2 Summer 2018

25th Anniversary Edition

FDIC Consumer News

Saving Money

1997| Retirement Planning and Saving: Mistakes to Avoid 

Excerpted and updated from “Retirement 

Planning: Saving for Your Golden Years,” 

Spring 1997. 

Millions of working Americans find it’s 

a challenge just to pay for their house, 

car, insurance, child care and other 

expenses each month. So how can 

people even think about setting aside 

money for their retirement 20, 30 or 

even 40 years away? We can’t predict 

the future, but we can help you learn 

from the past. Here’s a list of common 

mistakes and miscalculations on the 

road to financial security — wrong 

turns we want you to avoid.

Saving too little. How much of your 

money should go to retirement savings? 

The answer depends on factors such as 

how many years until you retire, how 

much you already have in savings and 

pensions, what kinds of expenses you 

foresee in retirement, and the impact 

of inflation on your future buying 

power. When in doubt, perhaps the 

simplest approach is to try to put 10 to 

20 percent of your income each year 

into money toward your retirement. 

Regular, automatic savings programs 

also help make it “painless” to set 

money aside. 

Starting too late. The sooner you 

begin saving, even with relatively 

small amounts contributed year after 

year, the faster you can develop a solid 

retirement fund. Through the magic of 

compound interest, a little bit of money 

saved over a long period can grow to be 

a lot of money. Unfortunately, too many 

people delay saving for retirement until 

they meet other goals, such as saving 

for a child’s college education.

Not diversifying enough. Putting 

all your (nest) eggs in one basket can 

be a problem if the approach you take 

doesn’t perform well or actually loses 

money. Consider a mix of savings 

and investments that might perform 

reasonably well under any economic or 

market conditions. 

Not doing your homework. A 

wrong move can cost you thousands 

of dollars in taxes, fees, penalties or 

bad investments. Learn as much as 

you can about planning and saving for 

retirement. A good place to start is with 

free resources from the public library, 

your employer’s personnel department 

and governmental agencies. Talk to 

financial professionals you know and 

trust. Ask for a clear explanation of 

the pros, cons and costs of what they 

recommend, and do some comparisonshopping before you make a final 

decision. And don’t forget to check your 

savings and investments regularly.

Falling for retirement rip-offs. If you 

get a call, letter or visit from someone 

peddling financial products with 

features that seem too good to be true, 

trust your instincts. There are many 

scams designed to trick consumers 

into giving up cash, checks, credit card 

numbers or other valuables for little 

or nothing in return. Common cons 

involve promising fantastic returns on 

investments that turn out to be fraud. If 

you think you’ve been approached by a 

con artist or you’ve been victimized by 

someone offering a financial product or 

service, report it to the Federal Trade 

Commission (visit ftc.gov/complaint or 

call toll-free 1-877-FTC-HELP). If the 

scam is internet-related, send an email to 

the federal government’s Internet Crime 

Complaint Center at www.ic3.gov. Q

About This Special Edition

The Federal Deposit Insurance 

Corporation has been publishing 

FDIC Consumer News quarterly 

since the fall of 1993 to deliver 

timely, reliable and innovative 

tips and information about 

financial matters, free of charge. In 

recognition of the 25th anniversary 

of the newsletter, we have issued 

this special edition — a collection of 

some of our more popular articles 

through the years, condensed and 

updated, with one article from each 

year going back to 1993. 

A lot has changed in banking and 

financial services for American 

consumers, from an increase in the 

FDIC deposit insurance limit (going 

from $100,000 to $250,000) to 

major technological advancements 

(transitioning from basic banking 

at branches to mobile banking 

from anywhere with smartphones 

and apps). Something that hasn’t 

changed is the FDIC’s commitment 

to helping people learn about their 

rights, responsibilities and options as 

they manage their money in today’s 

financial marketplace. We hope you 

will find this issue to be truly special 

and beneficial.

INSIDE

Saving Money 2

About FDIC Insurance 3

Protecting Yourself 6

Banking and Bill Paying 11

Borrowing Money 12

Getting Organized 15

Ages and Stages 17

Test Your Financial IQ 19
3

25th Anniversary Edition

FDIC Consumer News Summer 2018

Excerpted from “Good Ways to Get Started 

Cutting Back” and “7 Tips on Putting 

Your Dollars to Work...for You!” Winter 

2008/2009.

If you or others in your family are 

facing difficult times financially, perhaps 

from a job loss or wage cuts, it is 

especially important to spend less on 

nonessential items so you 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 your 

spending. As a first step, think about 

creating a budget. Make a list of your 

monthly expenses divided into two 

groups — your “needs” (expenses 

that are absolutely necessary, such 

as your housing, utilities, clothes, 

food and transportation) and your 

“wants” (optional purchases). After 

you differentiate between spending for 

needs and splurging on wants, cut back 

on the second category, especially if 

you’re already suffering an income loss 

or other financial hardship. Possible 

places to cut back include restaurant 

meals, monthly subscriptions and 

premium TV channels. 

Keep banking costs down. Among 

the possibilities: If you routinely pay 

bank fees, shop for a different account 

that meets your needs at a lower cost. 

Also review your banking habits to 

cut unnecessary fees. With your credit 

card bill, pay as much as you can, as 

2009| Ways to Spend Less, Save More in Good Times and Bad

soon as you can. It will mean you’ll 

pay less interest and avoid late fees. 

And 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 weighing the up-front 

costs of refinancing. 

Have an emergency savings account. 

This is an account you can tap if you 

lose your job or have major, unforeseen 

expenses. Emergency savings will help 

ensure that you don’t have to borrow 

from your retirement nest egg or take 

out additional loans that would push 

you into debt. A general rule of thumb 

is to have enough money in this “rainy 

day” fund equal to at least two months 

of living expenses. If your employment 

outlook is especially uncertain, consider 

setting aside enough to cover six or 

more months of anticipated expenses. 

Also, keep your emergency savings 

in an account that will be fairly liquid 

— such as a bank savings account, 

money market account or a short-term 

certificate of deposit (CD) — so you 

can withdraw the money relatively 

quickly, if necessary. 

Try to save money for long-term 

goals, such as your retirement.

If your employer matches a portion 

of your payroll contributions to a 

tax-advantaged retirement savings plan, 

not participating means you are passing 

up free money and perhaps losing out 

on a valuable tax break. Even if your 

employer does not match, you should 

still take advantage of these accounts.

Pay yourself first. That means each 

month, before you’re tempted to spend 

money, commit to putting a good bit of 

it into a savings account. You can write 

out a check to be deposited into your 

savings account, but it’s much easier to 

arrange with your bank to automatically 

transfer a certain amount from your 

paycheck or your checking account

into savings. 

Review your existing accounts and 

comparison shop for the best deals. 

Look at what is being offered by your 

bank and a few competitors. The 

idea is to make sure the interest rates 

are competitive and that the fees and 

features are appropriate for how you 

use each account. 

Turn a debt payment into a deposit. 

If you pay off a debt, such as the 

outstanding balance on a credit card, or 

if you make that last loan payment on 

your car, put that money to work as part 

of your savings. 

Save, don’t spend, a financial 

“windfall.” If you receive a large sum 

— perhaps from an inheritance, an 

insurance payment, a tax refund or a 

bonus at work — deposit that money 

into a savings or investment account 

before you’re tempted to spend it. Q

Excerpted and updated from “One-Stop 

Shopping for Financial Services: A Window 

of Opportunity for the Informed Consumer,” 

Spring 2001.

The wide array of financial products 

available from banking institutions 

means you can take care of most of 

your financial needs — from banking 

to investing to buying insurance — 

under one roof. For example, you may 

be able to put your retirement savings 

into mutual funds and insured bank 

deposits all at the same bank. Or, you 

can get your auto loan and your auto 

insurance from the same institution. But 

along with a wider range of savings and 

investment options comes an increased 

need for consumers to be knowledgeable 

about these various products and the 

different risks associated with them. 

Some products can offer the potential for 

higher returns than traditional deposits, 

but consumers need to understand these 

products, especially the risks, before they 

make a purchase.

One important aspect of understanding 

the risks is to know which products 

offered by banking institutions are 

covered by FDIC insurance and which 

are not. Examples of FDIC-insured 

deposits include:

2001| Why and How to Know What’s FDIC-Insured and What Isn’t 

continued on the next page

About FDIC Insurance
4 Summer 2018

25th Anniversary Edition

FDIC Consumer News

• Checking accounts, Negotiable 

Order of Withdrawal (NOW) accounts 

(checking accounts that earn interest), 

and Money Market Deposit Accounts 

(savings accounts that allow a limited 

number of checks to be written monthly. 

• Savings accounts that you can add to 

or withdraw from at any time.

• Certificates of deposit (CDs), which 

generally require you to keep funds in 

the account for a set period, perhaps 

from three months to five years. Money 

can be taken out beforehand if you pay 

an early withdrawal penalty.

So, what’s NOT insured by the FDIC 

that consumers often mistakenly believe 

may be federally insured if a banking 

institution is involved?

• The contents of safe deposit boxes. 

Even though the word deposit appears 

in the name, under federal law a safe 

deposit box is not a deposit account — 

it’s strictly a well-secured storage space 

rented by an institution to a customer. 

If you are concerned about the safety or 

replacement of items you put into a safe 

deposit box, ask your insurance agent 

whether your homeowner’s or renter’s 

insurance policy covers your safe deposit 

box against damage or theft. 

• Losses due to theft or fraud at the 

institution, including cybercrimes. For 

information on how federal laws and 

industry practices may limit losses under 

certain circumstances, search by topic at 

the Federal Trade Commission website 

(www.ftc.gov). 

• Insurance and annuity products, such 

as life, auto and homeowner’s insurance. 

Not only are these products not backed 

by the FDIC, but some insurance 

products may even lose value.

• Stocks, bonds and mutual funds.

• Investments backed by the U.S. 

government, such as Treasury securities 

and Savings Bonds.

How can you tell the difference? First, 

remember that FDIC insurance protects 

only deposits. Products such as mutual 

funds, annuities, stocks, bonds and U.S. 

Treasury securities are not deposits 

and, therefore, are not protected by the 

FDIC. Mutual funds, stocks and bonds 

also are subject to investment risks, 

including the possible loss of principal, 

even if you bought them from your 

FDIC-insured institution. Treasury 

securities and Savings Bonds, while not 

insured by the FDIC, are backed

by the full faith and credit of the

U.S. government.

To minimize potential confusion about 

which products are FDIC-insured, 

banks and savings institutions are 

required by federal banking regulators 

to clearly differentiate insured deposits 

from investments, both in their sales 

practices and their advertisements. For 

example, when offering or advertising 

an investment product to a customer, 

FDIC-insured institutions must 

indicate that the investment is not 

FDIC-insured, is not guaranteed by the 

bank or savings institution, and is subject 

to investment risk, including the possible 

loss of principal. 

