Ideas for
Any Age or Stage
Teens
Young Adults
Newlyweds
People at Midlife
Teaching Our Kids
Before You Retire
After You Retire
Financial Caregivers
Coping After Changes
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
For Any Age or Stage
such as housing, utilities, food and could be to ask your bank to cover
transportation. You can also decide insufficient funds by automatically Understand your FDIC
what is appropriate for non-essential transferring money from your savings
insurance so you can be fully
expenses, such as entertainment, eating account.
out and the latest electronics. This is protected if your bank fails. The
At the ATM, limit or avoid
how a budget can help you commit to
surcharges (access fees) by using your basic coverage is $100,000 per
saving a little money every month and
own banks machines or those owned
splurging a little less, said Kincaid. depositor per institution, but
by institutions that dont charge fees
She also said that a budget doesnt to non-customers. If you definitely you may qualify for more FDIC
have to be complicated or scary, need cash when youre out of town or
insurance depending on the
and that while there are budgets you otherwise not near an ATM owned by
can easily create on a computer, a your bank, consider getting cash back circumstances.
notebook and a pencil can be enough when you use a debit card to make a
to get you started. purchase at a supermarket or another beneficiaries upon the death of the
merchant. owner, such as in payable-on-death
Keep banking costs down. With
planning, you can sidestep some of Dont be afraid to ask for a break. accounts, also can be insured for
the more costly fees and penalties. Bounce a check or send in a late more than $100,000 under certain
Examples: payment for the first time ever? Think circumstances. And, some retirement
the fees for your mortgage application accounts (notably Individual
With credit cards, try to pay the Retirement Accounts) are insured up
are a bit steep? Depending on the
card balance in full each month to to $250,000.
circumstances, your bank might be
avoid interest charges. If you cant
willing to reduce or waive a fee or For guidance about your FDIC
pay in full every month, send in as
penalty, especially if youve been a insurance, including how to make
much as possible to keep interest
good customer and dont have a history sure that all your funds are protected,
costs to a minimum. Think twice
as a repeat offender. go to www.fdic.gov/deposit/deposits/
before accepting an offer from your
credit card issuer to skip a payment, For more ideas on how to cut banking index.html to find FDIC brochures,
said Luke W. Reynolds, Chief of the costs, see previous issues of FDIC videos and an interactive insurance
FDICs Community Affairs Outreach Consumer News at www.fdic.gov/ calculator. Or, you can call the FDIC
Section. Its likely that interest will consumernews, including our Summer or write or e-mail questions to us
still be charged, so youll actually be 2007 special edition called 51 Ways to (see the back page).
paying more in interest because youll Save Hundreds on Loans and Credit Remember that investments
carry a higher balance on your card for Cards and the Summer 2005 feature can lose value. Investment
a longer period of time. A Shoppers Guide to Bank Products products include stocks, bonds and
and Services. mutual funds. Over the long term,
In addition, pay your credit card bill
on time. One reason is to avoid late Understand your FDIC insurance investments might produce higher
fees. Another is that late payments can coverage so you can be fully returns than bank deposits. However,
damage your credit record. If repeated, protected if your bank fails. If you investments are not deposits, they
they could even trigger interest rate (or your family) have $100,000 or less are not FDIC-insured not even
increases on your credit cards and in all of your deposit accounts at the the ones sold through FDIC-insured
loans. same insured bank, you dont need to institutions and they can lose value.
worry about your insurance coverage. Because of the risks associated with
With your checking account, avoid any investment, always deal with a
Your deposits are fully protected under
fees for insufficient funds and bounced reputable, licensed salesperson and
federal law because the basic insurance
checks. Record every deposit and research the product before making
coverage is $100,000 per depositor per
withdrawal in your checkbook a purchase. See Page 12 for securities
insured institution.
especially remember your debit card and insurance regulators that can help.
purchases and ATM withdrawals, said You also may qualify for more
Reynolds. It is important to know how than $100,000 in coverage at one Certain annuities are a type of
much money you have in your account insured bank. For example, the investment. In general, an annuity
so you wont overdraw your balance. money you have in your individually is a contract with an insurance
owned accounts (not including your company. The consumer makes one
Your bank may offer various overdraft or more payments to the insurer, as an
retirement accounts) is insured up to
protection services for your checking investment, and the insurer agrees to
$100,000 separately from your share
account, but be aware that these come make a series of income payments to
of any joint accounts at the same bank.
with their own costs. Reynolds added the consumer as long as he or she lives.
