Tips to Help Rebound From a Bad Credit History

For people grappling with a history of debt payment problems, improving their credit record may seem like a daunting task. Union State Bank and FDIC Consumer News offer these tips, which can help increase the chances of qualifying for better loan terms, lower insurance rates and perhaps even a new job or apartment.

1. Order your free credit reports and look for errors. Credit reporting companies, often referred to as “credit bureaus,” maintain reports that show how an individual handles certain aspects of his or her finances. Your credit report includes information on how much credit you have available, how much credit you are using, whether you pay loans and other bills on time, your payment history on closed accounts, and any debt collections or bankruptcy filings. Credit bureaus and other companies use the information in your credit report to generate a credit score to predict, for example, how likely you are to repay your debts or how reliable you may be as a tenant.

Federal law requires credit reporting companies to provide consumers with a free copy of their credit report once every 12 months, if requested. You can easily obtain your free credit reports from each of the three major credit bureaus (Equifax, Experian and TransUnion) at one Web site — www.AnnualCreditReport.com — or by calling 1-877-322-8228. Under other circumstances, such as being denied a loan or employment based on your credit report or if you believe you may be a fraud victim, you are also entitled to a free copy directly from the credit bureau that provided the initial report. Be cautious of costly subscriptions to additional credit-related services that you may be offered while requesting your credit report.

Because mistakes can happen, closely review your credit report(s) when you receive it. According to a 2012 study from the Federal Trade Commission, more than 25 percent of consumers surveyed identified errors on their credit reports that might affect their credit scores. “It is important to dispute inaccurate information, in writing, with both the credit reporting company as well as with the original source of the information so that the error does not show up again,” said Jennifer Dice, an FDIC Supervisory Consumer Affairs Specialist.

If you have a complaint about a credit reporting company, you can contact the Consumer Financial Protection Bureau (CFPB) at https://help.consumerfinance.gov/app/creditreporting/ask or by calling 1-855-411-2372.

2. Improve your credit history by paying your bills on time. Paying on time is one of the biggest contributors to your credit score. If you have a history of paying bills late, find out if your bank will send you an e-mail or text message reminding you when a payment is due. You may also consider having your payments for loans or other bills automatically debited from your bank account.

Once you become current on payments, stay current. “The more you pay your bills on time after being late, the more your credit score should increase,” Dice added. “The impact of past credit problems on your credit score fades as time passes and as your current timeliness in paying bills is reflected on your credit report.”

3. Reduce the amounts you owe. You can get on track toward a better score by paying down balances owed.

It takes some discipline, so start by getting organized. Make a list of all of your accounts and debts (perhaps using your credit report, if it’s accurate, and recent statements) to determine how much you owe and the interest rate you are being charged. You may be able to reduce your interest costs by paying off the debts with the highest interest rate first, while still making the minimum payments (if not more) on your other accounts.

Also consider how to limit your use of credit cards in favor of cash, checks or a debit card. “While regular, responsible use of your credit card may help your credit score, it is best to keep your balance low enough so that you can pay the account balance in full, on time, every month,” suggested Heather St. Germain, an FDIC Senior Consumer Affairs Specialist.

4. Consider free or low-cost help from reputable sources. Counseling services are available to help consumers budget money, pay bills and develop a plan to improve their credit report. Be cautious of counseling services that advise you to stop making payments to your creditors or to pay the counselors instead (so they can negotiate on your behalf with the lender). These programs can be costly and may result in your credit score becoming even worse.

5. Beware of credit repair scams. Con artists lure innocent victims in with false promises to “erase” a bad credit history in a short amount of time, but there are no quick ways to remove credit problems on your record that are legitimate. “You’ll also know you’ve encountered credit repair fraud if the company insists you pay upfront before it does any work on your behalf or it encourages you to give false information on your credit applications,” said St. Germain. In general, before doing business with a for-profit credit repair company, learn how you can improve your own credit history at little or no cost.

Unfortunately Union State Bank has seen this with some of our customers.  Individuals have paid large sums of money to have a credit repair service help improve their score.  These services dispute every transaction in a credit report, even if the reporting is accurate.  If you have an issue with your credit report, file the dispute with the credit reporting agency or directly with the financial institution and save your money.

For more information from the FDIC, the CFPB, the Federal Trade Commission and other government agencies on topics such as credit reports, credit scores, fixing a credit problem and how to choose a credit counselor, go to www.mymoney.gov and search by topic.