FDIC insurance provides a guarantee 

that your insured deposits will be 

safe in the event your bank or savings 

institution fails. While the basic federal 

insurance amount is $250,000, you 

actually can receive more than $250,000 

of coverage if your funds are maintained 

in different ownership categories. For 

example, you can have coverage of up to 

$250,000 for your individual accounts 

at the bank, another $250,000 for your 

share of joint accounts at the same 

bank, and yet another $250,000 for 

certain retirement accounts, including 

Individual Retirement Accounts (IRAs). 

The FDIC also is here to help you

with your banking questions or 

problems. Start at www.fdic.gov 

or call toll-free 1-877-ASK-FDIC 

(1-877-275-3342). To learn more about 

FDIC deposit insurance coverage, 

call that same number or visit www.

fdic.gov/deposit. If you are a person 

who is deaf or hard-of-hearing, please 

call 1-800-925-4618. The FDIC offers 

assistance to individual consumers in a 

variety of ways because we share 

a common goal — to protect 

your money. Q

Excerpted and updated from “Basics of 

Deposit Insurance for Businesses,”

Fall 2004. 

The FDIC receives many questions 

about deposit insurance from 

businesses and other entities that want 

to know if all their money would be 

fully protected if their bank were to fail. 

If you own a business or manage the 

money of a non-profit organization, 

here are some basics you should know 

about your FDIC insurance coverage. 

Deposits of a corporation, 

partnership or “unincorporated 

association” (such as a religious 

organization, charity or homeowners 

association) are insured up to 

$250,000 in total. These business-type 

accounts, though, are insured separately 

from any personal accounts of the 

entity’s stockholders, partners or 

members held at the same institution. 

The FDIC gets calls, for example, 

from corporations or partnerships 

asking if it is possible to deposit more 

than $250,000 in a bank on behalf of 

multiple partners or principals and 

still be fully insured. The answer is 

no — it’s $250,000 of insurance to the 

corporation alone or the partnership 

alone. The insurance coverage doesn’t 

increase based on the number of 

owners.

To quality for coverage of up to 

$250,000 of FDIC insurance separate 

from the personal deposits of the 

owners or officials, the organization 

must be engaged in an “independent 

continued from 2001 on the previous page

2004| Basics of Deposit Insurance for Businesses

continued on the next page
5

25th Anniversary Edition

FDIC Consumer News Summer 2018

continued from 2004 on the previous page

activity.” That means the entity cannot 

exist solely for the purpose of increasing 

the deposit insurance coverage of the 

owners. 

Note: While a corporate account is 

insured for up to $250,000 in total, 

funds held in connection with employee 

benefit plans, such as pension or 

profit-sharing plans, might qualify 

for coverage up to $250,000 for each 

employee’s share if FDIC requirements 

for this separate category are met. 

In addition, a corporation’s accounts for 

different purposes (such as one account 

for research projects and another for 

a building project) are each separately 

insured to $250,000 only if they belong 

to separately incorporated subsidiaries. 

Otherwise, they are added to any other 

deposit accounts of the corporation and 

the total is insured up to $250,000. 

Deposits of a sole proprietorship 

are insured together with any 

personal funds the business owner 

may have at the same bank. A sole 

proprietorship is a business owned 

by just one individual rather than a 

corporation or partnership. Many small 

stores or service companies operate as 

sole proprietorships. 

Unlike corporations or partnerships, if 

you are the sole proprietor of a business, 

your personal accounts and the accounts 

of the sole proprietorship at the same 

institution are insured together as 

individual accounts up to $250,000

in total. 

If you have questions about your 

insurance coverage, call the FDIC 

toll-free at 1-877-ASK-FDIC 

(1-877-275-3342). Also read the 

deposit insurance information posted 

on the FDIC website at www.fdic.

gov/deposit. Single copies of selected 

publications, including “Your Insured 

Deposits,” the FDIC’s comprehensive 

guide to deposit insurance coverage, are 

available free of charge by completing 

the online order form at catalog.fdic.

gov or by contacting the FDIC’s Public 

Information Center at the toll-free 

phone number above. If you are a 

person who is deaf or hard-of-hearing, 

please call 1-800-925-4618. Q

Excerpted and updated from “How to Be 

Sure You’re Fully Protected by the FDIC,” 

Fall 2008. 

In 85 years, no one has lost a penny of 

FDIC-insured deposits. You don’t need 

to worry about the safety of your money 

if you have deposits at one bank totaling 

less than the basic FDIC coverage limit 

of $250,000. If your deposits exceed 

the coverage limit, or if you’re just not 

sure about how much of your money is 

protected, consider these steps. 

Use “EDIE” the FDIC deposit 

insurance estimator. EDIE will help 

you understand if you have funds over 

the insurance limits. Find it at www.

FDIC.gov/EDIE. 

When in doubt, contact the 

FDIC for additional assistance. 

You can call the FDIC toll-free at 

1-877-ASK-FDIC (1-877-275-3342).

Specialists are available 8:00 a.m. to 

8:00 p.m., Eastern Time, Monday 

through Friday. If you are a person 

who is deaf or hard-of-hearing, call 

1-800-925-4618. We also have deposit 

insurance brochures, videos and other 

materials at www.fdic.gov/deposit. 

If your deposits are over the FDIC 

insurance limit, consider your 

options. One possibility is to divide 

the funds among the various ownership 

categories (single accounts, joint 

accounts, revocable trust accounts, 

retirement accounts, and so on) at 

the same institution, because deposits 

in separate insurance categories are 

separately insured. But changing 

accounts is something you need to 

think about carefully because, for 

example, moving some money from a 

single account into a joint account with 

someone else means that you are giving 

that other person legal ownership of 

the money. Before finalizing your plans, 

consider discussing them with your 

attorney, accountant or another trusted 

advisor. A second option for insuring 

funds that are over the FDIC’s limit is 

to move some money to accounts at 

other insured institutions. This option 

works well for people who don’t want, 

or don’t qualify for, other ownership 

categories at their existing bank. 

Periodically review your insurance 

coverage. Here are suggestions for 

when to take a closer look: 

• Before you open a new account. Think 

about all the accounts your family owns 

at an institution, the types of accounts 

and the names of the beneficiaries. 

You’ll need this information to get an 

accurate calculation of your insurance 

coverage. 

• After the death of a loved one. If two 

people own a joint account and one of 

them dies, the FDIC will insure the 

deceased person’s share as if he or she 

were still alive for another six months. 

This grace period gives executors or 

other authorized people time to make 

changes to the account, if necessary, 

without having to worry about a drop 

in FDIC coverage. But if the joint 

account is not restructured within that 

six-month period, it will automatically 

be insured as the surviving co-owner’s 

single account at the bank, and 

sometimes that results in funds 

becoming uninsured. As an example, if 

two people have one account at a bank 

— a $500,000 joint account — and one 

of them passes away and the survivor 

makes no change to the account 

within the six-month grace period, 

then $250,000 would be uninsured. 

Please keep in mind that the $250,000 

insurance coverage for this account 

would include principal plus accrued 

interest.

• If a large windfall comes your way. 

Suppose you sell your house or receive 

a large payment from a trust. Make sure 

any deposits, especially those made on 

your behalf by third parties, won’t put 

you over the FDIC’s limits.

• If you own accounts at two institutions 

that merge and the combined funds exceed 

the insurance limit. Accounts at the 

two institutions before the merger 

continue to be separately insured for 

six months after the merger, and longer 

for certificates of deposit (CDs), but 

you have to review the accounts within 

that grace period to avoid a potential 

problem with uninsured funds. Q

2008| How to Be Sure You’re Fully Protected 
6 Summer 2018

25th Anniversary Edition

FDIC Consumer News

Pay bills before you leave, if 

possible. You don’t want essential 

services to be cut off while you’re away 

on a long trip. Check the due dates on 

all bills — especially utilities and auto 

insurance — to see if payments will 

come due in your absence. If so, be 

sure to make those payments before 

you leave or pay them online from 

wherever you are.

An upcoming trip is also a good reason 

to consider signing up for direct 

deposit of paychecks and government 

benefit checks, if you haven’t already 

done so. With direct deposit, you don’t 

have to worry about possible theft of 

the checks by mail and you know the 

funds will be in your account on a 

certain date — a comforting thought 

whether you’re away or at home.

Stash your valuables. Consider 

putting jewelry and other valuable 

items in a safe deposit box at your 

financial institution.

Copy important documents and 

make a list of important numbers. 

Make two copies of your passport 

identification page, driver’s license, 

vehicle registration, airline or other 

tickets and your itinerary. Leave one 

at home with a relative or friend and 

carry the other one with you separately 

from the items themselves. Do the 

same with your list of important 

numbers. It could include phone 

numbers for your credit card company, 

bank and insurance companies.

It’s probably not a good idea to include 

credit card numbers or your Social 

Security number on this list, because 

the information could fall into the 

wrong hands. Carry the list with you; 

don’t pack it.

Understand what credit card 

blocking is about. It most often 

occurs when you rent a car or check 

into a hotel and present your credit 

card. The clerk could electronically 

ask the bank that issued the card to 

“block” (reserve) part of your line 

of credit to cover the expected cost 

before you go out and use it for your 

Excerpted and updated from “Don’t 

Leave Home Without Making Financial 

Preparations,” “Trouble on the Trip and 

How to Cope with It,” and “Giving Credit 

Before Credit is Due,” Spring 1995. 

In the haste of preparing for a trip, it’s 

easy to forget those finance-related 

steps you really should take before 

leaving. Here’s how you can avoid a 

lot of grief, save money and greatly 

improve your chances for a pleasant 

journey.

Decide on the amount of cash or 

credit you may need on the trip. For 

your own security, it’s not a good idea 

to take a lot of cash anywhere. If it’s 

lost or stolen, you can’t replace it. Only 

carry enough cash for cab rides, tips 

and other small expenses. Otherwise, 

use credit cards when you can because 

they are readily accepted by merchants 

and can easily be replaced if lost or 

stolen. And if you need cash fast any 

time of day, even in a foreign country, 

you can still get it from an automated 

teller machine (ATM) using the 

same cards you use back home. The 

following are other things to consider:

• If you plan to get cash using a credit 

card at an ATM, you can incur hefty 

fees. Using your debit card to get cash 

from an ATM may cost you less

in fees. 

• If you’re traveling out of the country, 

when you pay for purchases you are 

likely to fare better on the exchange 

rate (how much your U.S. dollars 

will be worth in a foreign country) if 

you use a credit card or swipe a debit 

card (and choose the “credit” option) 

instead of converting your cash to local 

currency. If you do convert currency, 

the fee is usually the same whether you 

change $10 or $100, so convert larger 

rather than smaller amounts. Change 

money in a safe place and put it away 

in your wallet or purse immediately.

