive their money?
Top 10 Money Management Tips for College Students
New credit card reforms to kick off new school year
If you’re sending a child off to college this year, you may be about to breathe a sigh of relief: It should be harder for them to get into trouble with credit cards. However, it may also be harder for students to establish a good history of credit during their college years.
A new law, enacted as part of the wide-ranging credit card reforms that took effect this year, requires anyone under the age of 21 who seeks to open a credit card to first prove that he or she can afford to pay back whatever amount borrowed through credit cards—or find a parent or someone over the age of 21 to act as a co-signer. The law limits fees that creditors may charge to 25% of the credit limit in effect when the account is opened. Additional provisions protect students from changes in interest rates, fees and charges, and from automatic increases in credit limits.
Before co-signing for your child’s credit card, you should know that any late or missed payments will damage your credit score in addition to your child’s. You will, however, be able to receive monthly statements, and your authorization will be required before the credit limit can be increased. NOTE: creditors must allow students to “opt in” to charges that would exceed the established credit limit (“over-the-limit transactions”).
Though the new law may make it harder for students to establish credit, financial experts say establishing a line of credit at a young age is a positive thing. If used responsibly, credit cards can help young adults build a strong credit profile. Here are some tips for college students—and anyone else— looking to establish a history of good credit while avoiding debt.
- Pay off all balances in full every month or pay as much as you can, making the largest payment on cards with the highest interest rate.
- Get secured credit cards, or cards backed by a deposit when the account is opened. The amount deposited acts as the card’s limit. If at any point the account holder can’t cover purchases made on the card, the deposit covers any outstanding balance, and the account is closed.
- Know your credit limit and stay below it. Card issuers charge a penalty for each transaction that exceeds your credit limit. Keep your card balances at 50 percent of your limit or below. Anything over 70 percent of your limit damages your credit score.
- Open a card that reports to credit bureaus. The three major credit bureaus are Experian, Equifax and TransUnion. Make sure the creditor granting your credit account reports to all three of the bureaus.
- Use your credit card for monthly charges. Recurring monthly charges, such as electric, cell phone and cable bills, provide a more consistent stream of credit than food or restaurant tabs.
These money-saving tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
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August 10, 2010
4 Back-to-School Money Tips for Teens
Teens have a lot on their minds as they prepare to go back to school this fall – class schedules, sports, activities, text messages, friends and Facebook, just to name a few. Managing money may not be at the top of their priority list, but this time of year is an opportunity for parents, grandparents and mentors to offer some financial guidance for the teens in their lives. Here are a few tips for teens to consider as they head back to school this year:
• Know where your money goes. You may have money from birthday gifts, a summer job or a part-time gig – the question is, how do you spend it? To help manage your money, it may be helpful to track how you spend your money on a regular basis. Whether you’re buying new clothes, movie tickets, fast food or video games, try keeping a list of your expenses during the month to see how you’re spending your hard-earned cash.
• Spend wisely. Before choosing to buy that cool new gadget you’ve been wanting, take some time to ask if you’re making a smart spending decision. Can you afford to spend money on the item? Do you really need the item, or is it something you want? Have you done enough research? Are you getting the best price? Stopping to ask yourself these questions will help to ensure you’re spending your money wisely.
• Set savings goals – and start a savings account. You may already have some savings goals in mind. Maybe you’re saving for a future purchase – like a bike, moped or car – or you may even want to start saving for your college education. If you’re ready to save your money, a great way to start is by opening up a savings account at your local bank. Your local banker can help you find the right savings account for you. Savings accounts allow you to keep your money in a safe place while it earns a small amount of interest. You’ll be able to deposit money into your account, and you’ll earn a specified amount of interest on that money. Your money will be also available whenever you need it – whether you’re ready to make a purchase or go off to college.
• Protect your personal information. Even if you don’t have your own checking account or credit card, criminals can still use your name, address and Social Security number to illegally obtain an account or credit card under your name. This is known as identity theft and could be harmful to your credit history. It’s important to take steps to protect yourself against identity theft. For starters, be suspicious of any requests for your name and Social Security number. Keep your Social Security card in a secure place, and don’t carry it with you. If you have a bank account, don’t share the account information with any person or organization – even if you receive a phone call, text message or e-mail that seems to be legitimate.
These money-saving tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
August 3, 20107 Money-Saving Tips for Back-to-School Shopping
It’s back-to-school time, which means it’s also back-to-school shopping season! As a new school year approaches, shopping for school supplies doesn’t have to break your family's budget. Here are seven tips to help maximize your savings this year.
- Reuse items from last year. If you dig deep enough in your closets, you may find plenty of school supplies left over from last year. Take time to do an inventory of the supplies you have on hand, and plan to reuse items that are still in good condition.
- Determine your family’s needs for the year. Before you begin shopping, take time to review the list of supplies provided by the school and compare it to the items you already have on hand. Create a list of the items you’ll need to purchase – and then be sure to stick to your list.
- Determine your budget. Decide how much you plan to spend for back-to-school shopping this year. As you do your shopping, keep a record of your purchases and be aware of how these purchases fit into your overall budget.
- Comparison shop. Scour the weekly ads to find the best prices on supplies and back-to-school basics. Keep a list of these prices with you so you can easily compare prices and find the best value.
- Search for quality used items. You may be able to find great deals on clothing items, backpacks and other supplies at consignment stores or garage sales. Taking time to find quality used items can pay off when you find the items you need at a fraction of the price.
- Stock up for the year. Many discount stores offer their best prices on supplies during the back-to-school season. If your budget allows, it may be worth buying extra folders, notebooks, pens, pencils and other supplies while they are on sale. This way you’ll have a supply built for the rest of the school year that can even be reused next year.
- Involve your children in the process. Parents and mentors can use the back-to-school shopping experience as an opportunity to explain the difference between “wants” and “needs.” For example, your child may want to purchase a box of pencils featuring their favorite cartoon character or superhero, but at $3 per package, the pencils are a luxury compared to a standard box of pencils that may cost 50 cents. Discuss the difference between “wants” and “needs” and explain how this has an impact on your family’s back-to-school shopping budget.
These money-saving tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
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Money-Saving Summer Travel Tips
Planning a summer getaway? Your summer vacation doesn’t have to break your budget. Here are a few money-saving tips to consider as you plan your ultimate summer getaway.
- Find deals online. Spend time searching for great travel deals online. Keep in mind that you may be getting a bargain at a specific destination because the weather at that time of year may be less than ideal. Be sure to do research in advance so you know what to expect.
- Thinking outside the box can pay off. Expand your search beyond traditional hotel stays to include time-shares or weekly house rentals. You may be able to get a full week of accommodations for less than you would spend on two or three nights at a hotel!
- Find coupons and discount codes before you leave. Planning to enjoy dinner at a particular restaurant or spend the day at an amusement park? Search for coupons online before you leave, and be sure to take advantage of discount programs and other discounts that may be available through your employer or other organizations.
- Take advantage of frequent flyer programs. Traveling by airplane? Don’t miss out on a chance to earn perks by participating in frequent flyer programs.
- Enjoy time at home. A great summer getaway doesn’t have to cost a lot. Consider a “staycation” and spend quality time with family and friends at home.
