Tips on Investing in Non-deposit Products that are not FDIC-Insured


Some banks sell non-deposit investment products (such as mutual funds, annuities, and stocks).
Since the FDIC does not insure these products, keep the following tips in mind to protect your money.

How to Protect Yourself
  • Before investing in non-deposit products, have enough emergency money in savings or
    other readily accessible account to support you and your family for 2 to 6 months. Do
    not use this money to buy investment products.

  • Never invest in a product you don’t understand.

  • Be sure you have enough information before making an investment. Ask questions until
    you are satisfied.

  • Investments always have some degree of risk. Understand the risks before investing.

    Find out more about your registered sales representative or broker/dealer by calling the National Association of Securities Dealers (NASD) at 800-289-9999, or by visiting http://www.nasd.com/.

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Types of Checking Accounts


After you determine what you need in a checking account and understand the different fees involved, you might be ready to choose the type of account you should open. Keep in mind that banks sometimes refer to these accounts by different names. Before making a decision, read the materials (disclosures), ask questions, and understand which checking account best fits your needs. The main types of checkingaccounts include:

Low-cost checking:
Many banks offer low-cost checking for people who don’t write a lot of checks. The charge is often less than $5 per month. There might be a limit to the number of checks you can write without an additional charge.

Electronic checking:
Some banks offer an electronic checking account for you at reduced-cost or a free checking account if you do all of your banking by phone, Internet, and ATM. This type of account usually requires you to use direct deposit. The bank might charge you a fee if you use the services of a teller. This type of account usually offers unlimited check writing privileges, meaning there are no additional charges based on the number of checks you write.

Regular checking:
With a regular checking account, there is often a minimum balance required to waive the monthly service fee. This type of account usually offers unlimited check writing privileges.

Interest checking:
There are different interest-bearing accounts, such as the Negotiable Order of Withdraw (NOW) account(commonly called "interest checking") and the Money Market Deposit Account (MMDA). With these accounts, you usually need to maintain a high minimum balance in order to earn interest and avoid fees. The minimum balance is often at least $1,000.

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Determine Your Checking Account Needs


When you consider opening a checking account, remember that banks offer different types of checking accounts. To determine what you need, think about how you plan to use your checking account. The following are a few examples of questions that will help you determine what you need to look for in a checking account.

Consider Convenience:

  1. How many checks do you think you will write every month?
  2. Do you want a bank that is close to your home or work?
  3. What are the bank’s hours of operation?

Determine Costs:

  1. How much money will you keep in your account?
  2. Will you be charged for writing extra checks?
  3. Are you willing to pay a monthly fee?

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Checking Account Fees



Before you open a checking account…



  1. Ask the bank for the Fee Schedule for checking accounts.

  2. Compare the costs of the various types of checking accounts you are considering. (For a list of common types of checking accounts, look under “Checking Accounts” in the Information Booth).

  3. Ask the bank whether fees can be waived and how to avoid them.

What fees can I expect when opening a checking account?

Monthly Service Fee
Also called a maintenance fee. The bank might charge a fee each month, just for having the account. You might also be charged a fee if your balance drops below the required minimum.

Per Check Fee
Some accounts charge a fee for each check you write. Depending on the account, you might pay the fee for each check or only when you write more than a certain number of checks (perhaps five) a month.

Check Printing Fee
You can buy checks from the bank or through the mail from other companies. If you buy checks from the bank, the charge for printing the checks is usually automatically deducted from your checking account. Fancy checks cost more than basic checks. You can buy more than one box at a time. Carbon copy checks are an option, and allow you to keep a copy of the check for your personal reference.

ATM-Use Fee
You might be charged a fee each time you use an ATM at a bank other than your own.

Overdraft Fee
Also called nonsufficient funds (NSF) fee. NSF fees apply when you bounce a check. The bank will notify you if a check is returned to the person or company to whom it was issued because there were insufficient funds in the account. Your bank will charge a processing fee to your account because of the cost to return the check. Merchants might also charge a fee if a bounced check is used to purchase the goods or services. The fee charged is usually posted near the cashier.