• In addition to your bank (debit/

ATM) card, take at least two major 

credit cards. They should meet all your 

foreseeable needs. Leave unnecessary 

credit cards at home.

other vacation purchases. If it’s a hotel, 

what’s blocked — usually on arrival 

— could be the cost of your room for 

the length of your stay, plus incidental 

expenses you may incur, like meals 

and phone calls. In the case of cars, it 

could be the cost of the rental, plus 

gasoline. There is nothing sinister or 

illegal about it, as long as the amount 

blocked isn’t out of line with what the 

customer is likely to pay at the end of 

the transaction.

If you leave on vacation with your 

credit card near the limit or if you 

are a business traveler who spends 

long periods on the road, you should 

be aware of credit blocking. This is 

because any additional transactions you 

attempt after you hit your credit limit 

would be rejected. To learn more about 

credit card blocking, visit the Federal 

Trade Commission’s webpage at www.

consumer.ftc.gov/articles/0217-whencompany-blocks-your-credit-or-debitcard.

Protect yourself from thieves and 

scam artists who target travelers. 

Here are some precautions: 

• Don’t flaunt your cash, charge 

cards, fancy clothes or expensive 

jewelry (or even expensive-looking 

jewelry). Among the people you may 

1995| Travel Tips: Don’t Leave Home Without Making Financial Preparations

Protecting Yourself

continued on the next page
7

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FDIC Consumer News Summer 2018

be impressing could be robbers. Avoid 

pickpockets by making sure your bag 

or purse is closed. 

• Always take your credit and debit/

ATM card receipts with you, and 

never give anyone your personal 

identification number (PIN). All 

contain information about your 

account that a thief can use to get 

cash or make purchases. If your cards 

are lost or stolen – in the U.S. or 

abroad — immediately report this to 

your bank or card issuer. In general, 

federal law limits your liability for 

unauthorized charges on a credit or 

debit card if your card is lost or stolen, 

but you must notify the bank or card 

issuer within certain time frames. For 

more information, see our article on 

debit, credit and prepaid cards on

Page 12. Industry practices may 

further limit your losses, so check with 

your card issuer.

• At hotels, one of best things you can 

do is keep your extra cash, jewelry, 

passport and other valuables in the 

hotel safe.

• While you may not enjoy hanging 

out at airports, thieves do. They know 

airports are full of tired, hurried, 

confused travelers carrying cash, credit 

cards and other valuables. This kind 

of theft usually occurs near ticket 

counters, X-ray machines, baggage 

check and claim areas, rest rooms or 

vending areas. The basic advice:

stay alert. 

Banks, card companies, express 

delivery services and other 

businesses are there to help. If 

the unexpected occurs, there are lots 

of ways to get emergency cash or 

arrange for payments, from practically 

anywhere in the world. A nearby 

bank can arrange for a cash advance 

using a major credit card. You can ask 

the bank to have money transferred 

electronically from your bank or 

brokerage account back home. Or see 

if it can safely deliver traveler’s checks 

and money orders or wire funds to 

your hotel or another location. If your 

problems are tied to a lost or stolen 

wallet, call your bank or credit card 

issuers immediately. Q

Excerpted and updated from “Don’t Get 

Mad, Get Answers,” Summer 1999. 

Got a complaint involving your financial 

institution but you’re not sure about 

the best or quickest ways to resolve the 

matter? Here are suggestions.

First contact the institution. 

Experience has shown that the quickest 

way to resolve most banking problems 

is to work directly with your bank. Ask 

who you should direct your complaint 

or question to and if the institution has 

any procedures it wants you to follow. 

If your bank is local, you may want to 

consider making an appointment with a 

manager or officer there. A face-to-face 

meeting to share information and 

discuss differences often will clear up 

misunderstandings, on both sides, and 

reduce the frustration that can result 

from exchanging letters. 

If you report a problem to an 

institution in a phone call, follow 

up with a letter that restates your 

concerns and asks that the situation 

be looked into. This part is very 

important, because written notification 

is often required by the consumer 

protection laws. If your call results 

in a verbal commitment, such as an 

agreement to refund a certain dollar 

amount, include in your follow-up letter 

a request for a written confirmation of 

what was promised over the telephone.

Keep your tone as positive and 

professional as possible. If you’re 

upset, allow yourself to calm down 

before calling or writing. You’ll be much 

more effective in getting the institution 

to see your side of the problem, and 

you’ll probably remember more details.

If you still feel there is a problem or 

that you’re being treated unfairly, 

write to the institution’s primary 

federal regulator. To find out who 

regulates a financial institution, 

you can call the FDIC toll-free at 

1-877-275-3342 or go to BankFind, 

the FDIC’s online directory of 

FDIC-insured banking institutions 

(research.fdic.gov/bankfind).

If you write to a government agency, 

include all pertinent information. 

Provide your name, address and 

telephone number; the name and 

location of the institution; a brief 

description of the problem and your 

efforts to fix it (including the names of 

employees you contacted); and what 

you’d like the institution to do to correct 

the problem.

Also attach copies of any supporting 

documents, such as account statements 

and letters to or from the institution. 

Of course, prevention is the best cure. 

Read all the information that comes 

with your accounts, and keep it in a safe 

place. Check your account statements 

frequently and contact the institution 

immediately if there are errors. Mistakes 

are easier to straighten out the earlier 

they are found, and some consumer 

protection laws have limits on how long 

you have to file a complaint.

Finally, read the notices mailed with 

your account statement, because they 

may include changes in your account’s 

terms or conditions. Q

1999| Don’t Get Mad, Get Answers continued from 1995 on the previous page
8 Summer 2018

25th Anniversary Edition

FDIC Consumer News

Excerpted and updated from “When 

a Criminal’s Cover Is Your Identity,” 

Summer 2000.

Your good name and reputation are 

among your most valuable assets. 

Unfortunately, criminals know the 

value of a good name and reputation, 

too. That’s why increasing numbers 

of con artists are “stealing” identities. 

They typically start by using theft or 

deception to learn a person’s Social 

Security number, date of birth or other 

personal information. Armed with 

those details, the perpetrators can open 

credit card accounts, make purchases, 

take out loans, or make counterfeit 

checks and ATM cards in your name. 

In effect, the crook becomes you to 

commit fraud or theft.

Federal and state laws plus banking 

industry practices may limit your losses 

from identity theft, also known as ID 

theft. Under the Truth in Lending Act, 

if a crook opened a credit card account 

in your name and ran up thousands 

of dollars in charges, the most you’d 

owe is $50 — and many creditors will 

agree to excuse you of all liability. 

Still, innocent victims are likely to 

face long hours (and sometimes years) 

closing tarnished accounts and opening 

new ones, fixing credit records, and 

otherwise cleaning up the damage. 

They may even be denied loans, jobs 

and other opportunities because an 

identity theft ruined their reputation 

and credit rating. 

Here are things you can do to 

minimize your risk of becoming a 

victim of ID theft: 

Protect your Social Security 

number, credit card numbers, 

account passwords and other 

personal information. Never divulge 

this kind of information unless you 

initiate the contact with a person or 

company you know and trust. A con 

artist can use these details and a few 

more, such as your mother’s maiden 

name, to withdraw money from your 

bank or order credit cards or checks in 

your name. If you get an unsolicited 

offer that sounds too good to be true 

and asks for bank account numbers 

and other personal information before 

you receive anything in return, this is 

probably a scam. Likewise, if a caller 

claims to represent your financial 

institution, the police department or 

some similar organization and asks 

you to “verify” (reveal) confidential 

information, hang up fast. Real bankers 

and government investigators don’t 

make these kinds of calls. 

Keep thieves from turning your 

trash into their cash. Thieves known 

as “dumpster divers” pick through 

garbage looking for credit card 

applications and receipts, canceled 

checks, bank statements, expired 

charge cards and other documents or 

information they can use to counterfeit 

or order new checks or credit cards. 

So, before putting these items in the 

garbage bin, tear them up as best you 

can. Any paper you don’t need to 

keep that contains private information 

should be shredded.

Pay attention to your bank account 

statements and credit card bills. 

Contact your financial institution 

immediately if there’s a discrepancy 

in your records or if you notice 

something suspicious, such as a 

missing payment or an unauthorized 

withdrawal. While federal and state 

laws may limit your losses if you’re 

victimized by a bank fraud or theft, 

sometimes your protections are 

stronger if you report the problem 

quickly and in writing. 

Review one or more of your credit 

reports approximately once a 

year. Your credit reports (prepared 

by a credit bureaus) will include 

identifying information such as your 

name, address, Social Security number 

and date of birth, as well as details 

about credit cards and loans in your 

name. Make sure each report you 

obtain is accurate, and that includes 

monitoring it for unauthorized bank 

accounts, credit cards and purchases. 

Under federal law, you can get at 

least one free report from each of the 

nationwide credit bureaus every 12 

months. To order your free annual 

reports from the three major credit 

bureaus — Equifax, Experian and 

TransUnion — visit www.Annual

CreditReport.com or call toll-free 

1-877-322-8228.

Don’t let ID theft take on a life of its 

own — yours. If someone is using 

your personal information to cash in 

on your name, visit www.identitytheft.

gov, the federal government’s one-stop 

resource to help people report and 

recover from ID theft. Q

continued on the next page

2000| When a Criminal’s Cover Is Your Identity:

Minimizing the Risk of Identity Theft

Excerpted from “Weathering a Financial 

Storm,” Winter 2001/02. 

Millions of Americans face financial 

problems that can start with the loss of 

a job, a death or illness in the family, 

a divorce or separation, an inability to 

control spending and borrowing, or a 

slowing economy. Here are warning 

signs of a financial problem:

• More than 20 percent of your monthly 

net income is going to pay credit cards 

and other loans (excluding a mortgage); 

2002| Weathering a Financial Storm

Income down? Expenses and stress level up? When the going 

gets tough, here’s how the tough can keep going. 

• Borrowing money to make payments 

on loans you already have; 

• You are frequently at, near or over the 

limit on your credit cards; 

• Only paying the minimum required 

on your credit card bill; and 

• Paying bills late or putting off visits 

to the doctor because you don’t have 

enough money. 

What can you do to protect yourself and 

your family if you’re having financial 
9

25th Anniversary Edition

FDIC Consumer News Summer 2018

off your highest-rate loans (usually your 

credit card or department store charge 

card) first. If you have several credit 

cards, target the one with the highest 

interest rate, pay it off, and then move to 

the card with the next highest rate. Also, 

try to pay all or as much as possible of 

your credit card bill each month, so you 

can avoid high interest charges. But 

if all you can manage is to send in the 

minimum payment, make this a priority.

If you think you’ve got a serious debt 

problem, address it immediately. 