Reprinted from FDIC Consumer News, Summer 2014.  https://www.fdic.gov/consumers/consumer/news/cnsum14/history.html
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Picking Up the Pieces: Managing a Loved One’s Finances After a Serious Life Event

Would you know what to do if you became responsible for handling the financial affairs of a loved one who has serious health issues? What if you were responsible for managing the money of someone who died? Union State Bank and FDIC Consumer News provides some basic strategies.

Helping an Elderly or Ill Person

Get a handle on the most important financial records. Look into getting a “power of attorney,” which is the legal authorization for you to manage matters like finances and health care decisions if your loved one becomes mentally or physically incapacitated. Ask about a will and a living will, in which a person specifies what treatment he or she wants or doesn’t want in case they can’t decide for themselves. Know where to locate his or her birth certificate, insurance policies, bank account statements and other important documents. Find out how to access online accounts and passwords, if necessary. Ultimately, you will need to identify all of the accounts and obligations, including debts.

A power of attorney appointment can be changed by the account owner at anytime.  Also, upon the death of the account owner, the power of attorney ceases and a financial institution will not be able to share any information with the person appointed as power of attorney.  At this point a personal representative must be appointed by the account owner’s trust or will and the court system.

Find ways to simplify their finances. “If you will be handling someone else’s bills, consider arranging for automatic or electronic payments, but also remember to keep good records,” said Bobbie Gray, an FDIC Supervisory Community Affairs Specialist. “Also have regular income from pensions and other sources deposited directly, which will save you time and avoid the risk that checks could be lost or stolen.”

Consolidating deposit accounts at one financial institution can make it easier to monitor the accounts and avoid low-balance fees, but be sure the accounts stay within the FDIC’s insurance limits (start at www.fdic.gov/deposit). If there are accounts that have not been used in a while but should be kept open, find out how to avoid paperwork and fees associated with “dormant” accounts.

“And if your loved one’s situation has resulted in a loss of income, consider how to eliminate unnecessary expenses,” said Luke W. Reynolds, Chief of the FDIC’s Outreach and Program Development Section.

Verify that there is adequate insurance coverage. Confirm, for example, that there is homeowner or renter insurance. And, consider checking to see whether the person is eligible for government-coordinated insurance, such as Social Security disability insurance and Medicare or Medicaid.

Avoid financial crimes. Help loved ones monitor their bank, investment and credit card statements plus their credit reports (visit www.AnnualCreditReport.com or call 1-877-322-8228) to look for suspicious transactions. Be wary of phone calls or mail promoting get-rich-quick investments and other schemes. For tips, see When People Face Tough Times, Crooks Try to Profit.

Learn more about your duties as a financial caregiver and where you can go for help. Check out guides from the Consumer Financial Protection Bureau (CFPB) called “Managing Someone Else’s Money” (www.consumerfinance.gov/blog/managing-someone-elses-money) and the U.S. government’s official Web site for caregivers at www.usa.gov/Citizen/Topics/Health/caregivers.shtml. Also, the U.S. Administration on Aging helps caregivers connect with organizations that can assist with a variety of problems (call 1-800-677-1116 or go to www.eldercare.gov).

Managing the Affairs of a Deceased Person

Take precautions against identity thieves who target the deceased. Criminals look in obituaries and other sources for details about deceased individuals they can use to try to open or access accounts. Among the first steps to take soon after a loved one dies is to notify his or her banks and investment firms so they can scrutinize attempts to withdraw funds from the account. Also consider reporting the death to the fraud departments of the nation’s three major credit bureaus (Equifax at 1-800-525-6285, Experian at 1-888-397-3742 and TransUnion at 1-800-680-7289).

Also quickly contact the Social Security Administration (www.ssa.gov/agency/contact or 1-800-772-1213), pension providers and others who may be paying money to the deceased. It’s also good to safeguard the deceased’s driver’s license and Social Security card.

Locate important documents needed to wind down the deceased person’s financial affairs. Examples include insurance policies, the most recent will (an original, not a copy) and multiple copies of the death certificate (needed to apply for death benefits from life insurance policies or Social Security and to access bank and brokerage accounts).

Inventory the deceased’s financial accounts. Stop automatic payments from the person’s bank account or credit cards. Inform the credit card issuers about the death so they can cancel the cards and prohibit future transactions.

Compare several funeral homes before committing to one. Prices and options can vary considerably.