Returned Deposit Item
Banks might charge a fee if a check you deposit in your account bounces.

Stop Payment Fee
If you lose a check or need to make sure a check is not paid by the bank for some other reason, you can request a “stop payment.” There is a fee for this service, and the bank might not be able to catch the check before it is paid.

Phone Inquiry Fee
Some banks charge a fee if you call to check your balance or to see if a check or deposit has cleared.

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Budgeting and Savings Tips



  1. Consider your needs vs. your wants. Think about items you purchase on a regular basis. These add up. Where can you save?
    • Do you eat out at restaurants a lot?
    • Can you cut back on daily expenses, such as coffee, candy, soda, or cigarettes?
    • Do you have services you do not really need, such as cable television or a cell phone?

  2. Set up a direct deposit and an automatic transfer to your savings account.
    • When you get paid, put a portion in savings through direct deposit or automatic transfer.
    • If you have a checking account, you can sign up to have money moved into your savings account every month. What you don’t see, you don’t miss!

  3. Pay your bills on time. This saves the added expense of:
    • Late fees, extra finance charges
    • Disconnection fees for phone, electricity, or other services
    • Fees to reestablish connection if your service is disconnected
    • The cost of eviction, repossession and bill collectors

  4. If you use check-cashing stores regularly, you might be paying $3 - $5 for each check you cash. Consider opening a checking account at a bank or credit union.

  5. If you get a raise or bonus from your employer, save that extra money.

  6. If you have paid off a loan, keep making the monthly payments to yourself. You can save or invest the
    money for your future goals.

  7. Avoid debt that does not help build long-term financial security. For example, avoid borrowing money for things that do not provide financial benefits or that do not last as long as the loan. Examples include: a vacation, clothing, and dinners out in restaurants.

  8. Save your change at the end of the day. Take that change and deposit it into the bank (every week or month).

  9. When you get a tax refund, save as much of it as possible.

  10. If your work offers a retirement plan, such as 401(k) or 403(b) plan that deducts money from your paycheck, join it! Most employers will match up to $.50 on each dollar you contribute. The matched amount is free money!

Meet Your Personal Savings Goals
To meet your personal savings goals, ask yourself these key questions:
1. What will I do now to save for my goals?
2. What will I do by the end of the month to save for my goals?
3. What will I do by the end of the year to save for my goals?


And, Consider these factors when making important savings decisions:
1. How much do you want to accumulate?
2. How long can you leave your money invested?
3. How do you feel about risking your money?

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Budgeting and Savings Tools









Budget Box System
  • The budget box is a small box with dividers for each day of the month, with one divider for each day of the month.
  • When you receive a bill, check the due date and place it behind the divider that represents the bill’s due date. As you receive income, pay all bills that are due.

Computer System

  • If you have access to a personal computer, you can create your own spreadsheet.
  • You may also want to purchase a personal finance program. They are available for less than $75.
  • Using a computer to manage your finances is relatively simple. Once you set up the system, updating information is quick and easy. It is important to enter transactions frequently to truly understand your financial position.

Expense Envelope System

  • This tool is useful if you pay your bills in cash each month.
  • Make an envelope for each expense category, such as rent, gas, electricity, and food.
  • Label the envelope with the name of the category, the amount, and the due date.
  • When you receive income, divide it into the amounts to cover the expenses listed on the envelope.
  • Pay bills right away so you will not be tempted to spend the money on something else.

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Beware of Unethical Mortgage Foreclosure Operators


A fairly new and dangerous threat has arisen for homeowners who have fallen behind on their mortgage payments and may be at risk of foreclosure – opportunistic companies calling themselves "foreclosure rescue operators." They often refer to themselves as a “foreclosure consultant” or “mortgage consultant,” and market themselves as a “foreclosure service” or“foreclosure rescue agency.” They count on homeowners being vulnerable and desperate.