Many people may need to turn to others 

for assistance, such as a knowledgeable 

friend or relative, or a reputable credit 

counseling service

(see Page 14). Q

continued on the next page

2006| Fires, Floods and Other Misfortunes: Are You Prepared Financially?

Excerpted and updated from “Fires, Floods 

and Other Misfortunes: Are You Prepared 

Financially?” Winter 2005/2006

Natural or man-made disasters strike 

without warning and can happen to 

anyone. They can also seriously impair 

victims’ ability to conduct essential 

financial transactions. If you had only 

a few moments to evacuate your home 

— and were away for several days or 

even weeks — would you have access to 

cash, banking services and the personal 

identification you need to conduct your 

day-to-day financial life? Here are some 

tips from the FDIC.

What to Have Ready 

Forms of identification: These 

primarily include driver’s licenses 

(or state ID cards for non-drivers), 

insurance cards, Social Security cards, 

passports and birth certificates. These 

documents will be crucial if you or your 

family needs to rebuild lost records or 

otherwise prove to a government agency, 

a bank or other business that you are 

who you claim to be. It’s best to have 

the originals, but it’s also important to 

have photocopies in case originals are 

misplaced or destroyed. 

Your checkbook with enough blank 

checks and deposit slips to last a 

month or so: Even if you rarely or 

never write checks, at least consider 

having a copy of a check or your 

checking account number handy because, 

in an emergency, you can authorize an 

important payment by providing your 

checking account number over the 

phone.

Automated teller machine (ATM) 

cards, debit cards (for use at ATMs 

and merchants) and credit cards: 

These cards give you access to cash 

and the ability to make payments on 

outstanding bills. Most ATM and 

debit cards require the use of personal 

identification numbers (PINs), so make 

sure you know those numbers. Don’t 

write your PINs on or near your cards in 

case they are lost or stolen. 

Cash: The amount you should have 

available will depend on several factors, 

including the number of people in your 

family and your ability to use ATM, debit 

and credit cards to get more cash or 

make purchases. But remember that cash 

in your house or wallet and not in your 

bank account can easily be lost or stolen. 

Phone numbers for your financial 

services providers: These include local 

and toll-free numbers for your bank, 

credit card companies, brokerage firms 

(for stocks, bonds or mutual funds) and 

insurance companies. Why? You may 

need to defer a payment, replace lost 

cards or documents, open new accounts 

or otherwise request assistance. 

Important account numbers: These 

include bank and brokerage account 

numbers, credit card numbers and 

homeowner’s or renter’s insurance policy 

numbers. 

The key to your safe deposit box: 

You can’t get into your safe deposit box 

at the bank without your key, no matter 

how many forms of identification you 

have. Also, while many banks issue two 

keys when a box is rented, simply giving 

someone else a key doesn’t allow that 

person access to a box in an emergency. 

He or she also must be designated in 

the bank’s records as someone who has 

access to your box. Contact your bank 

about the proper arrangements. 

What to Keep Where

Determine what to keep at home and 

what to store in a safe deposit box at 

your bank. A safe deposit box is best for 

protecting certain papers that could be 

difficult or impossible to replace (such 

as birth certificates and originals of 

important contracts) but not anything 

you might need to access quickly. For 

example, your passport and medical-care 

troubles ... or if you simply want to be 

better prepared financially? 

Beware of scams. Con artists are 

always around, but they can be 

especially dangerous during uncertain 

times. Why? Because people who are 

worried about jobs, investments or 

retirement savings are more likely to be 

taken in by attractive-sounding financial 

offers that, in reality, are frauds. 

Financial frauds that flourish during 

tough economic times include bogus 

offers of “easy credit” and “guaranteed 

loans” from swindlers who collect 

money upfront. Also remember that a 

bad credit history can only be repaired 

by steady and consistent on-time 

payments, so any promises to erase a bad 

credit history for a fee are scams. 

Review your spending. Your family’s 

welfare comes first, so continue the 

payments on your home, utilities

and insurance (life, health, disability). 

Consider cutting back on expenses you 

really don’t need or use. If you reduce 

outlays, you should have more money 

available to build an emergency savings 

fund (see Page 3) that can help get 

you through a difficult period without 

needing a loan or borrowing from your 

retirement savings. 

Be smart about borrowing. Interest 

payments on credit cards and other loans 

are an expense, so think about keeping 

these and other borrowing costs down. 

Among the strategies to consider: Pay 

continued from 2002 on the previous page
10 Summer 2018

25th Anniversary Edition

FDIC Consumer News

2016| A Cybersecurity Checklist 

Excerpted from “10 Scams Targeting Bank 

Customers: The Basics on How to Protect 

Your Personal Information and Your 

Money,” Summer 2017.

The FDIC often hears from bank 

customers who believe they may be the 

victims of financial fraud or theft, and 

our staff members provide information 

on where and how to report suspicious 

activity. To help, FDIC Consumer 

News includes crime prevention tips in 

practically every issue. Here are some 

Excerpted and updated from “A 

Cybersecurity Checklist,” Winter 2016.

As consumers have become 

increasingly reliant on the internet 

for everything from shopping and 

communicating to banking and bill 

paying, the FDIC highlighted the 

potential benefits and risks in a special 

edition of FDIC Consumer News 

entitled “A Bank Customer’s Guide 

to Cybersecurity” (online at www.

fdic.gov/consumers/consumer/news/

cnwin16). The back of the guide also 

included a checklist with reminders 

about simple things bank customers 

can do to help protect themselves from 

online criminals. Here are some tips 

from the checklist: 

Have computer security programs 

running and regularly updated to 

look for the latest threats. Install 

anti-virus software to protect against 

malware (malicious software) that 

can steal information such as account 

numbers and passwords, and use a 

firewall to prevent unauthorized access 

to your computer. 

Be smart about where and how you 

connect to the internet for banking 

or other communications involving 

sensitive personal information. 

Public Wi-Fi networks and computers 

in public places such as libraries or 

hotel business centers can be risky if 

they don’t have up-to-date security 

software. 

Ignore unsolicited emails asking 

you to open an attachment or 

click on a link if you don’t know 

who sent it or why. Cybercriminals 

are good at creating fake emails 

that look legitimate, but can install 

malware. Your best bet is to either 

ignore unsolicited requests to 

open attachments or files or to 

independently verify that the supposed 

source actually sent the email to you by 

making contact using a published

email address or telephone number. 

Be suspicious if someone contacts 

you unexpectedly online and asks 

for your personal information. A 

safe strategy is to ignore unsolicited 

requests for information, no matter 

how legitimate they appear, especially 

if they ask for information such as a 

Social Security number, bank account 

numbers and passwords. 

Use the most secure process you 

can when logging into financial 

accounts. Create “strong” passwords 

that could be easy for you to remember 

and difficult for others to guess. The 

National Institute of Standards and 

Technology has suggested passwords 

that are at least 12 characters in 

length and include multiple character 

sets, such as a mix of uppercase 

and lowercase letters, numbers and 

keyboard symbols. A good example 

is “1Banana+1Pineapple.” Change 

passwords regularly, and try not to use 

the same passwords or PINs (personal 

identification numbers) for several 

accounts.

Be discreet when using social 

networking sites. Criminals comb 

those sites looking for information 

such as someone’s place of birth, 

mother’s maiden name or a pet’s name, 

in case those details can help them 

guess or reset passwords for online 

accounts or figure out answers to 

security questions that some sites use.

Be careful when using smartphones 

and tablets. Don’t leave your mobile 

device unattended and use a device 

password or other method to control 

access if it’s stolen or lost. Q

continued from 2006 on the previous page

2017| Financial Scams: The Basics on How to

Protect Your Personal Information and Your Money

scams you should be aware of and some 

key defenses to remember.

Government “imposter” frauds:

These schemes often start with a phone 

call, a letter, an email, a text message 

or a fax supposedly from a government 

agency, requiring an upfront payment 

or personal financial information, such 

as Social Security or bank account 

numbers. They might tell you that you 

owe taxes or fines or that you have an 

continued on the next page

directives may be better left safely at 

home because you might need these on 

short notice. Consult your attorney for 

advice on the best place to store your 

will. 

Seal the most important original 

documents in airtight and waterproof 

plastic bags or containers to prevent 

water damage. Be aware that safe 

deposit boxes are water resistant, not 

waterproof. 

Prepare one or more emergency 

evacuation bags. Most of what you’re 

likely to pack inside will be related to 

personal safety, but also keep some 

essential financial items and documents 

there, such as cash, checks, copies of 

your credit cards and identification 

cards, and a key to your safe deposit 

box. Make sure each evacuation bag is 

waterproof and easy to carry, and that it’s 

kept in a secure place at home. 

What Else to Consider

Arrange for automatic bill payments 

from your bank account. This service 

enables you to make scheduled payments 

for your phone bill, insurance premiums, 

loan payments and other essential bills. 

Review your insurance coverage.

Make sure you have enough insurance to 

cover the cost to replace or repair your 

home, car and other valuable property. Q
11

25th Anniversary Edition

FDIC Consumer News Summer 2018

Banking and Bill Paying

1998| How to “Be More at Home” with Your Bank

Tips for getting good deals and solid service

Excerpted and updated from “How to

‘Be More at Home’ with Your Bank,” 

Summer 1998.

Chances are you’re pretty satisfied 

with your bank and you’ve been a loyal 

customer for years. But as with any 

place you do business, there’s always 

something you can do differently 

or better to make you feel more 

comfortable and more “at home” ... and 

perhaps save some time and money, too.

Ask yourself, and your bank, if 

you’re getting the best deal. About 

once a year, talk to a customer services 

representative at your bank to make sure 

you’re signed up for the right programs 

to meet your needs. You may also 

want to comparison shop to make sure 

you couldn’t do significantly better at 

another bank. 

Get to know bank employees you 

can turn to for help. Jot down the 

names and numbers of employees who, 

in-person or over the phone, seemed to 

be especially helpful and knowledgeable. 

If possible, become a familiar voice or 

face to them. 

Don’t be afraid to raise a concern. 

Your bank’s managers would prefer 

you bring a problem to their attention 

and be given the chance to fix it rather 

than have you take your business 

elsewhere. If you don’t get satisfaction 

from a customer service representative 

or another employee, consider talking 

to a supervisor. If you’re still having 

problems, consider contacting the 

institution’s state or federal regulator.

unpaid debt. They might even threaten 

you with a lawsuit or to arrest you if you 

don’t pay. Remember that if you provide 

personal information it can be used 

to commit fraud or be sold to identity 

thieves. 

Fraudulent job offers: Criminals pose 

online or in classified advertisements as 

employers or recruiters offering enticing 

opportunities, such as working from 

home. But if you’re required to pay 

money in advance to “help secure the 

job” or you must provide a great deal 

of personal financial information for a 

“background check,” those are red flags 

of a potential fraud.