These money-saving tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
5 Ideas for Inexpensive Summer Fun
Summer is officially here! Here are five low-cost ideas to help you enjoy the summer months without breaking your budget.
- Explore your local library. Spend an afternoon exploring the library and you'll discover a wide range of books, DVDs, magazines and audio books that are available. These free resources are perfect for long car rides, family vacations or lazy days this summer. Be sure to check the library calendar for special events – such as book clubs, special classes or reading programs – that are often available at no charge.
- Get active – and get outdoors! Summer is the perfect time to spend time outdoors hiking, biking and exploring local parks and nature preserves. Most of this outdoor fun is free, but you may decide to spend a few dollars to rent a canoe or kayak and cool off on the water. Pack a picnic and spend the day in the sun – just be sure to pack plenty of water and sunscreen!
- Dust off the board games. If you find yourself looking for something to do on a rainy day, don’t forget to check the closet for the classic board games you haven’t played in awhile – checkers, chess, Monopoly, dominoes, Scrabble and your other favorites. Get your friends and family together for an evening of inexpensive fun and friendly competition.
- Watch the stars. On a clear evening, spread a blanket in the backyard and do some stargazing. Find a map of constellations online or at the library to help you identify the stars you are seeing. With some additional planning, you may even be able to see special events like comets or meteor showers.
- Capture memories in a journal or blog. Keep a record of your summer activities, vacations and memories by creating a journal or starting your own blog. There are plenty of websites that offer free services and software to help you create your blog and begin publishing content in minutes. Add photos of your adventures, and by summer’s end you’ll be able to reflect on your summertime fun for years to come.
These money-saving tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
5 Questions to Ask When Deciding Whether to Rent or Buy a Home
June is National Homeownership Month, and it’s the perfect time to celebrate the role that homeownership plays in the lives of families and communities. Owning a home is an important goal that many Americans dream of and are willing to work hard for.
This year, first-time homebuyers have a lot to consider when making the decision to rent or buy a home: interest rates are at all-time lows, there’s still plenty of housing stock and prices are at or near their lowest in years. Yet deciding whether to buy a home or rent an apartment can be a complicated decision. How do you know what’s right for you? Potential buyers should ask themselves several key questions before making this important decision.
- What will monthly costs be, and can I afford the payments?
Keeping mortgage payments under 30 percent of your monthly income is a good rule of thumb. If you can’t keep mortgage payments below that, you may be better off renting for awhile.
- What other debt do I have?
Total rent or mortgage payments plus credit obligations should not exceed 35 to 40 percent of monthly income.
- What is my credit score? Can I qualify for a good interest rate?
A high credit score indicates strong creditworthiness, and that qualifies you for better interest rates on a mortgage. The impact of a credit score on interest rates can be significant. For instance, a borrower with a score of 760 could pay nearly two percentage points less in interest on a mortgage than someone with a score of 620. Lower interest rates also mean lower monthly payments. If your credit score is low, you may want to delay buying a home until you can improve your score.
- How much will taxes, monthly maintenance, or other fees cost?
Owning a home means you’ll have to pay real estate taxes and other costs like insurance and maintenance. On the other hand, owning a home brings big tax savings at the end of the year. As a renter, the owner pays those costs for you.
- How many years will I stay here?
Generally, the longer you plan to live in one location, the more it makes sense to buy. You’ll build equity in your house and its value may increase over the years.
These are just a few of the many important questions to consider before deciding to purchase a home. You can also refer to the “Rent vs. Buy Calculator” developed by the American Bankers Association. The calculator compares the cost of renting versus the real cost of buying a home. If you have additional questions about the home buying process, contact your local banker for more information.
These financial tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
Regulation E: What consumers and merchants need to know
Iowa merchants and consumers need to be aware of a new federal rule that could lead to a significant increase in debit card transactions being denied at the point of sale. Compliance with this rule is required of all financial institutions and becomes effective July 1, 2010, for new accounts and Aug. 15, 2010, for existing accounts.
The new Federal Reserve Board Regulation E rule gives consumers a choice to opt-in to their financial institution's overdraft protection service program for ATM and one-time debit card transactions. If consumers decide to opt-in, nothing changes – financial institutions will continue to assume the risk involved in covering overdrafts and charge a fee to the card holder in the event the account has insufficient funds. If consumers decide against opting-in to a program, and have insufficient funds in their account, their transaction will likely be denied at the point of sale.
All financial institutions must comply and all are preparing communications with customers regarding their choices and obligations. To help Iowans better understand the new regulation and what their options are, the Iowa Bankers Association offers the following tips and information:
Options for Account Holders
- Opt-in: If your financial institution has a practice of paying overdrafts for ATM and everyday debit card transactions, then there will likely be the option to opt-in to their overdraft program. Account holders will receive an opt-in notice with directions on how to do so. You may be able to opt in via the Internet, by phone or in writing. You can also inquire at your bank to better understand the process. If you decide to opt-in, you will still have the option to cancel at anytime.
- Don’t Opt-in: If you don't want to opt-in to an overdraft program, you don't have to. However, if you do not opt-in, your ATM or debit transactions may be denied if there are inadequate funds in your account and merchants may require you to provide an alternative form of payment, such as cash, check or credit card. There may be other choices available at a financial institution to protect against insufficient funds in an account. Many banks provide the option to link a checking account to a savings account or line of credit. Call or visit your bank to inquire about your overdraft protection options.
Avoiding Overdrafts
The best and easiest way to avoid overdraft fees it to keep track of your transactions and account balance. If you keep extra money in your account -- a cushion -- you will be less likely to overdraw. Some banks offer to send you an alert by phone, e-mail or text message if your balance falls below a designated amount. Check with your bank to find out what options are available.
More information on the new overdraft rules is available on the Federal Reserve's consumer information website at www.federalreserve.gov/consumerinfo/wyntk_overdraft.htm
These financial tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
5 Financial Tips for College Graduates
As college graduates receive their diplomas and prepare to enter the working world, they have a lot on their plate. In a tough job market, this year’s college graduates have even more challenges ahead as they search to find a job, find an apartment and pay monthly bills. To get the Class of 2010 started on the right foot, here are five financial tips every college graduate should consider:
- Create a spending plan. Creating your own spending plan – commonly known as a budget – is the best way to make sure you don’t spend more than you earn. Track your expenses and compare the total to your income, then develop a realistic spending plan that works for you. Your spending plan will include fixed costs that are the same each month (rent, utilities, student loan payment as well as savings for retirement). The rest of your income is considered discretionary income, and you control how that money is spent. After a few months of tracking your spending, you may discover that you need to cut back on things like magazine subscriptions, fitness memberships, fast food, lottery tickets, dry cleaning, cable television, pizza delivery or dining out at restaurants.
- Start saving now. You’ve probably heard your parents mention the phrase “pay yourself first.” Now as you prepare to enter the workforce, paying yourself first is more important than ever. By having a portion of your paycheck automatically deducted to a retirement plan or savings account, you won’t be tempted to spend that amount. Start by saving enough cash to create an emergency fund with enough cash to cover six to eight months of living expenses in case of the unexpected – a job loss, illness or major auto repairs. Once you’ve established an emergency fund, you’ll want to take advantage of your employer’s retirement savings plan – especially if your employer offers to match a portion of the dollars you contribute. This is free money that you won’t want to pass up! Find out how much your employer match is and how much you need to contribute to get all of it.