These companies claim they can assist homeowners facing foreclosure with options that allow them to keep their property, refinance or modify an existing mortgage, repair credit or help “buy more time.” In reality, these "options" are intended by foreclosure rescue scam operators to convince you to take the wrong steps so they can take your money and possibly your home.

But, remember the old saying, "If it's too good to be true, it probably is."

Be safe. It is important that you take action by contacting your mortgage lender – or any legitimate financial counselor – to find real options to avoid foreclosure. If someone offers to negotiate with your lender and offers to arrange to stop or delay foreclosure for a fee, carefully check his or her credentials, reputation, and experience. A number of agencies provide free counseling services to homeowners who are having trouble making ends meet (see “Protech Yourself and Resources Sections”). These agencies can help you explore your options, which may range from modifying your loan to refinancing your loan to selling your home and using any equity to start over.

Watch Out for Foreclosure Scams
Lease-Back or Repurchase Scams – In this scenario, a promise is made to pay off your delinquent mortgage, repair your credit and possibly pay off credit cards and other debt. However, in order to do this, you must “temporarily” sign your deed over to a “third party” investor. You are allowed to stay in the home as a renter with the option to purchase the home back after a certain amount of time has passed or your financial situation improves.

The trouble is once you have signed away your rights in your property, you may not be able to repurchase the property later, even if you can and want to. After the new owner takes ownership of your property, the new owner can evict you. Furthermore, the scammer is under no obligation to sell the house back to you. Typically, after the deed is signed away, the property changes hands numerous times. The scammer may have taken a new mortgage out on your home for hundreds of thousands of dollars more than your mortgage, making it impossible for you to buy back your home.

Partial Interest Bankruptcy Scams – A scam operator may ask you to give a partial interest in your home to one or more persons. You then make mortgage payments to the scam operator in lieu of paying the delinquent mortgage. However the scam operator does not pay the existing mortgage or seek new financing. Each holder of a partial interest then files bankruptcy, one after another, without your knowledge. The bankruptcy court will issue a “stay” order each time to stop foreclosure temporarily. However, the stay does not excuse you from making payments or from repaying the full amount of your loan. This complicates and delays foreclosure, while allowing the scam operator to maintain a stream of income by collecting payments from you, the victim.

Bankruptcy laws provide important protections to consumers. Scams can only temporarily delay foreclosure, and they may keep you from using bankruptcy laws legitimately to address your financial problems.

Refinance Scams – While there are legitimate refinancing programs available, including through the federal government, look out for people posing as mortgage brokers or lenders and offering to refinance your loan so you can afford the payments. The scammer presents you with “foreclosure rescue” loan documents to sign. You are told that the documents are for a refinance loan that will bring the mortgage current. What you don’t realize is that you are surrendering ownership of your home. The “loan” documents are actually deed transfer documents, and the
scammer counts on your not actually reading the paperwork. Once the deed transfer is executed, you believe your home has been rescued from foreclosure for months or even years until you receive an eviction notice and discover you no longer own your home. At that point, it is often too late to do anything about the deed transfer.

Internet and Phone Scams - Some scam lenders convince you to apply for a low-interest mortgage loan on the phone or Internet. They then extract vital information, such as your social security and bank account numbers. In this scam, the loan is immediately accepted, after which you start faxing the documents and sending wire transfer payments to the phony company without even meeting the lender. Unfortunately, this scam will put you in twice as much trouble-your personal details have been stolen or sold, putting you at risk of identity theft, and your
home is still at risk of foreclosure.

Phantom Help Scams - The scam operator presents himself as someone who is able to counsel or help a homeowner out of foreclosure. In exchange for his or her “services,” outrageous fees are charged and grand promises are made for robust representation, which never occurs. The “services” performed entail light paperwork or occasional phone calls that you could easily have made yourself. In the end, you are worse off than before, because you have little or no time to save your home, or seek other assistance.