“Phishing” emails: Scam artists send 

emails pretending to be from banks, 

popular merchants or other known 

entities, and they ask for personal 

information such as bank account 

numbers, Social Security numbers, dates 

of birth and other valuable details. The 

emails usually look legitimate because 

they include graphics copied from 

authentic websites.

Overpayment scams: This popular 

scam starts when a stranger sends a 

consumer or a business a check for 

something, such as an item being sold 

on the internet, but the check is for 

far more than the agreed-upon sales 

price. The scammer then tells the 

consumer to deposit the check and wire 

the difference to someone else who is 

supposedly owed money by the same 

check writer. In a few days, the check 

is discovered to be a counterfeit, and 

the depositor may be held responsible 

for any money wired out of the bank 

account. Victims may end up owing 

thousands of dollars to the financial 

institution that wired the money, 

and sometimes they’ve also sent the 

merchandise to the fraud artists, too. 

Here are some basic precautions to 

consider, especially when engaging in 

financial transactions with strangers.

• No matter how legitimate an offer or 

request may look or sound, don’t give 

your personal information, such as bank 

account information, credit and debit 

card numbers, Social Security numbers 

and passwords, to anyone unless you 

initiate the contact and know the other 

party is reputable. 

• Be cautious of unsolicited emails or 

text messages asking you to open an 

attachment or click on a link. This 

is a common way for cybercriminals 

to distribute malicious software. Be 

especially cautious of emails that have 

typos or other obvious mistakes.

• Don’t cash or deposit any checks, 

cashier’s checks or money orders from 

strangers who ask you to wire any of 

that money back to them or an associate. 

If the check or money order proves to 

be a fake, the money you wired out of 

your account will be difficult to recover.

• Monitor credit card bills and bank 

statements for unauthorized purchases, 

withdrawals or anything else suspicious, 

and report them to your bank right away.

• Periodically (approximately once a 

year) review your credit reports for signs 

of identity theft, such as a credit card or 

a loan you didn’t request. By law, you 

are entitled to receive at least one free 

credit report every 12 months from each 

of the nation’s three main credit bureaus 

(Equifax, Experian and TransUnion). 

Start at AnnualCreditReport.com or call 

1-877-322-8228. If you spot a potential 

problem, call the fraud department at 

the credit bureau that produced that 

credit report. If the account turns out 

to be fraudulent, ask for a “fraud alert” 

to be placed in your file at all three of 

the major credit bureaus. The alert tells 

lenders and other users of credit reports 

that you have been a victim of fraud and 

that they should verify any new accounts 

or changes to accounts in your name. Q

continued on the next page

continued from 2017 on the previous page

Illustration: Tommy Ballard
12 Summer 2018

25th Anniversary Edition

FDIC Consumer News

Don’t be afraid to ask for a break. 

Bounce a check for the first time 

ever? Want a copy of an old monthly 

statement? Depending on the 

circumstances, your bank might be 

willing to reduce or waive a fee or 

penalty, especially if you’ve been a good 

customer. Also consider talking to your 

bank if you’re having problems repaying 

a loan. Explain the situation and any 

unusual circumstances. Some lenders 

will agree to temporary or permanent 

reductions in your loan interest rate, 

monthly payment or other charges. 

Read the fine print. Knowing the costs 

and requirements of an account before 

you sign on the dotted line can prevent 

a complaint or hassle later. Also be very 

clear about whether an attractive interest 

rate on a credit card or a deposit is a 

short-term, introductory “teaser” rate 

good for just a short time.

Keep good records. Confirm that 

your monthly account statements are 

correct. Keep copies of any contracts or 

other documents you sign with the bank 

— loans, certificates of deposit, etc. — 

along with any accompanying handouts. 

If there’s ever a dispute, you’ll have those 

documents to refer back to. Q

Excerpted and updated from “Debit, Credit 

and Prepaid Cards: There Are Differences,” 

Summer 2012. 

Many consumers use debit, credit and 

prepaid cards, often interchangeably; 

however, these three types of cards are 

quite different. Consider the following: 

Each card works differently. When 

you use a credit card, you are borrowing 

money that you must pay back with 

interest if you do not pay the balance 

in full by the due date. But, if you use 

a debit card, which is issued by your 

bank and linked to your checking or 

savings account, the money taken from 

the account is yours and you will never 

incur interest charges. With prepaid 

cards, you are spending the money 

deposited onto them in advance, and 

they usually aren’t linked to your 

Excerpted from “Simple Mistakes That 

Can Lower Your Credit Score ... and Cost 

You Money,” Winter 2002/2003.

The better your credit record, the 

better your chances of obtaining a 

low-cost loan or insurance policy, 

renting an apartment or qualifying for 

a job. Here are some common mistakes 

that can significantly affect your credit 

history and ways to avoid these pitfalls.

Paying bills late. One or two late 

payments on your loans or other 

obligations over a long period of time 

may not significantly damage your 

credit record, but making a habit of this 

can count against you. Be especially 

careful with payments in the months 

before you apply for a loan because 

2012| Debit, Credit and Prepaid Cards: There Are Differences

checking or savings account. Prepaid 

products include “general-purpose 

reloadable” cards, which display a 

network brand such as American 

Express, Discover, MasterCard or 

Visa; store gift cards; and payroll cards 

for employer deposits of salary or 

government benefit payments. 

Watch for fees. You may be charged 

an overdraft fee if you use a debit card 

for a purchase but there aren’t enough 

funds in the account and you have 

given your bank written permission to 

charge you for allowing the transaction 

to go through. You can always revoke 

that authorization if you don’t want 

to risk paying these fees, and future 

debit card transactions will be declined 

if you don’t have the funds in your 

account. Similarly, a credit card issuer 

may decline a transaction that puts you 

over your credit limit unless you have 

explicitly agreed to pay a fee to permit 

over-the-limit transactions. Prepaid 

cards cannot be overdrawn, but costs 

may include monthly fees, charges for 

loading funds onto the card and fees for 

each transaction.

Your liability for an unauthorized 

transaction varies depending on 

the type of card. Federal law limits 

your losses to a maximum of $50 if a 

credit card is lost or stolen. For a debit 

card, your maximum liability under 

federal law is $50 if you notify your 

bank within two business days, but if 

you notify your bank after those first 

two days, under the law you could 

lose much more. Your liability for 

the fraudulent use of a prepaid card 

currently differs depending on the type 

of card, but that may be changing soon. 

Federal law already treats payroll cards 

the same as debit cards in terms of 

limiting losses. In 2016, the Consumer 

Financial Protection Bureau issued 

rules providing the same liability limits 

to other types of prepaid cards. Those 

rules are currently slated to become 

effective on April 1, 2019.

In addition, the funds you place on a 

prepaid card may or may not be covered 

by deposit insurance in the event of a 

bank failure. For information about 

deposit insurance coverage for prepaid 

cards, visit the FDIC webpage at www.

fdic.gov/deposit/deposits/prepaid.html. 

For all cards, industry practices may 

further limit your losses, so check with 

your card issuer. Q

continued from 1998 on the previous page

Borrowing Money

2003| Your Credit Record and Costly Mistakes to Avoid 

lenders put more emphasis on your 

recent payment history.

Not checking on your credit report. 

Inaccurate or missing information in 

your credit report could raise your 

borrowing costs or cause delays when 

you’re in a rush to make a major 

purchase. Many experts say you should 

review your credit reports at least once 

a year from each of the three major 

credit bureaus — Experian, Equifax and 

TransUnion (see Page 8) — especially 

before you apply for a home loan or 

seek some other benefit where your 

credit report could affect the outcome.

Owning too many credit cards. A 

stack of credit cards and department 

continued on the next page
13

25th Anniversary Edition

FDIC Consumer News Summer 2018

Excerpted and updated from “Special 

Edition: 51 Ways to Save Hundreds on 

Loans and Credit Cards,” Summer 2007.

Here are tips for saving money when 

shopping for new credit and when 

using loans and credit cards.

Focus on the long-term cost of the 

loan, not the monthly payment. It 

may be better to pay slightly more 

money each month, if it means you 

will be paying less in total interest. 

Some people look so much at the 

monthly payment that they don’t 

notice certain fees or service charges 

that are imposed. 

Build your own rainy-day fund and 

borrow from yourself when you 

need money fast. The best way to 

avoid a cash crunch is to put money 

into an emergency savings account. 

This fund can get you through a 

difficult period without having to take 

out a loan or borrow from retirement 

savings. Possibilities include having 

your paycheck directly deposited 

into your checking account with a 

portion automatically placed into your 

emergency account. 

Don’t pay for expensive insurance 

coverage you probably don’t need. 

Many lenders sell disability, life 

insurance or other similar protection 

plans which, as an example, might 

store cards — even if you rarely use 

them or don’t carry a balance on them 

— represents money that you could

borrow. As a result, if you apply for 

a mortgage, a car loan or some other 

important loan, you may only qualify 

for a smaller loan amount or a loan with 

increased costs or fees. Two or three 

general-purpose cards and a few (if 

any) cards issued by stores probably are 

enough for the average family. Consider 

keeping the cards you’ve had for a long 

time and handled well because they 

can show a long history of responsible 

credit use. Q

2007| Simple Strategies for Saving Money on Loans and Credit Cards

cover minimum loan payments due 

if the borrower becomes ill or dies. 

These plans may be far more costly 

or more limited in purpose than 

traditional insurance not tied to loans. 

Steer clear of fraudulent or 

deceptive offers targeting 

borrowers. Unscrupulous 

individuals try to lure consumers 

into questionable, high-cost deals 

or fraudulent transactions, usually 

involving new loans or credit cards or 

offers to help deal with debt problems. 

Deal with financial institutions or 

other companies you know or that you 

have independently verified as being 

legitimate. When in doubt, call your 

state or county’s consumer protection 

office. 

When choosing a credit card, ask 

yourself if you plan to pay the 

balance in full each month. In 

general, if you expect to pay your 

balance in full most months, look for 

a card with a full grace period and no 

annual fee. However, if you plan on 

carrying a balance, then a card with 

an annual fee and low APR (Annual 

Percentage Rate) may be better. 

Know your credit limit and stay 

below it. There are two problems with 

going over your card’s credit limit. 

One, your card issuer will charge you 

a penalty. Two, exceeding your credit 

limit may damage your credit score, 

which may mean higher interest rates, 

now and in the future. To be confident 

you are within your credit limit, 

periodically check your balance by 

phone or online. Also give yourself an 

extra cushion — either try not to get 

too close to your credit limit or call the 

card company to get a higher limit if 

you anticipate a special need, such as a 

vacation or major purchase.