- Maintain a good credit history. Your credit history is important to obtaining future credit to buy a house, car or other major purchase. To maintain a positive credit history, be sure to pay all of your bills on time – this includes your student loans, credit cards, utilities, cell phone and other bills that you receive. Curious about your credit history? Federal law allows you to obtain free copies of your credit reports every 12 months by visiting the official website at www.annualcreditreport.com or by calling (877) 322-8228. Review you credit reports carefully, and if you find errors or notice any suspicious activity, be sure to contact the credit reporting agency immediately.
- Don’t be afraid to buy used. If you were savvy enough to buy used books in college, why not continue being thrifty as you start out in the working world? Check out thrift shops and consignment shops in search of quality furniture to furnish your apartment. You can also find quality used clothing items to help build your wardrobe. If you need to buy a car, consider buying a well-maintained used car instead of buying new. As time goes on, you can set short-term financial goals to buy new furniture, new clothes or even a new car. Then adjust your spending plan and stick to it until you reach your goal.
- Take charge of your financial future. Now is the time to get organized and take charge of your finances. Review your employer benefits carefully and don’t be afraid to ask your employer if you have questions. Make sure you’re properly insured with auto, renter’s and health insurance. You’ll also need to start thinking about your taxes and if you are going to seek help from a professional. Your local banker is also a great resource when it comes to financial questions. Your local bank can help you set up a savings or checking account and may offer financial services like online banking and online bill pay to help make it easier for you to manage your money.
These financial tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.
Watch Your Child’s Savings Sprout
Parents, grandparents and other mentors can teach children about saving and interest with by visiting a local bank and opening a savings account. Plant the seeds with a few dollars, and watch the savings grow over the years. The amount of money in your child’s savings account can grow quickly, even if they start small. If your bank doesn’t have a savings account specifically for children, ask about a no-fee, no-minimum balance savings account instead.
You can help your child understand the complexity of interest and how money grows with a simple example: the power of the penny. If you put a penny aside and double the amount every day, your money would grow rapidly. On day 2 you would only have two pennies, but as the amount continued to double you would have $5.12 by day 10 and more than $10,000 by day 21! While the concept is far-fetched because banks aren’t able to pay 100 percent interest, it is a useful example to show young children how quickly money can grow.
In addition to teaching children about interest, you can also teach them how to set and reach a savings goal. Remind them that if they take money out of their account early, there won’t be as much to grow, so it won’t grow as quickly.
Finally, teach your children that saving money in the bank is safe – safer than keeping it at home in their piggy bank. Ask the staff at your local bank for a tour so your child can see the vault where the money is kept. The bank staff can also explain that sometimes your child’s money is loaned to help other people. Even when the money is loaned, your child’s money is still safe. Banks have measures in place, like deposit insurance, to keep customers’ money safe.
4 Smart Ways to Spend Your Tax Refund in 2010
April 15 is just days away, and for many Americans, that means that tax refunds are also on the way. If you’re expecting a refund this year, keep in mind that your refund isn’t really “free money” – in reality, Uncle Sam is paying you back for the interest-free loan that you provided during the year.
Now when it comes to spending our income tax refund, most of us already have plenty of ideas: a big screen TV, a new spring wardrobe or maybe the latest gadget like Apple’s new iPad. But if you’re ready to take control of your finances, a tax refund can be a great way to jumpstart your progress.
In recognition of National Financial Literacy Month, here are four smart ways to consider spending your tax refund in 2010.
- Boost your emergency fund. If you don’t have enough cash on hand to cover six to eight months of expenses, you may want to use your refund to boost your financial emergency fund. Experts recommend having an emergency fund available to protect yourself in case of the unexpected – a job loss, illness or major auto repairs. Your emergency fund should include enough money to cover all fixed expenses, including your mortgage payment, utilities, food, car payment and insurance. You can earn interest on your money by stashing your emergency fund in an interest-bearing savings account or checking account at your local bank.
- Pay down debt. By paying off – or at least paying down – high-interest credit cards, you’ll save on interest charges that add up quickly over time. You can choose to either (1) pay off your debts with the highest interest rate first or (2) start by paying down the debt with the smallest balance until it is paid off, then apply your payments to the next smallest balance. No matter which method you choose, be sure to continue making regular payments on all of your debts.
- Contribute to your retirement savings. There are lots of ways you can choose to save money for your retirement years, but in general, you’ll want to max out any retirement account that offers an employer match. If your employer offers a match, be sure to boost your retirement savings by taking advantage of those free dollars. To get started, talk to your human resources department. To learn about other retirement options that may be available to you, consult your tax advisor or an investment professional.
- Open a college savings account. The State of Iowa’s College Savings Iowa 529 Plan offers a convenient, tax-advantaged way to help a child afford college. Anyone – parents, grandparents, friends and relatives – can invest in College Savings Iowa on behalf of a child. You can give a child a jumpstart to pay for their college education while reaping tax advantages for yourself. To learn more about the program visit www.collegesavingsiowa.com. Talk to your tax advisor for details on the program’s tax benefits.
April is National Financial Literacy Month
April has been declared National Financial Literacy Month, making it the perfect time for consumers of all ages to sharpen their money management skills and take steps to take charge of their finances.
Taking control of your finances may seem like a daunting task – it can take time to organize financial records, balance your checkbook, review your monthly statements, keep track of your expenses and develop a budget. Why not dedicate one day this month to getting yourself on track for financial success? You may need to take a vacation day from work or clear your schedule on a Saturday, but you can use this time to get organized, set financial goals, open a savings account at your local bank, develop a budget and get on track for financial success in the months ahead.
If you are looking for other ways to sharpen your money management skills, the Federal Reserve Bank of Chicago and nearly 100 partners will offer free financial seminars throughout the state during Money Smart Week® Iowa later this month. Money Smart Week is a full week of events taking place April 17-24 designed to help Iowans of all ages better manage their finances. Financial literacy seminars are hosted by financial institutions, government agencies, not-for-profit organizations and community groups across Iowa. Topics range from basic financial education for children to retirement planning and investment options for senior citizens.
Don’t let the month of April go by without devoting some time to think about your personal finances. Taking charge of your money now will pay off in the future.
2010 census forms were mailed to every residence in the U.S. in March. Consumers should be on alert for potential scams related to the census.
Along with legitimate mailings from the U.S. Census Bureau, you could receive fake mailings sent by scammers trying to steal your identity. It’s important to note that any legitimate request for census information will be clearly marked as coming from the U.S. Census Bureau and as OFFICIAL BUSINESS of the United States.
To complete your legitimate census form, you’ll just need to answer 10 short questions and mail the form back in the envelope provided. If you don’t mail your census form back, you’ll soon receive a visit from a census taker who will knock on your door and ask you questions from the form. You should know that the Census Bureau will never:
- Ask for your full Social Security number;
- Ask for money or a donation;
- Send requests on behalf of a political party; or
- Request PIN codes, passwords or similar access information for credit cards, banks or other financial accounts.