Deposits designated to pass to named
that one of the least expensive options
continued on next page
Be particularly careful before investing accounts especially after a birth, Assume that any offer that sounds
in variable annuities (see Page 12), death, divorce or other major life too good to be true especially
which frequently come with high fees event to ensure that the named one from a stranger or an unfamiliar
and penalties if you withdraw money beneficiaries are correct. company is probably a fraud.
early. Example: You receive a call or letter
Also build an emergency savings
announcing youve won a lottery
Especially troubling have been reports fund, preferably of about three to six
or other prize you dont remember
of marketers steering people into months of living expenses, so you have
signing up for, and you are told to pay
annuities that are unsuitable for them. ready resources you can tap to pay
taxes or fees before you can claim
The National Association of Insurance your mortgage, insurance or costly
your (nonexistent) prize.
Commissioners has published a home repairs or medical bills. The
consumer alert to help consumers, safest place for emergency savings is a Beware of transactions in which
especially seniors, better understand federally insured deposit account. another party sends you a check for
annuities and recognize questionable more than you are due and then asks
Simplify your financial life. Have
sales practices. Read it online at you to wire back the difference. If the
your pay and benefit checks deposited
www.naic.org/documents/consumer_ check is fraudulent, you could lose a
directly into your bank account.
alert_annuities_senior_citizens.htm. lot of money, said Michael Benardo,
Arrange to automatically pay for
manager of the FDICs financial crimes
There also have been reports of recurring expenses, such as a mortgage
section.
marketers making false statements loan, insurance premium or utility bill.
about the FDIC such as claims that Banking and bill paying online or by Look at your bank statements and
the FDIC doesnt have the financial phone also can be good options. credit card bills as soon as they arrive
resources to protect insured deposit and report any discrepancy or anything
These and other ideas can help you
accounts as a way to sell investments suspicious, such as an unauthorized
save time, reduce stress, eliminate
or annuities to consumers. Again, for withdrawal or charge.
clutter, lower the fees you pay, and
information about the FDIC or FDIC
maybe help you earn a little extra on Keep bank and credit card
insurance, be sure to contact us.
your savings and investments. statements, tax returns, credit and debit
Be cautious when borrowing against cards and blank checks out of sight,
Protect against fraud. Here are basic
the equity in your home. If you even at home. Also shred sensitive
precautions against identity theft,
have property valued at $300,000 and documents before discarding them.
check fraud and other financial scams:
you owe $100,000 on your mortgage, Why? Because dishonest relatives,
your equity is $200,000. Home equity Be wary of requests to update or neighbors, workers around the house
loans and lines of credit are ways that confirm personal information and other people could use these items
homeowners can borrow money using especially your Social Security number, to commit identity theft or other
their homes value as collateral and bank account numbers, credit card crimes.
gradually pay it back. numbers (including security codes),
Periodically review your credit
personal identification numbers
Home equity products are relatively reports to make sure an identity thief
(PINs), your date of birth or your
low-cost ways to borrow money, but hasnt obtained a credit card or loan
mothers maiden name in response
they must be repaid like any other loan. in your name. Experts suggest that, to
to an advertisement or an unsolicited
Especially important to remember is maximize your protection, you request
call, letter or e-mail. Your bank wont
that if you cannot pay a home equity copies from all three credit bureaus
call or e-mail you to confirm account
loan, you risk losing your home. but spread out the requests during the
numbers or passwords it already has.
course of the year.
Prepare for the unexpected. Have
If you want to find out if a company
adequate insurance, especially for life, To learn more about common financial
is legitimate, look it up using a reliable
health, disability, personal liability, frauds and how to protect yourself,
source. Dont rely on the contact
and coverage of property. Review your see back issues of FDIC Consumer
information that was provided to you
coverage annually to ensure that it is News (online at www.fdic.gov/
on a Web site or in an unsolicited
up to date. consumernews) and our multimedia
call or e-mail. For information about
presentation Dont Be an Online
Consult an attorney or another trusted banks, you can use Bank Find, the
Victim (at www.fdic.gov/consumers/
advisor about having a will and/or FDICs online directory of insured
consumer/guard/index.html).