Check if all deposits are federally insured. Depending on the types of accounts the deceased had, the death could result in some funds exceeding the $250,000 federal insurance limits. However, the FDIC’s rules allow a six-month grace period after a depositor’s death to give survivors or estate planners a chance to restructure accounts. For more guidance, go to www.fdic.gov/deposit or call 1-877-ASK-FDIC which is 1-877-275-3342.

Know your rights if a debt collector contacts you to pay debts of the deceased. “Any debts typically are paid from the estate of the deceased, not by family members,” advised Gray. If there isn’t enough money in the estate to cover the debt, it usually goes unpaid, but there are exceptions, such as for co-signed loans. If you have questions, talk to a lawyer. And, if you are contacted by a bill collector seeking to collect on a questionable debt, request proof of the debt and include a copy of the death certificate. Learn more from the Federal Trade Commission at www.consumer.ftc.gov/articles/0081-debts-and-deceased-relatives. For sample letters to use when dealing with debt collectors or to file a complaint to the CFPB, start at http://www.consumerfinance.gov/newsroom/consumers-report-being-hounded-about-debts-not-owed.

 

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Your Next Car: New or Used? Buy or Lease?

Worried that your clunker won’t last another Wisconsin winter? Many people shop for new vehicles in the fall, hoping to get a great deal on outgoing models and last quarter sales.

car deal

For most consumers, buying a used car makes more financial sense than purchasing a new one. Used cars cost less, depreciate less, and have lower insurance premiums.

On the other hand, a new vehicle will be more reliable and present lower maintenance and repair costs. If you are financing your purchase, dealer zero-percent-interest and other incentives may make a new vehicle as affordable as a used one if you plan to keep it six years or longer.

When considering a new vehicle, consumers are often attracted by the lower monthly payments of leases. Leases, which typically run for three years, do have some advantages. In addition to lower monthly payments, they may offer lower maintenance costs, and the consumer can simply turn the car in at the end of the lease or buy it for a preset price. If you use a leased vehicle for your own business, the monthly payment sometimes can be deducted on your income tax return (check with your tax professional).

But a lease gives the consumer no equity in the vehicle, limits the number of miles driven (usually 12,000 or 15,000 per year) without penalty, and requires higher insurance premiums. A lease also prevents the consumer from customizing the car and may include added fees that increase the overall cost. Plus, if circumstances change and a consumer needs to end the lease before the contract ends, this can be costly. For most consumers, buying makes more financial sense than leasing.

Of course, other factors may trump financial ones – if the latest technology and amenities are important and you plan to upgrade every three years, a leased vehicle may make perfect sense. But if you commute long distances and could not reasonably limit your mileage, or have young children and pets and are concerned about wear and tear on a leased vehicle, buying may be your best option.

Whether you buy or lease a new or used vehicle, decide what you want before you enter a showroom. Focus on the total price, not just the monthly payment required. And be willing to walk away if the deal you are offered isn’t what you want.

Web resources worth checking out:

  • USAA on the best and worst times to buy a car.
  • Consumer Reports on buying vs. leasing. This site also offers many calculators to explore various options for your family.
  • Visit Edmunds.com for an analysis of buying a new or used Honda Accord vs. leasing one.
  • The Wisconsin Department of Financial Institutions offers a brochure on leasing, including the need for Gap insurance, to cover your costs if, in the event that your vehicle were totaled or stolen, the balance of your lease exceeded what you would receive from your insurance claim.
Reprinted from Community Bankers of Wisconsin Consumer Tips.

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When People Face Tough Times, Crooks Try to Profit

Facing a personal hardship can be tough enough. But often making matters worse are con artists who try to take advantage of these situations to steal money or valuable information. “We’ve seen everything from criminals pretending to be from disaster-relief organizations asking for ‘donations,’ to scammers offering fake jobs to individuals who are looking for employment,” said Michael Benardo, manager of the FDIC’s Cyber Fraud and Financial Crimes Section. “The fraudsters know that people dealing with serious events may be distracted and easily deceived.”

Here are some precautions.

Protect personal and financial information. Don’t provide bank or credit card numbers or other personal information over the phone, through e-mail, as a text message, or over the Internet unless you initiate the communication and you know the other party is reputable. Review financial statements so you can quickly report any irregularities. And always keep your checkbook, blank checks, used checks, account statements, credit cards and other financial items in a secure location.

