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Be Prepared
Be Informed
Be in Charge
Simple Strategies for
Managing Your Money
Inside
5 Things You Can Do to
Make Sure You Are Financially Fit
Avoid Bad Deals and Scams
Insure All Your Deposits
Complain and Get Results
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
Be Prepared, Be Inform e d , B e i n C h a r g e
Make Sure You Are Financially Fit kids. Its solid advice for anyone,
especially busy people, trying to
A checklist for shaping up your personal balance sheet manage their money in a world
You know its important to get regular full of opportunities and
physical exams and take your car in for occasional hazards. FDIC
oil changes and tune-ups. But what are Consumer News wants to help
you doing to make sure your finances you be better prepared. In this
are in good shape, too? The start of a special guide, we offer a collection
new year is a great time to give your
of practical strategies you can use
finances a checkup, but its never too
early or too late to make sure youre to deal successfully with some of
properly managing your money. Heres the most important money matters
a checklist for conducting a simple yet facing consumers today, including
thorough financial self-examination. as you conduct business can prevent how to:
misunderstandings and costly mistakes.
1. Periodically review your Make sure you are financially fit;
We are continually encouraging
accounts. Talk to a customer
consumers to read the disclosures,
service representative at your bank Avoid bad deals and scams;
Kincaid stressed. Make sure you
to make sure youre signed up for
know exactly what you are getting and Protect all your deposits with
the accounts and the features that
paying for and what you are not. FDIC insurance; and
best fit your needs, especially if
your financial situation has changed For example, your credit card may
Complain effectively and get
recently, said Janet Kincaid, FDIC automatically include, at no extra
Senior Consumer Affairs Officer. For charge, extended warranties on results.
example, if you tend to carry a balance purchases and insurance for car To keep things simple, weve
on your credit card, find out if you can rentals. These kinds of features can
qualify for a card with a lower interest limited our to-do lists to five
save you money but only if you
rate. Or, ask if your bank offers special know they exist. Similarly, your card suggestions, but if you need or
deals if you maintain certain balances may offer bonus points toward want more guidance, weve also
or use additional services, such as airline travel or products and services, identified additional resources you
direct deposit of your paycheck. auto club memberships, and other can turn to for help.
extras some free of charge, some for
At the same time, compare your banks
a fee. You need to read the disclosures Our goal is to give you the
products and services with those of
to understand the rules, restrictions information and the confidence
competitors. Dont be afraid to shop
and potential costs, which may greatly you need to manage your money
around, Kincaid said. If nothing else,
reduce the value of these offers.
youll want to know that the rates, fees and realize your dreams for a
and services at your current bank are 3. Get a free copy of your credit better future. So keep reading and
at least comparable to whats out there report. These reports, prepared by learn how you can be prepared, be
in the marketplace for the services you companies called credit bureaus, informed and be in charge!
need and, most importantly, that the summarize your history of paying
services you are using still meet your debts and other bills. If you apply
loan or credit card application, cost
needs. for a loan, insurance or a job, or you
you hundreds of dollars each year
want to rent an apartment, chances
2. Make sure you have and in interest or other charges. Also,
are your credit report will be reviewed
have read the most recent by monitoring your credit reports
for information about your financial
disclosures about your accounts. you help guard against identity theft
reliability. But you should be reviewing
These descriptions of your account because you can look for signs that a
copies of your credit report, too.
are like a contract with your financial fraudster has opened credit cards or
One reason is to correct errors or
institution. Knowing the features, fees other accounts in your name.
omissions, which could damage your
and options as well as limitations
credit rating and, in the case of a
before you open the account and later
The three nationwide credit 5. Find new ways to simplify your time and money (instead of writing
bureaus Equifax, Experian and financial life. There are many things and mailing checks) but also can
TransUnion issue their own reports you can do to make your banking, help you monitor your account more
and they sometimes differ, so its bill paying and other financial chores efficiently than waiting for monthly
smart to see what each one is saying. easier. Examples include: statements in the mail.