If someone claiming to be a census taker comes to your door, the Census Bureau recommends asking to see the worker’s ID badge. All census workers carry official government badges. You may also ask them for a photo ID from another source to confirm their identity. The U.S. Census Bureau says that most importantly, census workers will never, under any circumstances, ask to enter your home. Be cautious of anyone who tries to enter your home or asks for donations.
You should also be on alert for potential e-mail scams. The Census Bureau does not conduct the 2010 Census via the Internet and does not send e-mails about participating or to collect information. If you receive an e-mail that may be a scam, do not reply or click on any links within the e-mail. Criminals may try to send an e-mail directing you to enter sensitive information at a fake website that seems legitimate. This scam, known as “phishing,” may be an attempt to fraudulently gather your personal financial information. The Census Bureau suggests forwarding suspicious e-mails and questionable Web links to the Census Bureau at ITSO.Fraud.Reporting@census.gov. Then be sure to delete the e-mail in question.
Learn more about the 2010 Census online at www.2010.census.gov.
6 Ways to Save Some Cash This Spring
Spring has arrived! To celebrate the warmer weather (and put money back in your pocketbook), here are a few tips to help you save some cash this spring:
Install a programmable thermostat. Properly using a programmable thermostat to regulate your home’s temperature is one of the easiest ways you can save energy and money. ENERGY STAR estimates that homeowners can save about $180 a year by properly setting their programmable thermostats and maintaining those settings. For more information about programmable thermostats, visit the ENERGY STAR website at www.energystar.gov.
Pay your bills online. If you’re still paying your bills by mail, you can save on the cost of stamps by paying your bills online through your local bank. Many banks offer services to make it easy to manage and pay your bills online with the touch of a button. Check with your local banker for more information.
Refresh your closet. With warmer weather right around the corner, you may feel the urge to spend money on new clothes. But with a little time and creativity, you can save your money by refreshing the old clothes in your closet and making them like new. Turn old jeans into shorts, Bermuda shorts or Capri pants. Head to a fabric store to find unique buttons to transform an old shirt. Mix-and-match pieces to create new outfits. It is amazing what a little creativity can do!
Make your own cards. You can also use your creativity – and any paper and craft supplies you have on hand – to make unique, personalized cards for Easter, Mother’s Day, Father’s Day, birthdays and other upcoming holidays. Your handmade cards will cost a lot less than spending $3 to $5 on cards you find in the store, and they’ll mean a lot more to the recipient.
Improve your gas mileage. Taking the time to do some simple spring tune-ups on your vehicle can help improve your gas mileage and save you money. You can improve your gas mileage by up to 3.3 percent by keeping your tires inflated to the proper pressure. Refer to your vehicle’s owner’s manual to find out the recommended tire pressure for your vehicle. Then use a tire gauge to check your tires. If they are low, head to a gas station that offers a free air pump and fill them up. (Be sure to use the recommended tire pressure found in your owner’s manual and not the maximum pressure printed on the tires). For more gas mileage tips, visit the government’s official website at www.fueleconomy.gov.
Start a garden. If you have space in your yard, starting a garden can provide large amounts of fresh vegetables, herbs and fruit. There are numerous websites offering tips and advice to help you get started. By the end of the growing season, you’ll have fresh, healthy foods that are very inexpensive compared to shopping at the grocery store.
These money-saving tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.iowabankers.com.
New Fed Rules give consumers additional overdraft options
As a consumer, you should know that new Federal Reserve rules give debit and ATM card users additional options regarding overdrafts. An overdraft occurs when you make a purchase or ATM transaction but don't have enough money in your account to pay for it. For a fee, your bank's overdraft services will cover you when you become overdrawn. This fee can apply to each time you overdraw your account.
In the coming months, banks, credit unions and other financial institutions must offer you the ability to make decisions about overdraft services for transactions made with your debit or ATM cards. Expect your bank to send you an explanation of its overdraft services. Generally, there are two types of overdraft services:
Standard overdraft services. Your bank will cover your transaction for a flat fee of about $20-30 each time you overdraw your account. For example, if you make a purchase with your debit card for $150 but only have $100 in your account, your account will be overdrawn by $50 and your bank will charge you a fee. If you then make an ATM withdrawal for $50, your account will be overdrawn by $100 and you will be charged another fee. In this example, if the fee your bank charges for overdraft services is $30, you will pay a total of $60 in fees.
Overdraft protection plans. Your bank may offer a line of credit or a link to your savings account to cover transactions when you overdraw your account. Banks typically charge a fee each time you overdraw your account, but overdraft protection plans may be less expensive than standard overdraft services.
Here are a few things you should know about the new rules:
You choose. In the past, some banks automatically enrolled you in their standard overdraft services for all types of transactions when you opened an account. Under the new rules, your bank must first get your permission to apply these services to everyday debit card and ATM transactions before you can be charged overdraft fees. To grant this permission, you will need to respond to the notice and opt in (agree).
Existing accounts. If you do not opt in (agree), beginning August 15, 2010, your bank's standard overdraft services won't apply to your everyday debit card and ATM transactions. These transactions typically will be declined when you don't have enough money in your account, but you will not be charged overdraft fees.
New accounts. If you open a new account on or after July 1, 2010, your bank cannot charge you overdraft fees for everyday debit card and ATM transactions unless you opt in. If you open a new account before July 1, 2010, your bank will treat you as an existing account holder: you will receive a notice about your bank's overdraft services and will have to decide if you want them for everyday debit card and ATM transactions.
Flexibility. Whatever your decision, the new overdraft rules give you flexibility. If you opt in, you can cancel at any time. If you do not opt in, you can do so later.
Checks and automatic bill payments. The new rules do not cover checks or automatic bill payments that you may have set up for paying bills such as your mortgage, rent, or utilities. Your bank may still automatically enroll you in their standard overdraft services for these types of transactions. If you do not want your bank's standard overdraft services in these instances, talk to your bank; you may or may not have the option to cancel.
These financial tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.iowabankers.com or www.mysmartfinances.com.
Last year, Americans spent $87 billion on gift cards. As form of payment becomes more widely accepted, the types of gift cards available is growing. Gift cards make great gifts, but for many consumers, the cards are easily lost or forgotten. In other cases, consumers may not spend the full amount. To maximize the value of your gift cards, consider the following tips for buying and using gift cards wisely:
Buying Gift Cards
- Only buy gift cards from reputable sources.
- Check for an expiration date before you buy.
- Consider practicality, like a grocery store or gas station card.
- Understand the policies and fees before purchasing gift cards.
- If you’re giving a gift card, be sure to include the terms and conditions.
Using Gift Cards
- Keep gift cards in a secure place to avoid misplacement.
- Spend gift cards within the first year to receive the full value.
- Consider swapping unwanted cards at card-swapping and card-selling sites.
- Regift cards unused or with minor balances to charities who distribute them to the needy.
Prepaid gift card provisions of the 2009 Credit Card Accountability Responsibility and Disclosure Act (CARD Act) will take effect Aug. 22. The provisions will prohibit inactivity fees for the first year and within 12 months following activity on the card. Funds credited to the gift card will remain for five years after they are added, even if the printed expiration date has passed.
This information provided by the Iowa Bankers Association (www.iowabankers.com) in partnership with the American Bankers Association.