Look out for the people you care for. Since many scams target the ill or the elderly, pay attention to suspicious behavior, such as a sudden and unexpected major purchase, the opening or closing of a bank or card account without a good reason, or hiding financial statements to conceal what may appear to be an embarrassing mistake. Also take note if your loved one mysteriously starts to spend significantly more time with new “best friends” and less time with the family. “Scammers and con artists tend to target the same people over and over with offers for things the person may not really need,” said Kathryn Weatherby, an Examination Specialist for the FDIC.

Only give to charities that you are familiar with or have researched. Check them out with the state government office that regulates charities, which you can find at the Web site of the National Association of State Charity Officials at www.nasconet.org/documents/u-s-charity-offices.

Use caution when making online donations. Go directly to a charity’s Web site by independently confirming the address. Don’t click on a link in an e-mail or on a random Web site because that may lead to a fake site.

Walk away from any offer or request that involves pressure to act quickly. Be suspicious if you are asked for money or personal information on the spot. Be particularly wary if someone says you previously agreed to send money and you don’t remember doing so.

If you’re a disaster victim, be careful about accepting unsolicited offers to make repairs. Ask people you trust for recommendations of licensed and insured contractors. Check out local businesses, including complaints against them. Start by contacting your state Attorney General’s office (www.naag.org/current-attorneys-general.php) or your state or local consumer affairs office (www.consumeraction.gov/state.shtml). Ask for prices and other important information in writing before you agree to anything and understand any document you are asked to sign.

Be aware that con artists sometimes pose as debt collectors. Following a disaster, crooks know that people fall behind on bills so they attempt to collect on non-existent debts, often by posing as belligerent debt collectors or officials from the government or a law enforcement agency. To learn more, see our Spring 2013 article at www.fdic.gov/consumers/consumer/news/cnspr13/debtcollector.html.

For more about how to protect yourself, see back issues of FDIC Consumer News (online at www.fdic.gov/consumernews) and the Federal Trade Commission’s “Scam Alerts” Web page at www.consumer.ftc.gov/scam-alerts. And if you think you may be a fraud victim, you can report the matter online at www.lookstoogoodtobetrue.com/complaint.aspx, a Web site co-sponsored by the FBI and the U.S. Postal Inspection Service, or by calling the FTC at 1-877-382-4357.

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Tips for Safe Shopping

Criminals often try to steal money or commit fraud by targeting consumers as they are buying and paying for things or by obtaining valuable personal information from previous purchases. We have compiled simple ways to help you be as safe as possible.

When Shopping in Person…

Provide only the information that you are comfortable giving. Be careful about sharing your Social Security number with a merchant. “A retailer may legitimately ask for your Social Security number and other personal information if you are applying for store credit, but that information is not needed for an ordinary sales transaction,” said Michael Benardo, Chief of the FDIC’s Cyber Fraud and Financial Crimes Section. “Giving personal information to a retailer when you’re using a credit card is a voluntary decision. If you say ‘no,’ the worst that can happen is that you’ll have to take your business elsewhere.”

The Social Security Administration suggests that you “ask why your number is needed, how it will be used and what will happen if you refuse. The answers to these questions can help you decide if you want to give out your Social Security number.”

Never “flash” your cash. When paying with dollar bills, keep large amounts of money concealed. You don’t want to attract the attention of a thief.

Only carry the checks, credit cards, debit/ATM cards or cash that you plan to use. The more you take along, the more you risk having lost or stolen. Consider limiting the number of credit cards you own by canceling the ones you rarely use, but weigh the benefits of doing so against the possible lowering of your credit score, which could increase your future cost of credit. And keep your Social Security card in a safe place and not in your wallet.

When Shopping Online…

Create “strong” PIN numbers and passwords and keep them secret. Numbers, letters and symbols can be combined to form a password that is tough for someone else to figure out. Don’t write the PIN numbers in your wallet or use your birthdate or address, which can easily be determined if your wallet is stolen. While using the same password or PIN for several accounts can be tempting, doing so can put you at risk that a criminal who obtains one password or PIN can log in to other accounts.

Protect your computer. Install software that protects against “malware” (malicious software that can steal personal information, such as passwords or account numbers you’ve typed). Also use a firewall program to prevent unauthorized access to your PC. Protection options vary, and some are free. Once you’ve installed the software, set it to automatically update.