By law, you are entitled to one free
Organizing your personal and These ideas can help you save time,
copy of your report each year from
financial papers to make sure you and reduce stress, eliminate clutter, lower
each of those three companies. For
your family can quickly find what you the fees you pay, and maybe even help
more information and to order free
need; you earn a little extra on your savings
credit reports, go to the Web site
and investments.
established by the three credit bureaus Getting rid of the papers youre sure
at www.AnnualCreditReport.com you dont need; To learn more, read the FDIC
or call toll-free 1-877-322-8228. Consumer News article You Can
Although you can ask to receive copies Looking into consolidating accounts
Simplify Your Financial Life in our
from all three credit bureaus at the or concentrating your business with
Winter 2004/2005 issue, online at
same time, you also can spread out fewer financial institutions;
www.fdic.gov/consumers/consumer/
your requests throughout the year to Signing up for direct deposit of news/cnwin0405.
get periodic updates. your pay and benefit checks and other
For more information: See back issues
4. Look at how youre spending regular income;
of FDIC Consumer News, especially
money and how you can do a Having a certain sum automatically our special guides for seniors (Fall
better job. Its easy to overspend in transferred each month to a savings or 2005) and young adults (Spring 2005)
some areas and neglect other priorities investment account; because they feature various
such as reducing high-interest debt, strategies to prepare financially,
saving for a down payment on a car Arranging for an automatic including to-do lists at key stages of
or a home, or putting money away withdrawal from your checking your life You can find them online at
for your retirement. Thats why you account to cover a recurring expense www.fdic.gov/consumernews. Also
should use your periodic financial such as a mortgage loan or utility bill; check the Internet or your local library
checkup as an opportunity to see and for a wide variety of resources that can
where your money has been going and Exploring banking and bill paying by help you organize and manage your
make adjustments in your spending phone or online, which not only saves finances. Q
and saving plans for the future.
We suggest you try any system
ranging from a computer-based budget Top Reasons People Call or
program to hand-written notes that Write the FDIC:
will help you keep track of your
spending each month and enable you
to set and stick to limits you consider
What You Can Learn from Other
appropriate. You might be surprised Consumers Questions and Concerns
how much you spend, even on small,
incidental things such as snacks or The FDIC receives hundreds of 1. Questions about FDIC insurance
specialty coffee, Kincaid said. You letters, e-mails and calls from coverage. Most of the calls and
also might be surprised at how keeping consumers every day. FDIC Consumer letters the FDIC receives from
track of your spending can make a big News wants you to know the most consumers about 60 percent of
difference in achieving your goals. common reasons people contact the them are from people asking
FDIC so you can learn from their about their insurance coverage, said
When reviewing your spending, also
questions and concerns and take Kathleen Nagle, chief of the Deposit
make sure you have enough insurance
precautions that can save you time, Insurance Section in the FDICs
to protect your family such as
money and headaches. In addition, Division of Supervision and Consumer
disability insurance to replace lost
we want to remind you that, if you Protection. They want to know
income during a serious illness, life
need a little help, the FDIC can be a whats covered, what isnt, and how
insurance in case a wage earner dies,
resource. much their coverage is.
home owners or renters insurance,
and health insurance to cover medical Here, in no special order, are the top She added that a surprisingly
bills. five reasons consumers contact the large number of consumers have
FDIC.
continued on next page
misconceptions about deposit dont realize that a bank can change 4. Billing disputes and errors,
insurance. The biggest concern, the interest rate or the terms on an primarily involving credit cards.
Nagle said, is that some depositors account or even close an account, Sometimes something goes wrong,
who believe that all their funds are as long as the change is allowed in including bills that are incorrect or
insured may inadvertently have some the contract or agreement between card payments that are posted late.
money over the insurance limits. the bank and the customer and the When that happens, people contact
proper notification is given. Thats the FDIC for help, and our response
For more information, see the article
why it is so important to read and is usually to provide guidance
on Page 8 about how to protect
understand your account agreement regarding their consumer protections
yourself with FDIC insurance.
and correspondence sent by your under the Fair Credit Billing Act.