Consider a fixed-rate mortgage loan 

even if adjustable-rate mortgages 

(ARMs) carry a lower initial interest 

rate. A fixed-rate loan adds certainty 

and stability to a big part of your loan 

payment, especially given that other 

housing costs — such as real estate 

taxes, insurance and home upkeep 

— are likely to rise. ARMs generally 

start with a lower interest rate, but 

remember that an ARM rate can go 

up, sometimes significantly. 

Look into paying off your mortgage 

sooner rather than later. A mortgage 

with a long repayment term (30 

or even 40 years) is very appealing 

because the monthly payments 

are relatively small. However, the 

downside is that you’ll have a much 

smaller amount going to pay off 

your loan each month, and that can 

dramatically increase the total interest 

costs. You can save tens of thousands of 

dollars in interest by sending in extra 

payments — say, an additional $50 or 

$100 each month or one large payment 

once a year. There are pros and cons 

to the different strategies, so you may 

wish to consult with a financial or tax 

advisor about what is best for you.

Research government incentives 

for first-time homebuyers, low- or 

moderate-income families and other 

borrowers. Eligible applicants can 

save on the interest rate, closing costs, 

down payment and other loan terms. 

For example, mortgages insured by 

the Federal Housing Administration 

may feature low down payments and 

low closing costs (go to www.hud.gov/

buying/loans or call 1-800-569-4287). 

For programs offered by your city, 

county or state government, call its 

housing agency or check its website.

Think carefully about how much 

car you can afford and how much of 

a loan you need. The dollar amount 

of your loan largely will be determined 

by the sales price of the vehicle minus 

your down payment, any rebates and 

continued on the next page

continued from 2003 on the previous page
14 Summer 2018

25th Anniversary Edition

FDIC Consumer News

the value of any trade-in. Don’t forget 

the cost of auto insurance, sales taxes, 

annual property taxes on the car (if 

any), and options you may be inclined 

to buy, such as an extended warranty. 

Also remember that every item you 

add to your loan instead of paying 

upfront will add to the interest you pay 

on the amount financed.

Consider saving, not borrowing, 

your first choice for paying for 

college. College loans can be costly, 

and the easiest way to avoid those 

costs is to have your own college 

savings fund. Starting a college savings 

account, such as a state-sponsored “529 

Plan,” allows families to maximize 

growth in a tax-advantaged account 

and reap the benefits of compounding 

small amounts of money into a large 

sum over time (i.e., by the time the 

child graduates from high school). 

Investment advisers also recommend 

an automatic investment plan tied to 

your bank account or paycheck.

Think twice before borrowing 

against your home or retirement 

accounts to pay for college. Parents 

who do not qualify for a tax deduction 

on loans for higher education may 

want to consider using a home equity 

loan if they qualify for a tax break 

on the interest. But remember, a 

home loan puts your house at risk. 

Another option is to borrow from 

your retirement savings, but most 

investment advisers recommend 

against that because it may reduce your 

future earnings from compounding 

interest and make it tougher for you to 

retire when you want.

Youth is no excuse for defaulting 

on a student loan. At some point, 

perhaps after graduation, the loan 

payments will begin. While other 

loans (such as credit cards) and high 

living expenses make it tough to pay 

off college loans, the non-payment 

of a student loan is a bad way to start 

adulthood. Your credit report will be 

damaged and your ability to obtain 

new credit or even qualify for certain 

jobs may be jeopardized. If your good 

intentions fail and you have no way 

of making a payment, contact the 

lender immediately. Many lenders 

would rather work out some modified 

payment plan than have a borrower stop 

making payments completely. For more 

information on topics such as student 

loans and paying for college, visit 

the U.S. Department of Education’s 

webpage at StudentAid.gov.

If you’re borrowing to start or 

operate a small enterprise, consider 

an SBA-guaranteed loan. Under 

this program, the U.S. Small Business 

Administration guarantees a portion 

Excerpted and updated from “Weighed 

Down by Debt? Here are Ways to Ease the 

Load,” Fall 2010.

If you’re overwhelmed by debt, it’s 

crucial to find a solution. FDIC 

Consumer News offers a few tips.

Contact your lender immediately if 

you think you won’t be able to make 

a loan payment. Lenders generally 

prefer to work with customers to find 

a solution that benefits both parties, 

so ask for their help, preferably before 

you miss a payment. With your 

mortgage, it’s especially important to 

contact your lender or its loan servicer 

quickly to ask what can be done to 

keep your home. Programs exist to 

help homeowners with mortgage 

payment problems, but borrowers need 

to be proactive and reach out to their 

lender and respond to their requests 

for information.

You may also want to contact 

a reputable, nonprofit housing 

counseling agency approved by the 

U.S. Department of Housing and 

Urban Development (HUD). These 

organizations provide advice on 

housing issues, including dealing 

with missed mortgage payments and 

the possibility of foreclosure. Call 

1-800-569-4287 or go to the HUD 

webpage at apps.hud.gov/offices/hsg/

sfh/hcc/hcs.cfm.

Reputable credit counseling 

organizations can help you develop 

a personalized plan to solve a 

variety of money problems. The 

of a loan, often up to 85 percent, 

and enables a small business owner 

to qualify for attractive interest rates 

and financing options. For more 

information, call the SBA toll-free at 

1-800-827-5722 or go to www.sba.gov.

Research local small business loan 

programs. These programs may 

include loans with below-market 

interest rates or no origination

fees. Start by contacting your state 

or local department of economic 

development. Q

2010| Weighed Down by Debt? How to Ease the Load

quality of these organizations can 

vary, so interview several, check their 

background (including contacting 

your state Attorney General’s office or 

local consumer protection agency for 

complaints), get key details and costs 

in writing before signing a contract, 

and ask about any disadvantages to a 

proposed solution. For suggestions on 

finding a reputable credit counseling 

service, visit the Federal Trade 

Commission (FTC) webpage at

www.consumer.ftc.gov/articles/0153-

choosing-credit-counselor. 

Be very careful of “debt settlement” 

companies that claim they can 

reduce what you owe for a fee. 

FTC rules prohibit debt relief services 

from collecting a fee until after they 

have settled, reduced or otherwise 

changed the terms of at least one of 

the consumer’s debts. These rules 

also require the companies to disclose 

information about how long it will take 

to obtain the promised debt relief. 

continued from 2007 on the previous page

continued on the next page
15

25th Anniversary Edition

FDIC Consumer News Summer 2018

Excerpted from “Refinancing Loans: Not 

Just for Mortgages,” Spring 2014.

Most people know they can refinance 

a mortgage, but did you know you also 

can refinance personal loans, including 

auto loans, credit cards and student 

loans? Here are tips to help you decide 

if refinancing makes sense for you.

Think about your goals. Do you 

want to lower your interest rate? 

Extend the terms of your loan? Once 

you determine what you want to 

accomplish, you can make a better 

decision about whether refinancing is 

right for you.

Understand potential pitfalls. While 

you may be able to take advantage 

of promotional offers — such as 

introductory zero-percent interest or 

lower Annual Percentage Rates (APRs) 

by transferring a balance from one card 

issuer to another one and closing the 

original card account — you also may 

end up with a higher APR when the 

promotional rate ends. Closing a credit 

card account also reduces your available 

Excerpted and updated from “Hidden 

Assets: Out of Sight ... Out of Mind ... 

Out of Luck?” Fall 1996.

All sorts of property gets abandoned. 

At banks, the list includes checking and 

savings accounts as well as valuables 

in safe deposit boxes. How can you 

“lose” these assets in the first place? 

You could have moved, not given a 

forwarding address and forgotten 

about the money. You could have 

changed your name and not notified 

your banks and other companies. You 

may be unaware of the money entirely 

— perhaps because it was given to you 

as a child or you inherited it — and 

now the people who have it for you 

can’t find you. 

The rules governing unclaimed bank 

accounts vary from state to state. In 

general, after several years without 

activity — you’ve made no deposits 

or withdrawals, you haven’t cashed a 

check — and after efforts to reach you 

fail, the property will be considered 

abandoned and will “escheat” (a fancy 

legal term for being transferred) to 

the state government of your last 

known address. The state becomes the 

custodian of the property on behalf of 

the owner. Even if the state can’t locate 

you and it sells your property, you still 

have the right to come forward at any 

time to claim its value. How can you 

uncover and recover your forgotten 

funds?

Search for unclaimed money 

the government might have for 

you. Start by visiting www.usa.gov/

unclaimed-money and linking to the 

unclaimed property offices in the states 

where you or your benefactors have 

lived or conducted business. That same 

webpage also has links to unclaimed 

2014| Refinancing Loans:

Not Just for Mortgages

Avoid scams. Warning signs of 

possible fraud by a debt settlement 

company or a credit counselor include 

demands for upfront fees and requests 

to start making payments to the 

organization instead of your creditors 

directly. Also be wary of promises to 

quickly eliminate your debts or remove 

negative but accurate information from 

your credit file. The only legitimate 

way to rebuild a bad credit history is to 

show you pay your debts on time and 

keep your debt to a manageable level. 

Remember that you have rights 

when it comes to debt collection. 

The federal Fair Debt Collection 

Practices Act (FDCPA) requires that 

you be treated fairly and without 

harassment. For more information 

about your rights under the FDCPA, 

visit the FTC’s webpage at www.

consumer.ftc.gov/articles/0149-debtcollection. Q

1996| Tips for Finding Lost or Forgotten Money

Getting Organized

funds held by the federal government, 

including the FDIC. These assets at 

federal agencies include uncashed 

tax refunds, U.S. Savings Bonds and 

Treasury securities, Social Security 

benefits and veterans’ benefits. The 

FDIC occasionally winds up with 

temporary possession of deposits and 

contents of safe deposit boxes left in 

failed banks and savings institutions. 

The FDIC may still have possession of 

the asset or may have transferred it to 

an assuming bank or to the state. 

Contact financial institutions, 

former employers, landlords, 

utilities and other people you 

suspect still owe you money. If you 

can’t locate a company on your own, 

search online or ask at the library to 

check a business directory. If it’s a 

bank you’re looking for, the FDIC’s 

BankFind database (research.fdic.

gov/bankfind) keeps a status report 

for every insured bank going back 

to 1933. This information will show, 

for example, if the bank was bought 

by another bank, changed names or 

locations, or closed. 

Be on guard against fraud. Many 

excellent “tracer” companies, for a fee 

based on actual recoveries, will help 

people who don’t want to take the time 

to research unclaimed property or 

whose cases may be unusually complex. 

But a con artist might contact you 

about “inside information” regarding 

assets due to you. This person 

probably will demand money upfront 

for help reclaiming your property.

In reality, this person probably only 

has the same list of unclaimed

property available to everyone, for 

free. Think carefully before paying 

anything upfront. Q

continued from 2010 on the previous page

credit and may adversely affect your 

credit score, so consider keeping cards 

you have managed well for a long time.