Be careful where and how you connect to the Internet. Whether you are shopping, banking or otherwise conducting financial transactions online, only access the Internet using a secure connection. “A public computer, such as at an Internet café, hotel business center, school computer lab, or public library is not necessarily secure. You never know if there is security software on these types of computers or if it is up-to-date,” said Amber Holmes, a Financial Crimes Information Specialist with the FDIC. “They also may be infected with malware that may capture your credit or debit card numbers as you type them.”

Also, don’t use your own computer (including a tablet or smartphone) for shopping or banking if you are unsure about the wireless connection, as is the case with many free Wi-Fi networks at public “hotspots,” like coffee shops. “It can be relatively easy for fraudsters to intercept the Internet traffic in these locations,” Holmes explained.

In addition to a secure connection, you can have greater confidence that a Web site is authentic and that it encrypts (scrambles) your information during transmission by looking for a padlock symbol on the page and a Web address that starts with “https://.” To learn about additional safety features, start with your Web browser’s user instructions. These precautions are not totally foolproof, as evidenced by the recent news about the “Heartbleed” Internet flaw, but they may still provide your best protection. And, be aware that the FDIC and other regulators directed financial institutions to review their security systems and make any needed upgrades as soon as the Heartbleed vulnerability became known.

Be suspicious of unsolicited e-mail offers that ask you to click on a link or download an attachment. It’s easy for criminals to copy a reputable company or organization’s logo into a fake e-mail. By complying with what appears to be a simple request, you may be installing malware. Your safest strategy is to ignore unsolicited requests for personal information, no matter how legitimate they may appear.

Take additional precautions with your tablet or smartphone before conducting online transactions. Consider opting for automatic updates for your device’s operating system and “apps” (applications) when they become available to help reduce your vulnerability to software problems. Use a password or other security feature to restrict access in case your device is lost or stolen. And, beware of unsolicited offers and downloads that come via text message, e-mail or through social networking sites and apps.

To learn more about safe shopping and paying, including key points to remember when using debit, credit or prepaid cards (the latter may not provide the full range of federal consumer protections that apply to the other cards), see previous articles in FDIC Consumer News at www.fdic.gov/consumernews. And, watch the FDIC’s multimedia presentation “Don’t Be an Online Victim” at www.fdic.gov/consumers/consumer/guard/index.html. For ways to protect yourself from data breaches, see More About How to Protect Yourself from Data Breaches.

Reprinted from FDIC Consumer News, Spring 2014. 
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Refinancing Loans: Not Just for Mortgages

Most people know they can refinance a mortgage – that is, replace an existing loan with a new one that may offer better terms. But did you know you also can refinance personal loans, including auto loans, credit cards and student loans?

“Refinancing a personal loan may save you money, especially if you get a lower interest rate, a lower monthly payment or other benefits,” noted Susan Boenau, Chief of the FDIC’s Consumer Affairs Section. “However, refinancing does not always equate to saving money or better terms.”

Here are ways to see if refinancing makes sense for you.

Think about your goals. For example, if you want to simplify your life by consolidating multiple credit card accounts, most card lenders allow you to transfer balances from other accounts for a fee. “Once you determine what you want to accomplish, you can make a better decision about whether refinancing is right for you,” Boenau added.

Understand potential pitfalls. While you may be able to take advantage of promotional offers, such as introductory zero-percent interest or low Annual Percentage Rates (APRs), by transferring a balance and closing a credit card account, you also may have a higher APR than what you were originally paying when the promotional rate ends.

Closing a credit card account also reduces your available credit and may adversely affect your credit score, which lenders often use to determine your interest rate. To avoid a reduction in your credit score, consider keeping cards you have managed well for a long time.

A balance transfer also may result in your account having multiple interest rates (such as one for your “purchase balance” and one for your “transfer balance”), so know how your payments will be classified. For instance, if you only pay the minimum required each month, a creditor can generally apply that payment any way it chooses. This includes applying your minimum payment to lower-rate balances first, which means higher-rate balances will keep accruing higher interest costs. Depending on the circumstances, a large balance transfer also may trigger fees for going over your credit limit until you can bring the balance down.