Included there is a guide to FDIC
financial institution. You may not be able to avoid a billing
resources on deposit insurance,
error, but its important to closely
including our toll-free Call Center. Also, she said, dont be afraid to
monitor your account and report
The FDIC consumer line is a great ask a bank representative to explain
errors promptly to your financial
service the FDIC provides, Nagle something to you when you open the
institution to have it fix mistakes.
said. We encourage anyone with a account or in the months or years that
question about their FDIC insurance follow. To fully protect your rights under
to call us. the law, consumers should write
Consumers also contact the FDIC
to their financial institution at the
2. General questions about to discuss a dispute over a deposit
address provided for billing errors
banking or consumer protections. account transaction or balance.
and not send their letter with their
Consumers want to know, for Examples include deposits that didnt
card payment, which goes to another
example, if their bank is permitted to get posted to their checking account as
location, said Janet Kincaid, FDIC
take a certain action and what their expected or fees that seem incorrect.
Senior Consumer Affairs Officer.
consumer rights are under the law. Read your account disclosures and
If that doesnt resolve the dispute,
Before approaching the FDIC, you monitor your account on a regular
we encourage folks to write the
can learn more about your rights basis to make sure the transactions
lenders primary federal regulator for
and responsibilities by contacting the reflected are yours and are accurate,
additional help. (For related tips, see
institution directly (if you havent said Joni Creamean, an FDIC Senior
the article on Page 10 about how to
done that already). Otherwise, you Consumer Affairs Specialist. If
complain effectively.)
may call or write the FDIC or go to there is a mistake, notify your bank
our Web site for more information immediately and follow up in writing. 5. Allegations of fraud. Con artists
(see Page 11). often prey on peoples desires to make
The FDIC also receives many calls
money quickly and to trust a friendly
3. Questions or complaints and letters each year from people
face or voice. A prime example is the
involving specific financial trying to track down information
counterfeit check fraud that the FDIC
institutions. Many questions or about old accounts and banks that
hears about in different variations
complaints involve account terms and have changed names or no longer
practically every day (Page 6). For tips
conditions, such as fees, penalties, exist. These inquiries often come
on avoiding bad deals and scams that
restrictions, and interest charges or in after an individual dies and the
arrive by phone, letter and e-mail, see
payments. executor or heirs find proof of an
the next page.
old account or a receipt for a safe
Concerns about charges for bounced
deposit box at an unfamiliar bank. For more information: The FDIC
checks (due to insufficient funds) are
FDIC officials say that, in most cases, resources listed on Page 11 of this
common. So too are calls and letters
the accounts were closed by the owner special guide can help you get up to
about the costs of ATM transactions;
years ago, but sometimes there are speed on preventing and solving
many consumers forget or are not
valuable accounts or other assets that many different issues facing bank
aware that they can be charged a fee
can still be claimed, usually from customers. Also take a look at back
for using an ATM that is not owned
the unclaimed property office in issues of FDIC Consumer News
by their bank.
the state where the owner lived or at www.fdic.gov/consumernews,
When a bank changes the terms did business. You can turn to the including the Spring 2006 issue
on an account, whether it is a FDIC for help or direction in these focusing on FDIC insurance coverage
checking account or a credit card, situations. Start by reading our article and a Fall 2006 article on costly
this also generates mail and phone about lost or forgotten accounts in the mistakes bank customers make. Q
calls, added Lynne Gottesburen, Spring 2002 FDIC Consumer News at
an FDIC Supervisory Consumer www.fdic.gov/consumers/consumer/
Affairs Specialist. Consumers often news/cnspr02.
Avoiding Trouble
Things You Can Do to
Marketers have lots of ways to find (PINs), date of birth, or your mothers
out who you are, where you live, maiden name.
and how youre likely to spend your
Also dont provide personal
money. While many unsolicited offers
information via phone or e-mail in
may be good deals for you, others
response to an unsolicited e-mail or
may be costly or inappropriate or
an Internet advertisement, no matter
even scams. In particular, crooks have
how legitimate it may appear. Thats
become very good at impersonating
because there are fraudulent, copycat
legitimate businesses, charities and
e-mails and sites that are designed
other organizations to trick people
to appear to be from well-known
into giving out valuable information trust. This minimizes the chance that
companies. If you want to follow up
that can be used to commit identity you may be lured in by a high-cost
with a company, use an e-mail address
theft, which involves stealing money company or a shady marketer, perhaps
or phone number from a reliable,
using someone elses name. even a con artist. When in doubt,
independent source that you go to on
The amount of fake products, your own. start with your state or local consumer
investments and services advertised protection office (listed in the blue
2. Thoroughly check out any offer pages of your phone book) and ask
online, by e-mail or by telemarketers
before agreeing to anything. Always where to go for information on
is staggering, said David Nelson, a
get key details in writing. Carefully whether a service provider is properly
fraud specialist at the FDIC.