establishing a formal trust to specify banking institutions, at www2.fdic.gov/
how your bank accounts, property and idasp/main_bankfind.asp. Or, call the For more help or information at
other assets should be distributed upon FDICs toll-free consumer assistance any age or stage: Keep reading this
your death. Periodically review your line at 1-877-ASK-FDIC, which is special edition for tips and strategies
life insurance policies and retirement 1-877-275-3342. for different times of your life. Q
For Parents
your beneficiaries wont inherit the full the policyholders cash value is invested
value of the house. They will have to in one or more portfolios of securities. While there are potential benefits
pay off the loan either by refinancing to reverse mortgages, they dont
The second product is an annuity, for
or selling the house.
which the consumer invests, through make sense for everyone. Among
Also be aware that some unscrupulous the insurer, in a variety of investment
individuals or companies have options, typically mutual funds. the reasons: The fees can be
promoted reverse mortgages that were high. You still will be responsible
Insurance companies issue both
not in the consumers best interest
products, and anyone who sells for maintaining the house and
or that involved extra payments for
them must be registered under state
unnecessary services. paying property taxes. And, your
insurance laws and state and federal
For example, there have been securities laws. beneficiaries wont inherit the
reports of companies attempting to
Although these products provide full value of the house.
sell questionable home repairs or
tax-deferred earnings, you can lose
investments in connection with a
money investing in them. Income and
reverse mortgage, or they charged
value can move up and down. Thats of Insurance Commissioners has a
a fee for information about reverse
what the variable in the name means. Web site (www.insureuonline.org) that
mortgages that is available for free
from the U.S. Department of Housing These products also may carry includes a special alert for seniors on
and Urban Development (HUD) or relatively high sales commissions, annuities. The NAIC also provides
other sources. One problem with using fees and surrender charges if you information on how to contact your
any loan product to fund an investment withdraw money early, typically state insurance regulator to verify that
is that you could lose money on the within the first five to eight years after a company and an individual agent are
investment and still owe on the loan. purchasing the product but sometimes licensed to sell in your state.
after a longer period. For additional guidance about variable
How can you protect yourself?
As with any loan youre considering, So, think of variable annuities as annuities and what to consider before
do some research using information long-term investments that can tie buying, the U.S. Securities and
from neutral, unbiased sources, such up your money for many years. The Exchange Commission has published
as HUD. If you later decide that a older you are, the less likely a variable investor tips at www.sec.gov/investor/
reverse mortgage is right for you, annuity is suitable for you. pubs/varannty.htm.
contact several reputable lenders and Also consider going to the Web site
Of special concern is that securities
read and understand all documents and of the Financial Industry Regulatory
and insurance regulators have reported
contracts, perhaps with the help of an Authority (www.finra.org), the largest
an increase in unsuitable sales of
attorney you trust, before you agree to non-governmental regulator of
variable products to older investors,
anything. securities firms operating in the United
who experts say should generally stick
For help or guidance regarding to low-risk, low- or no-fee financial States. It publishes investor alerts and
reverse mortgages, go online at products instead of those with provides background and disciplinary
www.hud.gov/buying/rvrsmort.cfm potentially high risks and fees. information about securities firms and
or contact a HUD-approved housing brokers that sell these products.
Before you invest in a variable life
counselor by calling toll-free For more help or information for
insurance or variable annuity product,
1-800-569-4287. Also, to receive retirees: See our tips for consumers of
be sure that you fully understand how
a reverse mortgage insured by the all ages starting on Page 2. Also read
the product works, the risk of loss,
Federal Housing Administration Fiscal Fitness for Older Americans,
and the applicable fees and surrender
(FHA), you must first speak with a the Fall 2005 special issue of FDIC
charges, said Victoria Pawelski, an
HUD-approved counselor, who can Consumer News, which is a special
FDIC Policy Analyst. Carefully
help you determine if the program guide for seniors and their families. It
evaluate whether the product is
meets your needs. is online at www.fdic.gov/consumers/
suitable for you given your investment
Do your research before purchasing objectives and time frame. And consumer/news/cnfall05/index.html.