Protect Yourself
Know with whom you are dealing. Before you hand over any money or provide any personal information, check out the company or person. You can check your local Better Business Bureau® or state consumer protection office to see if the company or organization is legitimate and if any complaints have been filed.

Contact reputable non-profit housing or financial counselors, such as those you can find by contacting the:

Know what you are signing. Read and understand every document you sign. If a document is too complex, seek advice from a lawyer or trusted financial counselor. Never sign documents
with blank spaces that can be filled in later. Never sign a document that contains errors or false
statements, even if someone promises to correct them later.

Get promises in writing. Oral promises and agreements relating to your home are usually not legally binding. Protect your rights with a written document or contract signed by the person making the promise. Keep copies of all documents you sign.

Make your mortgage payments directly to your lender or the mortgage servicer. Do not trust anyone else to make mortgage payments for you.

Never sign over your deed until you clearly understand what will happen to your rights to your home. Foreclosure scams often require you to “temporarily” sign over ownership of your home to another claiming it would be only as a means to help you. Instead contact only legitimate, well known entities who specialize in assisting homeowners with mortgage problems such as a HUD-approved homeowner counseling agency.

Report suspicious activity to the Federal Trade Commission, your State Attorney General’s Office or your state and local consumer protection agencies. Reporting con artists and suspicious schemes helps prevent others from becoming victims. Caught in a Foreclosure Scam? If you get caught in one of these scams, it is imperative that you contact a lawyer right away. An attorney can assist you as you navigate your way through eviction hearings. Lower income individuals may be able to find free legal services; see http://www.findlegalhelp.org.

If you believe that you are the victim of criminal activity, such as forged documents being presented for your signature, you should contact your local law enforcement agency.

Warning signs that you may be dealing with a mortgage foreclosure scam operator include if the company:

  • Demands a fee in advance. No legitimate organization that works with borrowers to
    avoid foreclosure will ever ask for money up front.
  • Makes unsolicited offers or “lofty advertisements, claiming they can help save your
    home.
  • Recommends you break off contact with the lender and any counselor that you may have
    been working with.
  • Advises you to stop making mortgage payments.
  • Tells you to send your mortgage payment to anyone other than your loan servicer.
  • Instructs you to transfer ownership of your property.
  • Makes verbal promises that aren’t put in writing.
  • Asks you to sign a document that has blank lines or spaces.

General Resources
FDIC Foreclosure Prevention Website
www.fdic.gov/consumers/loans/prevention/
(877) ASK-FDIC or (877) 275-3342

Mortgage Modification and Refinance Programs

Foreclosure Mitigation Assistance and Counseling

Report Foreclosure Scams

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How Much Mortgage Can I Afford?


Keep in mind that just because you qualify for that amount, it does not mean you can afford to be comfortable with those monthly payments. You need to consider your particular circumstances and your future financial needs and goals.

How can I calculate how much mortgage I can afford? As a rule of thumb, many people estimate they are able to afford a mortgage of 2 to 3 times their household income. For example, if you annual income is $30,000, you might be able to afford a mortgage of $60,000 to $75,000:

$30,0000 X 2 = $60, 000
$30,000 X 2.5 = $75,000
$30,000 X 3 = $90,000

Keep in mind that just because you qualify for that amount does not mean you can afford or be comfortable with those monthly payments. You need to consider your own circumstances and your future financial needs and goals.

What do lenders look at when deciding whether or not to finance a mortgage?
Lenders look at a debt-to-income (DTI) ratio when they consider your application for a mortgage loan. A DTI ratio is your monthly expenses compared to your monthly gross income.

Lenders consider monthly housing expenses as a percentage of income and total monthly debt as a percentage of income. Both ratios are important factors in determining whether the lender will make the loan.

What do lenders generally require?
Lenders usually require the PITI (principle, interest, taxes, and insurance), or your housing expenses, to be less than or equal to 25% to 28% of monthly gross income. Lenders call this the “front-end” ratio. In other words, if your monthly gross income is $10,000 or $120,000 annually, your mortgage payment should be $2,800 or less.