read all the documentation, including licensed to do business and whether
While laws and industry practices may the fine print in applications and there are complaints or rule violations
limit losses for fraud victims in many contracts, to understand your potential tied to this company. Another resource
cases, innocent victims sometimes end costs, risks and requirements. Dont for complaints against a company is
up losing money or spending many just rely on what a sales person tells the Better Business Bureau.
hours clearing their good name. you or whats printed in promotional
literature. Ask friends and family what For guidance on whether a bank is
Here are a few ways you can be legitimate, you can call the FDICs
they think.
better prepared to know a good deal toll-free consumer assistance line
from a bad one and protect against a Do some comparison shopping at your (1-877-ASK-FDIC, which is 1-877-
variety of scams, including ID theft. bank and one or two other financial 275-3342). You can also use the
(For special guidance on avoiding services firms to make sure that the FDICs online directory of insured
counterfeit check frauds, see the next special unsolicited offer you received banking institutions at www2.fdic.gov/
page.) is really special. idasp/main_bankfind.asp.
1. Never divulge personal With credit card offers, for example, 4. Assume that any offer that
information in response to an carefully review the terms and sounds too good to be true
unsolicited call, letter or e-mail. conditions, including the potential especially one from a stranger or an
Just having information about your fees or penalties, all of which must unfamiliar company is probably a
checking account may be enough be disclosed to you before you incur fraud. Common examples include:
for a thief to obtain a bank draft that any charges on the account. By law,
deducts funds from your account. the most important terms in credit A telephone call or a letter notifying
So unless you initiate the contact card offers must be in a specially you of winning a lottery or a
with another party and you know its highlighted box or near the box. sweepstakes that you dont remember
reputable, dont provide details such entering, and you are told to pay
3. Try to deal only with businesses taxes or fees before you can claim
as your Social Security Number, bank
you already know or that have been your prize.
account and credit card numbers,
recommended by someone you
personal identification numbers
continued on next page
Theres been explosive growth in In these cases, the depositor most likely Money isnt the only thing that can
counterfeit personal and business will be held responsible for the entire be lost to a fake check scam. In one
checks, cashiers checks and money amount of the fraudulent check. Why? example reported to the FDIC several
orders in the last few years, due in Because by depositing the check and years ago, a person sold a classic car
part to new technologies and the withdrawing money, the consumer then worth $41,000 to a scam artist
growth of the Internet for transactions is taking responsibility for the funds who used a counterfeit cashiers check.
among strangers. But whats especially that have been spent or sent before
troubling is that individual consumers the check is found to be worthless. FDIC Consumer News has been
and businesses are losing significant And often the withdrawal cannot warning readers about check fraud for
sums in these scams often be cancelled or reversed, especially years, but given the increase in fake
thousands of dollars because they with wire transfers, in which funds checks and the costs to victims, we
deposited a check from a stranger, are transferred out of the account offer these key reminders.
withdrew the funds and then sent immediately. Also, the person who 1. If you deposit a check from
money or merchandise before their receives the check usually is in the best a stranger, discuss the situation
bank discovered that the check was position to realize that it may not be with your branch manager before
fraudulent. good.
spending that money or handing for the average consumer or business order by using an automated service at
over anything of value. Its safer not owner or even bank teller to recognize toll-free 1-866-459-7822.
to accept checks from strangers, but a counterfeit check, so youre usually
Private financial services companies
if you do, tell the manager about the better off looking for the basic signs
also issue money orders, but its up to
circumstances surrounding the check of a scam instead of focusing on the
you to take appropriate precautions.
and ask when the check is likely to be check itself, said David Nelson, a
considered good (paid). fraud specialist at the FDIC. For example, Dont depend on
a phone number thats printed on
While federal regulations require In addition to the warning signs weve
a check or money order, Nelson
institutions to make funds from a already described, here are other red
stressed. If this is a fraud, one of
deposit available quickly generally flags of a check fraud (and additional
the criminals may answer and tell
within one to five business days it commentary from Nelson):
you that the check or money order
can take a couple of weeks or longer
The reasons for receiving a check is legitimate, or you may get a voice
before the bank discovers that the
are suspicious. (How could you win mailbox that the swindlers set up to
deposited check is worthless.
a lottery you never entered? Nelson sound real and reassuring.