variable life insurance or a beware of high-pressure sales tactics Also find out about federal government
variable annuity. Both products are from sales representatives who may resources and information for senior
part insurance and part securities. have an incentive to generate high citizens at www.usa.gov/Topics/
commissions and fees. Seniors.shtml. Q
The first is a type of whole life
insurance product (also called For more information about insurance
permanent life insurance) for which and annuities, the National Association
advisor because certain decisions, such You cant make your mortgage
as who will claim children on his or her payment. Regardless of the cause, if FDIC
tax return, can affect each parents tax youre having difficulty paying your Consumer News
liability. For more information, see IRS mortgage, you should contact your
Published by the Federal Deposit
publication 504, Tax Information for loan servicer and find out if you qualify Insurance Corporation
Divorced or Separated Individuals, for modified loan terms or other
online at www.irs.gov/pub/irs-pdf/ options to help you keep your home Sheila C. Bair, Chairman
p504.pdf. instead of losing it to foreclosure. Andrew Gray, Director,
You also may be able to reduce some You may also want to seek help from Office of Public Affairs (OPA)
legal fees by working with a mediator a trained homeownership counselor. Elizabeth Ford, Assistant Director, OPA
to resolve issues such as child custody. To find a reputable counselor, contact Jay Rosenstein, Senior Writer-Editor, OPA
the Homeowners HOPE Hotline
Cancel joint credit cards to prevent Mitchell Crawley, Graphic Design
at the Homeownership Preservation
the other spouse from running up large
Foundation (1-888-995-4673 or FDICConsumer News is produced
bills. Start or build your own credit
www.995hope.org) or the U.S. quarterly by the FDIC Office of
history independent of the marriage,
Department of Housing and Urban Public Affairs in cooperation with
such as by opening a new credit card
Development for a referral to a other Divisions and Offices. It is
in your name only. Decide who is
HUD-approved homeownership intended to present information in a
responsible for debts incurred during
counseling agency (1-800-569-4287 nontechnical way and is not intended
the marriage. If you change your last
or www.hud.gov/offices/hsg/sfh/hcc/ to be a legal interpretation of FDIC
name, notify the major credit bureaus
hcs.cfm). or other government regulations and
(www.equifax.com, www.experian.com
policies. Mention of a product, service
and www.transunion.com). Youre having problems making credit
or company does not constitute an
card or other loan payments. No matter endorsement.
Its also important that you update your
what triggers a personal financial crisis,
will and the list of beneficiaries you This publication may be reprinted in
the important thing is to be proactive
designate on life insurance policies, whole or in part. Please credit FDIC
and address the problem as soon as
retirement savings accounts and U.S. Consumer News.
possible by contacting your lender to
Savings Bonds, so your money and
try to negotiate a long-term, workable Send your story ideas, comments,
other assets will go to the right people
solution. and other suggestions or
upon your death.
And if you need help negotiating questions to: Jay Rosenstein, Editor,
A job loss. Try to keep spending FDIC Consumer News, 550 17th
with a lender or otherwise getting a
under control so you can pay your Street, NW, Washington, DC 20429
debt problem under control, consider
bills using existing bank and brokerage jrosenstein@fdic.gov
asking an attorney, accountant or
accounts for, say, the next three to six
another trusted advisor to refer Find current and past issues of
months. If possible, avoid withdrawing FDICConsumer News at:
you to a reliable credit counselor
or borrowing money from your www.fdic.gov/consumernews. Refer to
(see Page 14) who, at little or no cost,
retirement savings. If you anticipate that same index to locate issues that are
can help you develop a recovery plan.
problems paying debts, such as your specially formatted for being reprinted
If youre facing problems on a loan
mortgage or the minimum due on your in any quantity.
secured by your home, including a
credit card (see the next two sections),
home equity loan, see the previous To receive an e-mail notice about
contact your creditors immediately and
bullet point about mortgage payments. each new issue with links to stories,
attempt to work out a payment plan.
For more help or information follow instructions posted at:
One reason to keep loan and credit www.fdic.gov/about/subscriptions/
when dealing with changing events:
card payments current is so that you index.html.
See the back page for suggestions
can maintain the best possible credit
about government resources you can
record. Prospective employers may
contact regarding money matters. For More Information
review your credit reports when you
One is www.mymoney.gov, a financial from the FDIC
apply for a new job.
education Web site from the federal Go to www.fdic.gov or call
Also, carefully review your employers government that includes a page of toll-free 1-877-ASK-FDIC thats
severance benefits, including the information about responding to life
events. Another is 1-800-FEDINFO 1-877-275-3342
temporary continuation of your
salary and health insurance, and try to (1-800-333-4636), a toll-free hotline Monday through Friday
negotiate a better deal. you can call if youre not sure which 8:00 a.m. to 8:00 p.m.,
federal government agency can provide Eastern Time.
guidance with a problem. Q