Other examples include the following:

  • You may be assessed a prepayment penalty if you refinance a loan before it matures.
  • If you trade in a car loan for a new one with a longer repayment period, perhaps for five or more years, you may get lower monthly payments but you might not save money in the long run. “You’ll likely end up paying more in total interest, plus your car’s resale value may fall below what you owe on the loan,” noted Frances Tam, an FDIC Senior Consumer Affairs Specialist. “Then when you want to sell or trade in your car, you may have to put in additional money to pay off the loan.”
  • While multiple federal student loans may be consolidated (combined into one loan with a single monthly payment), individual federal loans generally can only be refinanced (paid off and replaced with a new loan) through a private lender, and that could result in the loss of important federal benefits. “Understand the benefits you may be giving up, such as loan forgiveness for entering public service and income-based repayment options, before refinancing a federal student loan,” warned Heather St. Germain, an FDIC Senior Consumer Affairs Specialist.

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.

Also remember that, for purposes of improving your credit score, the most important things are to be financially responsible and to correct any errors in your credit reports.

For more tips on improving your credit report and score, see Your Credit Reports and Credit Scores: Simple Steps to Make Them Better.

Union State Bank has a variety of loan products available to help you consolidate debt or refinance to a more manageable payment.  See a loan officer for complete details.

Reprinted from FDIC Consumer News Spring 2014.
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Protecting Yourself From Data Breaches

“While there isn’t really anything consumers can do to prevent a breach, you can be on the lookout for signs that something like this has occurred,” said Jeff Kopchik, a Senior Policy Analyst with the FDIC. “And, if you receive formal notice from your bank or a retailer that your credit or debit card information was stolen as a result of a breach, there are steps you can take to protect yourself.”

How can you avoid losing money due to a security breach?

Review your bank and credit card statements regularly to look for suspicious transactions. If you have online access to your bank and credit card accounts, it is a good idea to check them regularly, perhaps weekly, for transactions that aren’t yours.

Contact your bank or credit card issuer immediately to report a problem. Debit card users in particular should promptly report a lost card or an unauthorized transaction. Unlike the federal protections for credit cards that cap losses from fraudulent charges at $50, your liability limit for a debit card could be up to $500, or more, if you don’t notify your bank within two business days after discovering the loss or theft.

Periodically review your credit reports to make sure someone hasn’t obtained credit in your name. By law, you can request a free copy of your credit report from each of the three major consumer reporting agencies (also known as credit bureaus) once every 12 months. Because their reports may differ, consider spreading out your requests during the year. To order a free report, go to http://www.AnnualCreditReport.com or call toll-free 1-877-322-8228.

If you find an unfamiliar account on your credit report, call the fraud department at the consumer reporting agency that produced it. If that account turns out to be fraudulent, consider asking for a “fraud alert” to be placed in your file at the three main 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 being opened in your name or changes to your existing accounts.

What if you place a fraud alert in your credit files and then you apply somewhere for a new credit card, mortgage or other loan? Expect that the lender will call you for a confirmation. However, be aware that the fraud alert also may slow down the process of obtaining that new credit while the lender verifies your identity.

An additional but more serious step is to place a “credit freeze” on your credit report, which means that the credit bureaus cannot provide your credit report to lenders who request it. That, in turn, may prevent criminals from obtaining credit in your name, but it also will stop you from getting new credit until you lift the freeze.

Pay attention to notices from your retailer or your bank about a security breach. In the event of a large-scale breach, you may receive notice that your credit card is being replaced with one that has a new account number.

Also, the retailer may offer you free credit-monitoring services, usually for up to one year. “This service provides an excellent way to see if a cyber thief is using the stolen information to apply for new credit cards or loans in your name,” Kopchik said. “And if you are not offered free credit monitoring, you may want to consider buying it at your own expense.” Note: A credit-monitoring service can be costly, so research the options thoroughly and understand that you can monitor your own credit reports for free, as previously described.

Be on guard against scams offering “help” after a data breach. Be very careful about responding to an unsolicited e-mail promoting credit monitoring services, since many of these offers are fraudulent. If you’re interested in credit monitoring and it’s not being offered for free by your retailer or bank, do your own independent research to find a reputable service.

For additional information about data breaches and protecting yourself, see an advisory from the Consumer Financial Protection Bureau at http://files.consumerfinance.gov/f/201401_cfpb_consumer-advisory_card-security.pdf.

Reprinted from FDIC Consumer News Spring 2014 http://www.fdic.gov/consumers/consumer/news/cnspr14/databreach.html
 
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Checking Accounts: More Questions to Ask

Various reports suggest that it’s getting harder to find free or low-cost checking accounts. To help you get the best deal on an account that meets your needs, consider these questions.

What do I need most from a checking account? “Make a list of the services you need so you can select a checking account that’s a good fit,” said Luke W. Reynolds, Chief of the FDIC’s Outreach and Program Development Section.