If your credit score is low, consider 

waiting to refinance until you can 

raise it. You can protect yourself by 

ordering a free copy of your credit 

report from each of the three major 

credit bureaus (visit www.AnnualCreditReport.com or call toll-free 

1-877-322-8228) and correcting 

inaccurate information. For more tips 

on improving your credit report and 

score, see the article on Page 12. Q
16 Summer 2018

25th Anniversary Edition

FDIC Consumer News

2011| Strategies for Simplifying Your Financial Life 

Excerpted from “Basic Strategies for 

Simplifying Your Financial Life” and 

“Your Financial Records: What to Toss and 

When,” Winter 2010/2011. 

There are many reasons to organize 

and simplify your financial life. Here’s 

one motivating factor: Not keeping 

tabs on your finances can be costly if it 

results in fees or interest charges you 

could have avoided, investment losses, 

additional taxes or other pitfalls. FDIC 

Consumer News offers a checklist of 

basic things you can do to get your 

money matters in order ... and keep 

them that way. 

Automate recurring bills. Many 

merchants, such as insurance 

companies or utilities, will allow 

you to pay recurring bills with an 

automatic withdrawal from your 

checking account or through a charge 

to your credit card. However, be sure 

to record these transactions in your 

check register to avoid overdrawing 

your account. If you charge the bills to 

a credit card, pay the balance in full by 

the due date to avoid interest charges. 

Banks also offer online bill-paying 

services that allow you to pay bills 

quickly and easily. These programs 

generally allow you to sign up on 

your bank’s website to receive bills 

electronically from companies you do 

business with. Then you can review 

the bill and pay it online. Unlike with 

automatic withdrawal, you control the 

payments online.

Explore online banking. This 

service lets you review deposits and 

withdrawals, keep track of your 

balance, move funds between accounts, 

and pay bills at your convenience. For 

example, with online banking you can 

quickly review your account and make 

sure you didn’t forget to record any 

debit or ATM card transactions in your 

check register. You can get an update 

on whether funds from recent deposits 

are available for withdrawal. 

Put some savings on autopilot. 

Arrange with your bank or employer to 

automatically transfer a certain amount 

into savings accounts or investments 

on a regular schedule. 

Excerpted from “Five Things to Know 

About Safe Deposit Boxes, Home Safes and 

Your Valuables,” Winter 2018.

Over time, your valuables change, and 

so do your options to protect them. 

Here are a few choices.

Think about what should or 

should not be kept in a bank’s safe 

deposit box. Good candidates include 

originals of key documents, such as 

birth certificates, property deeds, car 

titles and U.S. Savings Bonds that 

haven’t been converted into electronic 

securities. 

You’re better off stashing your cash 

in a bank deposit account, like a 

savings account or certificate of 

deposit, than in a home safe or a 

safe deposit box. Cash that’s not in 

a deposit account isn’t protected by 

FDIC insurance. And unlike money 

in a savings account, money in a home 

safe or safe deposit box cannot

earn interest. 

A home safe isn’t a true replacement 

for a bank’s safe deposit box.

A burglar could more easily break into 

your home and open the safe than get 

inside your safe deposit box at

your bank.

No safe deposit box or home safe 

is completely protected from theft, 

fire, flood or other loss or damage. 

Consider taking precautions, such 

as protecting against water damage 

by placing items in water-safe plastic 

storage bags or other plastic containers 

that can be resealed. 

Be mindful of whom you allow to 

access your safe deposit box. You 

can jointly rent a safe deposit box with 

one or more people whom you would 

like to give unrestricted access. Keep 

in mind, though, that your bank would 

likely not be responsible for anything 

that people you authorize to enter the 

box remove without your permission. 

And, who has access to your safe 

deposit box if you die? That depends 

on state law. Q

Know what to toss and when.

In very general terms, because the 

Internal Revenue Service has about 

six years to assess additional tax if you 

underreported your income by more 

than 25 percent, many tax advisors 

recommend holding all tax records 

for about seven years, building in 

extra time for any unforeseen delays 

in processing your return. With tax 

considerations in mind, here are 

suggestions that may be reasonable

for many people: 

• Save credit card and bank account 

statements with no tax significance 

for about a year, but those with tax 

significance should be saved for

seven years. 

• Canceled checks that are unrelated 

to anything you claimed on your 

income tax form and are not needed 

to show you’ve paid a bill or debt 

probably can be destroyed after you’ve 

verified that your bank statement 

is correct. But canceled checks that 

support your tax returns probably 

should be held for seven years. You 

may want to keep canceled checks and 

related receipts or documents for a 

home purchase or sale, renovations or 

other improvements to a property you 

own. Once the home has been sold and 

another seven years have passed, the 

checks can be destroyed.

• Save deposit, ATM, credit card and 

debit card receipts until the transaction 

appears on your statement and you’ve 

verified that the information is 

accurate. You may make an exception 

for receipts for expensive items. If they 

are under warranty or you have to file 

an insurance claim, the receipt may

be helpful.

• Before tossing away any document 

that contains a Social Security 

number, bank account number or 

other personal information (especially 

financial information), shred it to avoid 

becoming a victim of identity theft.

For additional guidance, ask your 

accountant, attorney or another

trusted advisor. Q

2018| Safe Deposit Boxes, 

Home Safes and Your 

Valuables 
17

25th Anniversary Edition

FDIC Consumer News Summer 2018

For Different Ages and Stages

Excerpted and updated from “A Crash 

Course for 20-Somethings Starting to Face 

the Financial Jungle,” Summer 1994.

According to the Consumer Financial 

Protection Bureau in 2017, nearly 

half of student loan borrowers leaving 

school owed at least $20,000. As a 

graduate, you also may be paying for 

a car, rent, furnishings and credit card 

debt. That's why we offer some

basic tips.

Select a financial institution that’s 

right for your needs, not necessarily 

those of your parents. Does the 

institution offer account products 

that meet your needs, such as free 

checking with a low minimum balance 

requirement? What are the fees? 

Does it offer competitive interest 

rates on loans? These and many other 

questions can·be answered by going 

online or walking into a branch office. 

Know your rights and 

responsibilities if you want a loan. 

A default on a student loan can result 

in a bad credit history that can cost 

you more money down the road, such 

as when you apply for a loan. Take 

time to understand your rights and 

responsibilities and reach out to the 

lender for help at the first sign you 

1994| A Crash Course for Young Adults Starting to Face the Financial Jungle

2013| For Seniors: Tips for Protecting Your Finances and Steering Clear of Scams

may not be able to make a payment.

Be careful with credit cards. Credit 

cards can help you establish a credit 

history. To build a good credit history 

you can make small purchases and pay 

off the balance. You may be able to 

get your first credit card in your name 

by having a parent co-sign for it. By 

maintaining a job and paying credit 

card bills on time, you should be able 

to get cards on your own eventually. 

Take steps to improve a bad credit 

history. A good credit history will be 

essential if you are seeking credit to 

buy a home or an automobile. When 

debts go unpaid, the interest and the 

amount owed can increase enormously. 

If you are having difficulty paying a 

bill, ask to set up a more convenient 

payment plan. Creditors are more 

likely to work with people who try to 

restructure their obligations, rather 

than ignore them. Failure to make 

regularly scheduled payments on a 

debt will be reflected on your credit 

record and can affect your future 

buying power and financial flexibility. 

Also watch out for marketing scams 

that offer easy credit, guaranteed credit 

approval or the chance to clean up 

your credit history for a fee. 

Start saving for your future. Most 

young adults don't recognize the 

importance of building a nest egg. 

When in your 20s and 30s, it's a good 

idea to put a percentage, maybe 10 

percent, of your monthly income into 

savings and investments. If 10 percent 

is too much at first, pick a percentage 

that works for you. Over time, even 

small amounts will build to larger ones 

and can help you purchase a house, 

start a family or be prepared if you find 

yourself unemployed or temporarily 

unable to work. Retirement savings 

plans such as IRAs are examples of 

accounts you can contribute to and 

also save money on taxes.

Learn as much as you can about 

personal finance. Many colleges, local 

governments and other organizations 

offer personal finance resources 

including classes. Also consider visiting 

your local library. There are plenty of 

books, magazines and other sources 

of information that can prove helpful 

when trying to improve your finances. 

The FDIC offers free podcasts and 

an online learning tool at www.fdic.

gov/moneysmart. Invest time in your 

financial education and consider it part 

of your overall investment strategy. Q

Excerpted and updated from “For Seniors: 

Quick Tips for Protecting Your Finances” 

and “How Older Adults Can Steer Clear of 

Scam Artists,” Summer 2013.

No matter how old or young you 

are, there are some basic things 

you can do to better manage your 

finances. Here are banking and other 

money-management tips for seniors to 

consider for their retirement years.

Decide if you need financial help 

from an expert, and then choose 

wisely. A financial advisor could 

help answer questions such as how 

quickly to take money from savings 

and how to invest in your later years. 

But before you follow the advice of a 

supposed “expert” who claims to have 

special credentials for advising seniors, 

research what that title means and the 

advisor’s background. To learn more 

about professional designations and for 

tips on choosing an investment advisor, 

visit the Financial Industry Regulatory 

Authority website at www.finra.org. 

Prepare for the possibility that you 

may become unable to handle your 

finances. Consider writing down a 

list of your financial institutions and 

account numbers and keeping it in a 

safe place that would be accessible by 

your loved ones in an emergency. An 

attorney can help you decide if you 

should have a legal document known 

as a power of attorney, which would 

allow one or more people you designate 

to make key decisions with as much or 

as little of your financial or personal 

life as you choose. You can also add 

a co-owner to a deposit account, but 

that person has the ability to conduct 

transactions, including withdrawing 

money from a checking or savings 

account, without your prior approval. 

Your banker or attorney may be able 

to help you identify other possible 

alternatives, but you still must think 

carefully about to whom you give access 

to your money. 

Develop a spending plan for your 

retirement. Having a plan for your 

continued on the next page
18 Summer 2018

25th Anniversary Edition

FDIC Consumer News

Excerpted and updated from “For All Ages: 

Teaching Young People About Money,” 

Spring 2015.

It’s never too early or too late to 

introduce everyday financial concepts 

to a young person. Here are tips from 

FDIC Consumer News to help parents, 

guardians and caregivers show a child — 

from a preschooler to a college student 

— why and how to become responsible 

with money.

Engage in regular conversations 

about money-related topics. Discuss 

with your child what you are doing, 

and why, when you manage money at 

home, around town or with the bank. 