FDIC Insurance Coverage: Seven Tips Small Business Owners Need to Know
1) Understand what the FDIC insures…and what it does not. The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs) up to the FDIC’s insurance limit of $250,000 per depositor per bank (or $250,000 per deposit co-owner for joint accounts). The FDIC does not insure stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if the small business purchased these products from an insured bank.*
2) Utilize the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to calculate the exact amount of insurance coverage that your small business has at each insured bank. The EDIE is located on the FDIC’s Web site at www.fdic.gov/edie/.
3) Understand how the FDIC defines account ownership categories. The key to maximizing FDIC insurance coverage is to understand how various account ownership categories are defined. The FDIC includes “single accounts” of sole proprietorships not as business accounts but as personal accounts when calculating insurance coverage. Single accounts are deposits that are owned by one person.* If more than one person is a signatory to an account and they have equal authority to withdraw funds, the FDIC may include these funds in the “joint category” thus allowing the sole proprietorship to get additional FDIC insurance.*
4) Remember that the increases in deposit insurance are set to expire on December 31, 2013 and the unlimited deposit insurance coverage on qualifying transaction accounts will expire on June 30, 2010. Therefore, depositors should continue to monitor not only the deposit insurance limits, but also what is and is not covered by the FDIC. It is also important to remember that the unlimited FDIC insurance coverage for non-interest bearing transaction accounts is only available at banks that participate in the FDIC’s Temporary Liquidity Guarantee Program.
5) Ask your bank if it participates in a deposit placement program like CDARS (Certificate of Deposit Account Registry Service). If a small business has deposits at a bank that exceed the FDIC’s insured coverage limit, CDARS can provide protection. It enables banks to offer up to $50 million in federal deposit insurance by spreading the deposits among several banks (thus spreading the risk) and allowing customers to keep all of their deposits in one bank. More than 3,000 banks offer this service. Also, consider splitting deposit accounts among additional FDIC-insured banks.
6) If you have set up a sweep account to earn interest on your small business checking account, make sure that you understand where your swept funds are going. Some sweep accounts place funds into an FDIC insured account; others sweep funds into a Money Market Mutual Fund or use them to purchase (overnight) bank securities. It is important to understand not only what is done with the swept balances but also how your swept funds will be treated in the event that the bank fails.
7) What if your bank merges with another bank? If an insured bank is merged with another insured bank, the FDIC provides separate insurance coverage for deposits at both the former institution and the merged entity for a limited time. This grace period allows small business owners time to restructure their accounts to maintain full FDIC insurance coverage on all of their deposits. The length of the grace period varies by the type of deposit account.*
*Source: FDIC
Seniors should get the facts before considering a reverse mortgage
Reverse mortgages allow seniors to convert part of the equity in their home into cash without having to sell the home or pay additional monthly bills. Reverse mortgages are very different from other types of loans, and the risks to the borrowers are unique. The Federal Trade Commission (FTC), the nation’s consumer protection agency, encourages seniors to get all the facts on how reverse mortgages work before cashing in on their home’s equity.
The FTC emphasizes that if seniors don’t understand the cost or features of a reverse mortgage or any other product offered to them – or if there is pressure or urgency to complete the deal – they should walk away. Seniors may also want to seek the advice of a family member, friend or another trusted resource.
If you or a senior in your life have considered a reverse mortgage, there are plenty of online resources from credible organizations that provide information on these types of loans.
More information from the FTC is available online at http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm. The U.S. Department of Housing and Urban Development also makes information available at www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm.
The AARP Foundation’s Reverse Mortgage Education Project also provides seniors with information needed to make informed decisions about reverse mortgages and other, less costly, alternatives. AARP has also developed an article, “5 Questions to Ask Before Considering a Reverse Mortgage,” that may be helpful. More reverse mortgage information from AARP is available at http://www.aarp.org/money/personal/reverse_mortgages/.
Fight identity theft by reviewing your credit reports
Wondering how you can fight identity theft? One of the simplest things you can do is take a few minutes to request your free credit reports. Each of your credit reports, also known as credit files, contains vital information about your credit history gathered from your creditors and public records. This information includes your credit card accounts, lines of credit and how you pay your bills.
These reports are managed by three nationwide credit reporting agencies: Equifax, Experian and TransUnion. Federal law allows consumers to view a free credit report from each agency every 12 months. This is a great opportunity to verify the accuracy of the information in your credit report and to make sure criminals haven’t stolen your identity to open credit card accounts in your name. You can choose to receive all three free reports at once, or you can monitor your credit throughout the year by requesting one report every few months.
How to Request Your Free Reports
To obtain your free credit reports, visit www.annualcreditreport.com, the official Web site to help consumers to obtain their free credit report in accordance with the Fair and Accurate Credit Transactions Act. Keep in mind that if a Web site offers you a “free” credit report but also wants your credit card information, you are in the wrong place. There are many companies who offer “free reports,” but the catch is that you are required to sign up for a costly credit monitoring program. The official www.annualcreditreport.com Web site provides your free reports with no obligation.
When you request your report online, you’ll be asked to provide some personal identification information and will then be asked a few questions to verify your identity. When your identity has been authenticated, you’ll have instant access to your credit reports.
You may also request your free report by calling (877) 322-8228. You will be required to go through a simple verification process to verify your identity. Free credit reports can also be requested by mail by downloading the request form online. (Free credit reports requested by phone or mail will be processed within 15 days of receiving your request.)
Review Your Reports
When you receive your credit reports, review them carefully. Look for inquiries from companies you haven’t contacted, accounts you didn’t open and debts that are unfamiliar to you. If you find an error or notice any suspicious activity, you have the right to challenge the inaccurate information. Immediately contact the credit reporting agency at the phone number listed on your report for assistance or to dispute the information.
For more information about the credit reporting agencies, visit their Web sites:
• Equifax (www.equifax.com)
• Experian (www.experian.com)
• TransUnion (www.transunion.com)
Payday loans offer quick cash, but be prepared to pay a hefty price
During this holiday season, some consumers who are tight on money may consider turning to payday loans for extra cash. The concept of “instant cash,” as promised by payday lenders, may sound convenient – but consumers should know that you’ll end up pay extremely high interest rates and likely only add to your debt.
Payday lenders only rely on consumers needing cash right away with plans to repay it quickly. Payday loans – also known as “check cashing,” “payroll advance” or “deferred deposit” loans – are intended to be emergency loans until your next paycheck.
Payday loans offer cash to get you through until your next payday, but you’ll end up paying a very high price. Consumers may pay an Annual Percentage Rate (APR) of interest upwards of 100, 200 or even 300 percent. A payday loan of $500 repaid in one month could cost at least $50, an APR of 124 percent!
Avoid finding yourself in a money crunch by preparing for the unexpected. If you don’t have a savings account, start by opening one at your local bank. Then begin to establish your emergency fund. This money should be saved to pay bills and other expenses in case you lose your job, need car repairs or have unexpected medical expenses. Generally, it is a good idea to save at least six months worth of living expenses in your emergency fund. The money in your savings account will be there when you need it – and you won’t need to rely on an expensive payday loan.
These financial tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.iowabankers.com.