Which banks should I consider for a checking account? First, make sure your current bank or prospective banks are FDIC-insured, so your deposits are protected if the institution fails. Next, consider whether you prefer to bank in person, which means you might want a bank with branches close by, or if a distant bank with online services and a convenient network of free ATMs will meet your needs.

“Far-away banks may advertise high interest rates or low fees, but don’t overlook banks in your community, including smaller banks,” said Bobbie Gray, an FDIC Supervisory Community Affairs Specialist. “Just because a local bank doesn’t advertise online doesn’t mean it may not be offering free or low-cost checking.”

How can I compare the costs of different banks’ checking accounts? Review each bank’s disclosures of fees and services, and then focus on the costs you expect to incur. Also compare the products and features a bank offers on its Web site to what it offers when you call or visit a branch; it’s possible that a special offer may be available through certain branches only and not online, or vice versa.

What can I do to get a better deal? Having your paycheck or other income directly deposited into the account may help you qualify for a more attractive account. Some banks also offer a significantly higher interest rate up to a certain balance, often provided you also meet other conditions, such as using a debit card a set number of times or receiving your statements electronically.

In addition, banks may offer cash or another one-time bonus for opening a new account. “Still, you need to decide which account is right for you for the years ahead based on how you plan to use it,” Reynolds advised. “Be realistic about whether a special offer is going to consistently change the way you normally handle your finances.”

Similarly, banks want to develop lending relationships with their deposit customers and some may offer a break on checking account fees if you get a new credit card or refinance a loan with them. “But if you already have several credit cards and you want to get one more just to save on checking fees,” Gray said, “ask yourself if you can still closely monitor all your accounts to quickly catch a billing error or a change in account terms that could cost you money.”

Am I interested in using new, high-tech ways to save money on my checking account? Text messages or e-mail alerts about your account reaching a low balance that you set (say $100) can help you curtail spending or add funds to avoid overdraft fees. Or, you may be able to save on gas and stamps by using a smartphone or ATM to deposit checks or pay bills.

How will the bank handle transactions that would put my account balance in the negative? Under federal rules, you must have previously “opted in” (agreed) to an overdraft program before a bank can charge you a fee for approving an “everyday” (one-time) debit card transaction that would exceed your account balance.

“Ask your bank how it treats transactions that you do not have enough money in your account to cover,” Reynolds said. “If you have already opted in, you can change your election if you want to avoid the risk of costly fees for these transactions. You may also consider linking your checking account to a savings account to automatically cover an overdraft for a smaller fee.”

Also remember that the easiest way to avoid overdraft fees is to keep an up-to-date record of how much money is in your checking account, including recurring automatic payments, and know your balance before using your debit card or writing a check.

Would it be better to receive statements electronically or in the mail? Either way, to limit your potential losses in the event of a problem, such as a fraudulent transaction, promptly review your statements and report errors.

What should I do before moving my checking account? Consider keeping your old account open until you are sure that any electronic deposits or withdrawals have been processed and all the checks you wrote have cleared.

For more ideas for saving money on a checking account, go to www.mymoney.gov.

Reprinted from FDIC Consumer News, Spring 2014.  http://www.fdic.gov/consumers/consumer/news/cnspr14/checking.html
 
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Safe Deposit Boxes Keep Your Records Organized, Valuables Secure

Want to get organized and ensure that your financial life runs smoothly? One of the easiest and most cost-effective steps you can take is to rent a safe deposit box at your Wisconsin community bank.

Storing your vital records in a safe deposit box can help when:

  •  You need a birth certificate or Social Security card to apply for a passport or job.
  • You need a passport to begin your overseas adventure.
  • A tornado blows through your area and you need a copy of your insurance policy and household inventory, (perhaps accompanied by photos or a video).
  • The attorney helping to settle an estate has asked to see property deeds.
  • You need adoption records for any reason.
  • You need vehicle loan, leasing, or ownership records in order to sell a used car.

The list goes on. If you misplace your in-home list of credit card numbers, online passwords, or 2012 tax return, having a copy in a safe deposit box can save you hours of searching-not to mention megawatts of frustration. Other documents often stored in safe deposit boxes include wills, citizenship papers, military records, and marriage, and death certificates.

Even if you have copies of these documents at home, keeping the originals in a safe deposit box can save you time. While you can request a copy of your Social Security card from the Social Security Administration or a copy of your birth certificate from the city hall or courthouse of the county where you were born, keeping these documents at your community bank can save you the effort of tracking down and requesting duplicates.