For example, consider talking about 

similar products that have noticeably 

different prices at a store, and how you 

decide what is a good deal. You can 

explain that having a savings account at 

a bank has advantages such as income 

from interest, peace of mind of knowing 

the money will be there when you 

money and limiting expenses in 

retirement is important. Think about 

new ways to cut costs, such as by letting 

your auto insurer know you no longer 

drive your car to work. Consider 

continuing to put some of your income 

into savings, especially for short-term 

goals such as holiday gifts, because 

that can help you avoid a large, sudden 

withdrawal from your retirement 

investments. Also see our article on 

retirement planning (Page 2). 

Remember that a reverse mortgage 

will eventually have to be paid back, 

with interest. Reverse mortgages 

allow homeowners age 62 or older 

to borrow against the equity in their 

homes without having to make monthly 

payments as long as they meet the terms 

of their loan agreement, such as staying 

current on property taxes. However, 

the money borrowed plus interest must 

eventually be repaid, usually when you 

or your heirs sell the house.

Organize and protect your 

important documents. Items to keep 

at home, in a secure place that’s easy for 

you to get to, may include your bank 

and brokerage statements, insurance 

policies, Social Security and company 

pension records and other personal 

and financial papers you or your 

family might need on short notice. If 

caregivers or others regularly visit you, 

make sure that your checkbooks, credit 

cards and other financial records are 

protected. For additional suggestions, 

see our articles on safe deposits and 

home safes (Page 16) and preparing 

financially for a natural disaster, a fire or 

other misfortunes (Page 9).

Steer clear of scam artists. Anyone 

can be a victim of financial fraud, but 

older adults are particularly at risk. 

Those who commit elder fraud range 

from loved ones — family members, 

friends or caregivers — to complete 

strangers. To protect yourself or 

someone else:

• Remember the red flags of a fraud. 

These include an unsolicited phone call, 

email or other request that you pay a 

large amount of money before receiving 

the promised goods or services; an offer 

that seems too good to be true, like an 

investment “guaranteeing” a return 

2015| From Preschool to College: Teaching Young People About Money

that’s way above the competition; and 

pressure to send money quickly. Also be 

wary when someone expresses a new or 

unusual interest in your finances.

• Protect your personal information. 

Never provide Social Security 

numbers, bank account information, 

PINs, passwords and other sensitive 

information in response to an 

unsolicited call, fax, letter, email or text 

message, no matter how genuine the 

situation may appear.

• Look at your credit card bills and 

bank statements as soon as they arrive 

and report unauthorized purchases, 

withdrawals or anything suspicious, 

regardless of how small or large. 

Many people also make the mistake of 

not telling loved ones or not contacting 

the police or other law enforcement 

agencies when they’ve been victimized. 

Perhaps some are embarrassed to 

admit that they were “misled” and lost 

money. Others have fears of losing their 

independence. As difficult as this may 

be, reporting the incident is the only 

opportunity you have to recover some 

or all of your loss. Q

need it, and FDIC deposit insurance 

coverage for each customer up to at least 

$250,000 if the bank fails. 

Consider giving an allowance as 

a teaching tool. It can be a positive 

way to teach children, even those 

who are preschool age, about money 

management. There are many 

approaches to giving an allowance, 

including whether to tie it to work such 

as household chores, so each family will 

need to decide what is best for them. 

But before you give the first allowance, 

help your child decide how much he or 

she will spend now and how much to 

save for future goals. Also talk through 

the tradeoffs involved with spending 

decisions, such as how buying one toy 

may mean foregoing the opportunity 

to purchase another item the child 

also wants. And for younger kids, 

consider paying an allowance in smaller 

denominations to make it easier to learn 

counting skills.

Help your children develop a 

healthy skepticism of advertising and 

unsolicited inquiries. In general, teach 

them how to analyze advertisements; 

they need to know that “special offers” 

often are not the great deal they appear 

to be. Even young consumers are 

targets for identity thieves and among 

the victims of scams and rip-offs. 

Information for parents is available 

at the Federal Trade Commission 

website www.consumer.ftc.gov/topics/

protecting-kids-online. Q

continued from 2013 on the previous page
19

25th Anniversary Edition

FDIC Consumer News Summer 2018

Excerpted and updated from “Take Our 

‘Financial Aptitude Test’ — the FAT,” 

Spring 2005.

1. It’s always best to send in just the 

minimum payment due on a credit card 

bill each month and stretch out the card 

payments as long as possible instead of 

paying the bill in full. True or False?

2. Your credit record (your history 

of paying debts and other bills) can 

be a factor when you apply for a 

loan or a credit card but will never 

affect non-credit decisions, such 

as applications for insurance or an 

apartment. True or False? 

3. There’s no harm in having many 

different credit cards. True or False?

4. A debit card may be a good option 

for a young person. True or False? 

2005| Take Our Quiz on Money Management

Test Your Financial IQ 

5. People in their 20s should just focus 

on meeting monthly expenses and not 

start saving for retirement until their 

40s at the earliest. True or False? 

6. If you receive an email from a 

company you’ve done business with 

asking you to update your records 

by re-entering your Social Security 

number or bank account numbers, it's 

safe to provide this information as long 

as the email explains the reason for 

the request and shows the company’s 

official logo. True or False?

7. All checking accounts are pretty 

much the same in terms of features, 

fees, interest rates, opening balance 

requirements and so on. True or False?

8. If you or your family has $250,000 

or less on deposit at an FDIC-insured 

bank, and the bank fails, your money is 

completely safe. True or False?

1. False Make sure that the credit card 

company receives as much or all of the 

balance due on your credit card by the 

due date. This helps you minimize or 

avoid costly interest charges. 

2. False Credit bureaus prepare credit 

scores for lenders, employers, insurance 

companies, landlords and others who 

need to know someone’s financial 

reliability. The weaker your credit 

scores, the more likely you could be 

turned down for a job or an apartment 

or be quoted a higher cost when you 

apply for auto insurance.

3. False The more credit cards you 

carry, the more inclined you may be to 

use them for costly impulse buying. In 

addition, each card you own — even the 

ones you don’t use — represents money 

that you could borrow up to the card’s 

spending limit. This means that the next 

time you apply for credit you may only 

qualify for a smaller or costlier loan. 

4. True Among the benefits of debit 

cards: As long as you are careful to avoid 

overdrawing the account, you won’t go 

into debt and you won’t pay interest 

because the money is automatically 

deducted from your bank account. 

5. False Experts say it’s important 

for young people to save money for 

long-term goals, particularly retirement 

(even though it may be 40 or 50 years 

away). Start saving as early as you can. 

The combination of adding to savings 

and the compounding of interest 

can bring dramatic results over time. 

Also explore options to save money at 

work, which may come with matching 

contributions from your employer. 

6. False Reputable organizations 

won’t contact you to verify account 

information online because they already 

have it.

7. False Banks usually offer several 

accounts to choose from with different 

features and fees. That’s why it’s 

important to shop around for a good 

deal.

8. True Your funds in checking and 

savings accounts are fully insured up to 

$250,000, and sometimes more, under 

current laws. To learn more, call the 

FDIC toll-free at 1-877-ASK-FDIC 

(1-877-275-3342) or go to our

“Deposit Insurance” webpage at

FDIC

Consumer News

Published by the Federal Deposit

Insurance Corporation

Jelena McWilliams, Chairman

David Barr, Assistant Director,

Office of Communications (OCOM)

Jay Rosenstein, Senior Writer-Editor, 

OCOM 

Mitchell W. Crawley, Graphic Designer

FDIC Consumer News is intended to 

present information in a nontechnical 

way and is not intended to be a legal 

interpretation of FDIC or other 

government regulations and policies. 

Due to periodic changes in statutes and 

agency rules, always check the FDIC 

website — www.fdic.gov — for up-to-date 

information. Mention of a product, 

service or company does not constitute 

an endorsement. This publication may 

be reprinted in whole or in part without 

permission from the FDIC. Please credit 

FDIC Consumer News. 

Beginning September 2018, FDIC 

Consumer News will become a paperless, 

monthly publication. The new articles 

will still be posted at www.fdic.gov/

consumernews. Printable and Spanish 

versions will be available on the same 

webpage. For additional information, see 

the article on the back page of this special 

edition.

Subscriptions: To receive an email

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Send your story ideas, comments, 

and other suggestions or questions 

to: consumeraffairsmailbox@fdic.gov or 

FDIC Consumer News, 550 17th Street, 

NW, Room F-6082, Washington, DC 

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Find current and past issues

at: www.fdic.gov/consumernews.

www.fdic.gov/deposit. If you are a 

person who is deaf or hard-of-hearing, 

please call 1-800-925-4618. Q

CORRECT ANSWERS
Jelena McWilliams Is the 

New FDIC Chairman 

Jelena McWilliams was sworn in 

for a five-year term as Chairman 

of the FDIC on June 5, 2018. She 

was previously a bank executive, a 

U.S. Senate staff member and an 

attorney at the Federal Reserve 

Board. Chairman McWilliams 

succeeds Martin J. Gruenberg, 

who has served on the FDIC Board 

since August 22, 2005, as Vice 

Chairman and Acting Chairman 

before becoming Chairman on 

November 29, 2012, and will 

continue as a member of the Board.

Changes are coming for FDIC 

Consumer News and for subscribers 

to our paper edition. Beginning 

September 2018, our newsletter will 

be a paperless publication consisting of 

single articles, at least one per month, 

delivered to subscribers via email or 

social media (such as Facebook or 

Twitter). Although this new system 

means that the FDIC will no longer 

distribute paper copies of FDIC 

Consumer News to subscribers in the 

mail each quarter, we are encouraging 

those subscribers to learn about the 

potential benefits of electronic delivery 

and to consider signing up.

First and foremost, the changes 

will allow us to cover more topics 

and provide more information, 

including breaking news and updates 

to articles, at any time, not just once 

a quarter. Also, by using a personal 

computer, laptop, smartphone or 

tablet, subscribers will receive FDIC 

Consumer News articles anywhere 

they are and immediately after each 

article is published. And anyone with 

internet access can go online to the 

FDIC Consumer News website

(www.fdic.gov/consumernews) and 

easily find previously published articles 

and resources (including videos) on 

related topics. E-reader versions of 

articles also will be available at that 

same website.

For those of you who prefer paper 

copies of articles, the FDIC will

offer printer-friendly versions

online that can easily be reproduced

in any quantity. 

It’s also easy and convenient to make 

the change from mailbox to inbox. You 

have several options for automatically 

receiving FDIC Consumer News

articles by email or social media. You 

can visit www.fdic.gov and go to the 

email subscription box to provide the 

necessary information. You also can 

“like” the FDIC Facebook page

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follow the FDIC on Twitter (twitter.

com/FDICgov).

As we look back on the first

25 years of FDIC Consumer News, 

we also look forward to many more 

years as a source of helpful tips and 

common-sense strategies to protect 

and stretch your hard-earned dollars. 

That’s been our goal since 1993 ... and 

that’s not changing. Q

Attention Subscribers: FDIC Consumer News Is Going Paperless