The check could be counterfeit or said. And if you really won something
In general, its always best to use a
bounce because of insufficient funds, and owed money, why wouldnt they
phone number listed in your phone
and your bank will most likely hold just deduct that amount from your
book or another directory, not the
you responsible for that money, said winnings?)
number printed on a check or money
Michael Benardo, manager of the
Youre asked to send money outside order or told to you by the other
FDICs financial crimes section. If the
of the United States. (Thats because party.
other party badgers you at any time
it is difficult to track people down in
about waiting, especially if you are Another way to be more comfortable
another country.)
directed to send funds, tear up their that youre dealing with an honest
check and stop all communications. Youre pressed to send money right person especially someone youre
away. (Theyre rushing you to act dealing with over the Internet is
So, protect yourself by not touching
before you discover that the check is to try to confirm his or her name,
the deposited funds until you explain
bad.) address, home number and work
to your branch manager the details of
number through some independent
the transaction and the source of the Youre warned to keep things
means, such as an online database or
check, and you wait for the managers quiet to not discuss the deal with a
directory assistance.
go-ahead to use the funds. bank employee or anyone else. (Its
to prevent your banker or others 5. Immediately report if you think
2. Walk away from any deal if you
from warning you about a counterfeit youre a victim of a check fraud or
get a check for more than the
check.) if you notice something suspicious.
amount due and youre instructed
Contact your bank as well as the local
to return the difference. Lets 4. Take additional precautions to
office of the FBI (listed in your phone
say you sell a $5,000 item over the make sure a check is good. Consider
book and on the FBI Web site at
Internet and the buyer sends a check insisting on being paid with a money
www.fbi.gov/majcases/fraud/
or money order for $10,000. The order or a cashiers check (not a
fraudschemes.htm).
buyer, who has an explanation why personal check) drawn on a local bank
the check is for more than what you or a bank that has a local branch. That For more information: Visit the
expected, instructs you to deposit the way you can take the check to that Looks Too Good to be True Web
check and wire the excess amount banks branch to ensure its valid. site (www.lookstoogoodtobetrue.
to his account or to the account of com), a joint effort of federal law
an associate. It may take a couple of Also consider asking for a money
enforcement agencies and corporate
weeks, but eventually the check will be order from the U.S. Postal Service.
partners that is intended to educate
returned as counterfeit. These come in values of up to $1,000
consumers on how to avoid Internet
for domestic money orders and up to
frauds, including those that involve
Using our example, you may need to $700 for international money orders.
counterfeit cashiers checks and money
reimburse your bank for $10,000, even
To confirm that a Postal Service orders. It includes a test you can take
if thats far more money than you have
money order is valid or to cash it, you to see if you are at risk for check
fraud. Q
in your account. You may also have
lost the item you were selling. can take it to a local post office. You
can also verify a Postal Service money
3. Recognize other warning signs
of a check scam. Its very difficult
Resolving Problems
Things You Can Do to
The FDIC encourages financial institutions, government agencies, consumer For More Information
groups, the media and anyone else to help make the tips and information in this
special edition of FDIC Consumer News widely available to the public.
from the FDIC
Go to www.fdic.gov or call
The newsletter may be reprinted in whole or in part without advance
toll-free 1-877-ASK-FDICthats
permission. In addition, the FDIC offers this special edition online in a PDF
version at www.fdic.gov/consumernews that looks just like the printed newsletter 1-877-275-3342
and can easily be reproduced in any quantity. Space on the back page of the Monday through Friday
PDF version also was intentionally left blank so that an organization could add 8:00 a.m. to 8:00 p.m.,
its name, logo, a special message and/or mailing information.
Eastern Time.