Be a smart shopper during the holiday shopping season
Black Friday and Cyber Monday have come and gone, but the hustle and bustle of the holiday shopping season has just begun! Shoppers now have less than 24 days to check items off their holiday shopping lists. Consumers can make the most of their time — and money — by following a few simple guidelines to avoid problems with holiday purchases.
Shopping online, by mail or by phone?
- Order from reputable companies. Confirm the company’s physical address and phone number in case there is a problem. If you are not familiar with the company, you can check its reputation with the Better Business Bureau or the state attorney general where the company is located.
- Buy only from “secure” websites that protect your financial information. To ensure your transaction is protected, look for a padlock at the bottom of your web browser window. A secure website is also indicated when the web address begins with “https.”
- Know what you’re buying – and know the return policy. Be sure to read the product description carefully. Some name-brand items with prices that are “too good to be true” could be counterfeits. Research the company’s return and exchange policies in case you are not satisfied with your purchase.
- Keep good records. Save detailed information about your purchase, including your order number, shipping costs, warranties, refund and return policies. You’ll need this information in case there is a problem or if you need to return the merchandise.
- Keep shipping costs and delivery time in mind. Allow plenty of time for delivery. If you wait until the last minute, you could end up paying a hefty price for express or overnight shipping.
- Don’t send cash. Paying by credit card offers you the most protection as a consumer.
Going to the store?
- Keep an on your purse or wallet. Carry a minimal amount of cash, and don’t flash cash to others around you. Keep an eye on your credit or debit card during transactions, and be sure to return them to a safe place as quickly as possible. If your cards are lost or stolen, report the loss or theft immediately to your card issuer.
- Verify the store’s return policy. Before you make a purchase, be sure you know the store’s refund and return policies. Individual retailers may have different policies for different types of items -- for example, clearance merchandise may be on final sale, meaning no refunds or exchanges.
- Consider layaway – and get the policy in writing. Layaway purchase plans allow you to buy merchandise by making a deposit and then making payments over time. The retailer holds the merchandise until you have paid for the item in full. Avoid problems by verifying the policy before you make the purchase and getting a copy of the policy in writing.
- Save your receipts. You will need receipts for returns and exchanges. It’s also a good idea to compare your credit and debit card receipts against your monthly bills and statements. If you find any errors or suspicious activity, be sure to notify your card issuer immediately.
These financial tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.iowabankers.com.
Improve Your Credit Score
A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time. Each score is based on the information in your credit report. The most commonly-used credit scoring system is the FICO® score, developed by Fair Isaac Corporation. FICO scores range from 300-850, with most people scoring in the 600-700 range. FICO scores above 700 are very good and are generally a sign of financial health. FICO scores below 600 indicate higher risk.
Why Your Credit Score is Important
Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, mortgages and other kinds of credit. For most kinds of credit scores, higher scores mean you are more likely to be approved and pay a lower interest rate on new credit. Want to rent an apartment? Without good scores, your apartment application may be turned down by the landlord. Your scores also may determine how big a deposit you will have to pay for telephone, electricity or natural gas service.
Lenders look at your scores all the time. They look at your scores when deciding whether to change your interest rate or credit limit on a credit card, or whether to send you an offer through the mail. Having good credit scores can save you money in lower interest rates. Consider the following example:
A couple is buying their first house. They want a 30-year mortgage and their FICO credit score is 720. They could qualify for a mortgage with an interest rate up to three percentage points lower than a couple with a FICO score of 580. On a $100,000 mortgage loan, that difference in interest rate accounts for as much as $2,400 a year, adding up to $72,000 over the loan’s 30-year life.
What You Can Do
Wondering how you can take steps to improve your credit score? Here are a few steps to get you started:
- Realize that it takes time to improve your score. There is no quick fix to improve your credit score. According to Fair Isaac Corporation, the best way to improve your FICO score is to manage credit responsibly over time.
- Pay your bills on time. Late payments have a negative impact on your credit score.
- Pay down past due accounts. Any amounts that are past due destroy your credit score. Work at paying down past due balances as soon as possible.
- Keep balances low on credit cards. High outstanding debt can negatively affect your score. Make sure your credit card company reports your credit limit to the credit bureau and then keep your card balances at 50 percent of that limit or below.
- Don’t close your credit cards. Closing credit cards won’t necessarily improve your credit score. If you need to close some credit card accounts, the newest cards are the ones to close. People that have credit for a longer period of time are assumed to be at less risk of defaulting on payments. Use the old card at least once every six months to avoid it moving to inactive.
- Call to eliminate late payments from your credit report. Once you become current on any late payments, contact all creditors that have reported the late payments to the Credit Bureau and request they be removed. Persistence and politeness usually result in success on this one!
- Review the information in your credit report. Take time to verify the accuracy of the information in your credit reports from each of the nationwide credit reporting agencies: Equifax, Experian and TransUnion. Federal law allows consumers to view a free credit report from each agency every 12 months. To obtain your free credit reports, visit www.annualcreditreport.com, the official site created by the credit reporting agencies to help consumers to obtain their free credit report in accordance with the Fair and Accurate Credit Transactions Act.
Information provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.
Cashier’s Checks - Good As Cash?
Protect Yourself Against Cashier's Check Fraud
The old adage, “a cashier’s check is as good as cash,” may, or may not, be true in today’s world. A cashier's check—one where funds are already set aside in a special account at a bank—may seem like a safe way to receive payment for an item you’re selling, but it is often very difficult for consumers and banks alike to determine if a cashier’s check is genuine or counterfeit.
Cashier's check or "advance fee" fraud has become more prevalent as online auction sites have gained popularity as a way to buy and sell valuable items – such as collectibles, jewelry, electronics and even cars. Here are some examples of common scams involving cashier’s checks:
- Internet Sales Scams: You sell goods (often over the Internet) and the buyer sends you a cashier check for the price you agreed upon. You ship the goods to the seller and 10 days later, your bank informs you that the cashier's check was fraudulent and that you're responsible for any money you've drawn against it. Unfortunately, you've lost your money and merchandise to a scam.
- Excess Fund Scams: You sell goods (often over the Internet) and the buyer sends you a cashier check for an amount in excess of the sales price and asks you to wire all or some of the money to a third party, such as a shipping agent. Your bank later notifies you that the cashier's check was fraudulent.
- Advance Fee & Lottery Scams: You receive a letter informing you that you have won a lottery (often a foreign lottery) or you are the beneficiary of someone’s estate. The letter states you need to pay a processing or transfer fee before you can receive your winnings/inheritance, but a cashier check is enclosed to cover this cost on your behalf, all you have to do is deposit the check and wire the funds to the agent.
- Mystery Shopper Scams: You receive a letter informing you that you have been selected as a mystery shopper. The letter includes a cashier check that you are instructed to deposit and use the funds to purchase merchandise at designated stores, wire a portion to a third party and keep the remainder.
Banks are often required by federal law to make funds from deposited items available to account owners before it actually receives settlement from the bank on which the check was drawn. Your account agreement states if a deposited item is returned unpaid, the bank can charge it back to your account (reverse the deposit.)
Protect Yourself
So how can you protect yourself from cashier’s check and “advance fee” fraud schemes? The Iowa Bankers Association offers the following tips for consumers:
- ACCEPT a cashier check only for the amount of your selling price.