Many people also store small valuables in their safe deposit boxes, everything from seldom worn jewelry to gems, stamps, baseball cards, comics, or old coins. If you have small heirlooms that you would like to hand down to your children but not necessarily display in your home (old letters, an ancestor’s diary, military medals, or tintypes and photo negatives), you may want to keep them in your safe deposit box as well. While you can keep copies of many of these items at home, storing the originals in a safe place gives you peace of mind.

When you rent a safe deposit box, you will receive two keys to it. Remember to keep them in two separate places, including one site that is outside of your home. Avoid placing a safe deposit box key on your key ring, which might be lost or stolen. Also remember to pay the rental fee annually. After five years of nonpayment, banks transfer the contents of abandoned boxes to the Wisconsin State Treasurer’s Office.

Curious about what other people keep in their safe deposit boxes? The Treasurer’s Office sells unclaimed property from abandoned boxes on eBay. Learn more at: http://wistatetreasury.wordpress.com/2012/02/29/things-found-in-safe-deposit-boxes/.

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Saving and Investing for Your Future: Questions to Ask Yourself Now

Finding money to put into savings can seem difficult, but there are some strategies that can make it easier. Start by asking yourself these questions.

Do I have savings goals? Knowing how much you want to save and why can help you stick to a plan.

For example, if you have a young child, ask yourself if you plan to help pay for college. Research indicates that children who have a college savings fund are more likely to go to college than those who don’t. Start by looking at “529 plans” sponsored by your state (typically with cost and tax benefits for residents) and compare them to other 529 plan options. Learn more about college planning at www.studentaid.ed.gov/prepare-for-college.

How can I spend less? Review how much you spent in the last month and consider ways to cut back. “Start by reviewing recurring expenses — even small ones — and determine what you might be able to cut out, downgrade, or find a better deal on elsewhere,” said Luke W. Reynolds, Chief of the FDIC’s Outreach and Program Development Section.

Also try to pay less in interest. For example, if you have multiple loans, pay off the ones with the highest interest rates first. And, regularly reviewing your credit report and correcting errors (see Refinancing Loans: Not Just for Mortgages) can result in considerable savings on loans and insurance policies. For more about saving money on loans, see Saving Money on a Mortgage, From Start to Finish and Refinancing Loans: Not Just for Mortgages.

Do I have an emergency savings fund? Financial experts generally recommend that you have at least six months of living expenses in a federally insured product, such as a savings account or a certificate of deposit (CD). The idea is to help you withstand a major reduction in income, such as from a job loss, or to pay for a major, unexpected home or car repair. To build your “rainy day fund,” consider a combination of regular, automated deposits and any “windfalls” you receive, perhaps from a tax refund or a bonus at work.

Am I saving money on a regular basis? “Automatic transfers into savings on a set schedule can help you save money before you spend it,” said Bobbie Gray, an FDIC Supervisory Community Affairs Specialist.

How much investment risk am I willing to take? Investments such as stocks, bonds and mutual funds can produce higher returns than bank deposits over many years, but you could also lose some or all of that money. (Remember, nondeposit investments are not insured by the FDIC against loss.)

In general, the longer you plan to keep money invested and the greater your tolerance for volatility, the more likely these investments can help you reach your targets.

Am I saving enough for retirement? For many, the answer is “no” even when they think it is “yes.” Options to save include workplace retirement plans, Individual Retirement Accounts (IRAs) offered by many banks and investment companies, and the U.S. Treasury Department’s new “myRA” (MyRetirement Account) program.

The myRA account is a simple, safe and affordable retirement savings program that is backed by the U.S. government. Savers can open an account with as little as $25, there are no fees, the account will earn interest at a variable rate, and the investment is protected so the account balance will never go down. To learn more about myRA, go to www.treasurydirect.gov/readysavegrow/start_saving/myra.htm.

“Many working people can save considerably on their taxes through qualified retirement savings. And, if your employer offers a retirement savings program of any kind, find out whether it will match your investment contributions, and then don’t lose out on any matches,” Reynolds added.

To learn more about ways to save, see resources from more than 20 federal agencies, including the FDIC, at www.mymoney.gov.

Reprinted from FDIC Consumer News Spring 2014  http://www.fdic.gov/consumers/consumer/news/cnspr14/savingandinvesting.html

 

 

 

 

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