- BEWARE if the buyer or seller asks you to send money quickly. Banks often take 10 days or more to determine if a cashier's check is counterfeit. Do not ship the goods or spend any of the funds sent to you until 10 days to two weeks after you deposit the cashier's check.
- KNOW who you are doing business with. Take steps to verify the name, address, phone numbers of the person you are dealing with.
- CONSIDER payment options other than cashier checks such as online payments, credit card payments or wires.
- TAKE the cashier check or other monetary instrument to a branch of the bank on which it is drawn if possible. That bank is in the best position to determine the check’s authenticity.
- TALK to your bank if you are suspicious about the authenticity of any item you are depositing. The bank can attempt to verify its authenticity or send it directly to the issuing bank for collection.
- BE cautious! One old adage that still remains true is: “If it seems to be good to be true, it probably is!”
If You Are a Fraud Victim
Here are steps you can take if you become a victim of financial fraud:
- File a report with local law enforcement.
- File a complaint with the Iowa Attorney General. (1-888-777-4590)
- Work with your bank on repayment options if the reversal of the deposit has overdrawn your deposit account.
Information provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.
Tips to Help You Keep Your Financial Information Private
Protecting your personal financial information is essential to reducing your risk of identity theft or other types of financial fraud. Consumers are encouraged to take advantage of these protective steps to avoid putting your personal information at risk of identity theft or financial fraud.
- Keep personal and financial information in a safe place. Shred it when you don’t need it anymore.
- Minimize…carry only the minimal identification and credit/debit cards you actually need.
- Pay attention to your mail. Know billing cycles and when to expect statements. Drop outgoing mail in collection boxes. Ask the U.S. Postal Service for vacation hold when you’re away.
- Provide your Social Security Number only when absolutely necessary.
- Before revealing nonpublic personal financial information, find out how it will be used or shared with others.
- Obtain a copy of your credit report at least annually to verify accuracy of information. Free upon request (once annually from each of the three nationwide credit reporting agency) by contacting: www.annualcreditreport.com or by calling 877-322-8228.
- Opt-out of pre-approved credit offers. Call 888-567-8688 for an automated opt-out of prescreened solicitation lists from all three nationwide credit reporting agencies or contact each of the three national credit bureaus directly:
- Equifax, Inc,Options, PO Box 740123, Atlanta, GA 30374-0123 Phone: 800-525-6285.
- Experian Consumer Opt-Out, 701 Experian Pkwy. , PO Box 919, Allen, TX 75013 Phone: 888-397-3742.
- TransUnion Marketing List Opt Out, PO Box 97328, Jackson, MS 39288-7328 Phone: 888-567-8688.
- Get your name off mailing lists, telemarketing lists and e-mail lists. List residential phone numbers on the “National Do Not Call” registry – call 888-382-1222 or register online at www.donotcall.gov.
- To reduce direct mail solicitation, list residential addresses with Direct Marketing Association (www.the-dma.org), Mail Preference Service, PO Box 643, Carmel, NY 15012-0643. List e-mail addresses with Direct Marketing Association, E-mail Preference Service, www.e-mps.org.
These tips are provided by the Iowa Bankers Association (IBA). For additional information go to www.mysmartfinances.com. More consumer information is available from the Federal Trade Commission at www.ftc.gov or 877-382-4357.
When the Economy Cools Down, Financial Scams Heat Up
As our economy sloughs along, creative thieves continue to prowl for victims; and, business is brisk. Crooks are taking advantage of the difficult economy and higher unemployment to trick people into accepting fraudulent and deceptive offers that seem beneficial on the surface but actually could cost a lot of money or result in identity theft. Here are some common schemes being reported, along with tips to protect yourself.
Mortgage rescue schemes
Con artists are preying on homeowners in the current depressed housing market. Companies posing as foreclosure specialists “promise miracles,” such as falsely claiming they can save a home from foreclosure by lowering the loan balance, interest rate and monthly payments, and “all for a large upfront fee.”
Instead, distressed homeowners should contact their mortgage loan servicer to request a modification of their loan at no cost. “It’s very important for qualified borrowers to understand that the industry best practice is loan modifications free-of-charge,” said FDIC Chairman Sheila C. Bair. “ They do not need to spend thousand of dollars to get help. “
Other credit-related scams involving upfront fees
Several of these have been circulating since problems emerged in mortgage and other credit markets. In some cases, con artists claim they can “guarantee” loan approvals to people with credit problems — in exchange for a big upfront fee. Of course, after collecting the nonrefundable fee, the loan falls through. No legitimate lender can promise a loan without looking at a borrower’s financial condition. In most cases, loan fees are typically collected at the end of the lending process, not at the beginning.
Work-at-home scams
Thieves prey on people who have lost their jobs or need extra cash by sending unsolicited e-mails and running advertisements on the Internet and in newspapers. The ads offer flexible, easy part-time jobs working at home and involve a lot of pay for doing very little, such as processing payments or shipping items.
These offers may seem especially attractive if you’ve just lost your job. What can go wrong? Here are two common scenarios:
1. Your “employer” may steal your identity and commit fraud by obtaining your bank account and Social Security numbers, perhaps as part of a fake job application.
2. Or, you could face major losses if your new boss requests that you deposit a check or electronic transfer into your bank account and wire funds out of your account (after deducting your “commission”), and later your bank tells you that the original deposit was bogus and you’re responsible for the money.
For more information about work-at-home scams and a complaint form, go to www.IC3.gov, a website created by the U.S. Department of Justice and the National White Collar Crime Center.
Protect Yourself
Be wary of requests to “update” or “confirm” personal information — such as your Social Security numbers and bank account and credit card numbers.
Take the time to thoroughly research the people or organizations offering a job, loan, deposit, investment or other “opportunity” involving your money or personal information.
Walk away from any offer from a stranger involving a large deposit into your account and instructions to wire any of that money back, perhaps to someone in another country.
In general, assume that any offer that sounds unrealistic or otherwise “too good to be true” — especially one from a stranger or an unfamiliar company — is probably a fraud.
Submitted by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.
Understanding the value of FDIC insurance
The good news is that because of an independent government agency, your money is safe. The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency created in 1933 to promote public confidence and stability in the nation’s banking system. The FDIC protects depositors' funds in the unlikely event of the financial failure of their bank or savings institution.
FDIC deposit insurance covers the balance of each depositor's account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank's closing. In the FDIC’s 75-year history, no customer has ever lost a single penny of insured deposits. For complete information on deposit insurance coverage, see the FDIC’s brochure “Your Insured Deposits” at www.fdic.gov/deposit/deposits/insured.
The basic insurance amount is $250,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $250,000. The $250,000 amount applies to all depositors of an insured bank. The standard insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor.
Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.
Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $250,000 at one insured bank and still be fully insured.
Who does the FDIC insure?
Any person or entity can have FDIC insurance on a deposit. A depositor does not have to be a citizen, or even a resident of the United States. FDIC insurance only protects depositors, although some depositors may also be creditors or shareholders of an insured bank.
What does FDIC deposit insurance cover?
FDIC insurance covers deposits received at an insured bank. Types of deposit products include checking, NOW, and savings accounts, money market deposit accounts (MMDA), and time deposits such as certificates of deposit (CDs). The FDIC does not insure safe deposit boxes or their contents. In the event of a bank failure, the FDIC in most cases arranges for an acquiring bank to take over the failed bank's offices, including locations with safe deposit boxes. If no acquirer is found, boxholders would be sent instructions for removing the contents of their boxes.
What is a bank failure?
A bank failure is the closing of a bank by a federal or state banking regulatory agency. Generally, a bank is closed when it is unable to meet its obligations to depositors and others. The following information deals with the failure of “insured banks.” The term “insured bank” means a bank insured by FDIC, including banks chartered by the federal government as well as most banks chartered by the state governments. An insured bank must display an official FDIC sign at each teller window.
How does the FDIC resolve a closed bank?
In the unlikely event of a bank failure, the FDIC acts quickly to protect insured depositors by one of two methods:
- Purchase and Assumption Transaction. This is the preferred and most common method, under which a healthy bank assumes the insured deposits of the failed bank. Insured depositors of the failed bank immediately become depositors of the assuming bank and have access to their insured funds. The assuming bank may also purchase loans and other assets of the failed bank.
- Deposit Payoff. When there is no open bank acquirer for the deposits, the FDIC will pay the depositor directly by check up to the insured balance in each account. Such payments usually begin within a few days after the bank closing.
When can depositors expect to receive their money?
Federal law requires the FDIC to make payments of insured deposits "as soon as possible" upon the failure of an insured institution. While every bank failure is unique, there are standard policies and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC's goal to make deposit insurance payments within two business day of the failure of the insured institution.
Note: Some deposits that require supplemental documentation from the depositors, such as accounts linked to a formal written trust agreement, funds placed by a fiduciary on behalf of an owner such as a deposit broker or deposits placed by an administrator of an employee benefit plan may take a little longer. The timing of the completion of the deposit insurance determination is based solely on the depositor providing the documentation needed by the FDIC to determine insurance coverage.
How are depositors notified when a bank has been closed?
The FDIC notifies each depositor in writing using the depositor's address on record with the bank. This notification is mailed immediately after the bank closes.
When the failed bank is acquired by another bank; the assuming bank also notifies the depositors. This notification usually is mailed with the first bank statement after the assumption.
Every effort also is made to inform the public through the news media, town meetings, and notices posted at the bank.
What is the source of funding used by the FDIC to pay insured depositors of a failed bank?
The FDIC’s deposit insurance fund consists of premiums already paid by insured banks and interest earnings on its investment portfolio of U.S. Treasury securities. No federal or state tax revenues are involved.
For more information:
For more information about deposit insurance, visit www.fdic.gov/deposit or contact the FDIC toll free at 1-877-ASK-FDIC (1-877-275-3342) from 7 a.m. to 8 p.m. (Eastern Time) Monday through Friday and 9 a.m. to 5 p.m. (Eastern Time) Saturday and Sunday. The FDIC also offers a hearing impaired line at (800) 925-4618.
For more information on deposit insurance coverage, see the FDIC’s brochure “Your Insured Deposits” which can be accessed at www.fdic.gov/deposit/deposits/insured
Submitted by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.
TOP 10 MONEY MANAGEMENT TIPS FOR COLLEGE STUDENTS
As college students go back to the classroom this fall, they will be thinking about course schedules, test scores and GPAs. The Iowa Bankers Association (IBA) reminds students to also think about how they plan to spend, save and manage their money. The following tips are designed to give college students an edge when it comes to managing their personal finances.
- Take charge of your finances. Now is the time to realize that you are the one responsible for your money. Start by creating a realistic budget or spending plan and stick to it. This will help you make the most of your money during college and will reduce your headaches.
- Watch your spending. You control your money, which means that you decide how you spend or save it. You can make your money last throughout the semester by cutting unnecessary expenses like eating out or shopping.
- Use credit wisely. Understand the responsibilities and benefits of credit. How you handle your credit in college could affect you well after graduation. If you are ready to use a credit card responsibly, shop around for a card that best suits your needs.
- Get a bank account. Banks are more than money in a vault. They offer valuable services that students can benefit from like check cashing, debit cards, online banking, balance alerts, personal loans, direct deposit, financial education and some offer identity theft protection.
- Keep an eye out for scholarships. There’s a lot of money available for students, you just have to look for it. Apply for scholarships available through your college or university, and talk to professors and advisors about other scholarship opportunities that might be available.
- Stay busy with low-cost fun and food. There are lots of fun activities on campus to keep you busy and most are free to students. Use your meal plan or sample new recipes instead of eating out.
- Take advantage of student discounts. If you decide to go out to a restaurant, movie theater or other local business, save money by looking out for student discounts that may be available.
- Buy used books. Consider buying used books or ordering them online. Buying books can become expensive and often used books are in as good of shape as new ones.
- Start saving now. Things happen, and it’s important that you are financially prepared when your car or computer breaks down or when you have to buy that unexpected plane ticket home. No matter how small the amount, you should start putting some money away immediately.
- Ask for help. This is a learning experience, so if you need help, don’t be afraid to ask a trusted resource. Your parents or your banker are a good place to start.
Submitted by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.
Financial Challenges Require Smart Money Management
It’s always smart to control your spending. But if you or others in your family are facing difficult times financially, perhaps from a job loss or wage cuts, it’s especially important to spend less so you can have more money to pay essential bills or to add to a savings account you can tap in an emergency. Here are some strategies.
Take a serious look at spending.
Think about creating a spending plan, commonly known as a budget. Make a list of your monthly expenses divided into two groups — your “needs” and your “wants.” The needs are expenses that are absolutely necessary, such as your housing, utilities, clothes, food and transportation. The wants are optional purchases. Possible places to cut back on unnecessary spending include restaurant meals, monthly subscriptions and premium TV channels. Don’t use your credit cards or other loan products to buy things you really can’t afford.
Keep banking costs down.
Look at the most costly recurring charges on your bank and credit card statements. Talk with your banker about what services you use and how you might reduce or eliminate extras. For example, use your own bank’s ATMs for cash withdrawals instead of going elsewhere and paying a surcharge, and keep close tabs on your checking account balance to avoid bounced checks, which can be costly.
Refinance your mortgage.
If you have a mortgage and you expect to continue to own your home for the foreseeable future, see if you can save money by refinancing to get a lower interest rate and a lower monthly payment after also weighing the up-front costs of refinancing. Refinancing your mortgage or auto loan can save you money over the coming years that you can put to better use in a savings account or paying off other debt now. Consult your trusted lender.
Be careful before cutting insurance coverage.
It’s important to have adequate insurance, especially for life, health, disability, personal liability, and coverage of property. While it’s a good idea to review your insurance coverage every year or so and not carry more coverage than necessary, think twice before trying to save money by dropping insurance coverage. All it takes is one illness or auto accident to realize the importance of having adequate insurance.
The bottom line:
Cutting back on an already tight budget may seem daunting, but you can find ways to spend less without sacrificing your quality of life.
For more ideas on ways to cut spending, see articles in back issues of FDIC Consumer News online at www.fdic.gov/consumernews.
Submitted by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.