$10,000 X 28% = $2,800 – maximum monthly housing costs

Lenders usually require housing expenses plus long-term debt to less than or equal to 33% or 36% of monthly gross income. Lenders call this the “back-end ratio.” In other words, if your monthly gross income is $10,000, the combination of your mortgage, $2,800, and other longterm debt should be no more than $3,600:

$10,000 X 36% = $3,600 – maximum total debt

If your debt-to-income exceeds these ratios, talk to your lender about your options.

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Interest-Only and Payment Option Mortgages


Important Facts about Interest-Only and Payment Option Mortgages
Whether you are buying a house or refinancing your mortgage, this information can help you decide if an interest-only mortgage or a payment option mortgage is right for you. These mortgages can be complicated. If you do not understand how they work, you should not sign any loan contracts, and you might want to consider other types of loans.

Interest-Only Mortgages allow you to pay only the interest on the money you borrowed for the first few years of the mortgage (the “interest-only period”).

If you pay only the amount due, then at the end of the interest-only period:
  • You will still owe the original amount you borrowed.
  • Your monthly payment will increase because you must pay back the principal as well as interest. Your payment could increase even more if you have an adjustable rate mortgage(“ARM”) and interest rates increase.

Payment Option Mortgages allow you to choose among several payment options each month during the first few years of the loan (the “option period”). The option period will end earlier than scheduled if the amount you owe grows beyond a set limit—for example, 110% or 125% of your original mortgage amount.

During the option period, the payment options usually include:• A payment of principal and interest, which reduces the amount you owe over time.

  • An interest-only payment, which does not reduce the amount you owe.
  • A minimum payment, which may be less than the interest due that month.

At the end of the option period, depending on what payment options you chose:

  • You could owe substantially more than the original amount you borrowed.
  • Your monthly payment could increase significantly because:
    o You may have to start paying back principal, as well as interest.
    o Unpaid interest may have increased the amount you owe.
    o Interest rates may have increased (if you have an ARM).

Additional Information
►Home Equity—If you make interest-only payments, your payments are not building home
equity. And, if you make only the minimum payment on a payment option mortgage, you may be losing home equity. This may make it harder to refinance your mortgage or to obtain funds from selling or refinancing your home.
►Prepayment Penalties—Some mortgages require you to pay a lump-sum prepayment penalty
if you sell your home or refinance during the first few years of the loan. You should find out if your mortgage has a prepayment penalty, how it works, and how much it could be.
►No Doc/Low Doc Loans—“Reduced documentation” or “stated income” loans usually have
higher interest rates or other costs compared to “full documentation” loans that require you to verify your income and assets.

Payment Options Impact
Traditional Mortgage Payment(pay principal and interest)

  • You will pay some of the principal on your loan.
  • You will reduce your loan balance.

Interest-Only Mortgage Payment

  • You will not pay any principal on your loan.
  • You will not reduce your loan balance.

Minimum Payment on a Payment Option Mortgage

  • Your payment may not cover all of the interest that accrues during that period.
  • Your outstanding loan balance may increase.

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Homebuyer Assistance Programs


There are a number of different programs available for first-time homebuyers. Many people start the home buying process by working with local community organizations that provide education on the homeownership process. Some of these organizations can be found by contacting the U.S. Department of Housing and Urban Development for a referral to a HUD-approved homeownership counseling agency (1-800-569-4287 or www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or http://www.hereiaminc.com/.

Be sure to ask your financial institution or mortgage counselor what lending options are available to you. Options may include loans insured by:



  • Federal Housing Administration (FHA)

  • Department of Veterans Administration (VA)

  • Federal National Mortgage Association (Fannie Mae)

  • Federal Home Loan Mortgage Corporation (Freddie Mac)

  • United States Department of Agriculture (USDA) Rural Development Housing Services

These programs may include features such as: minimal down payment requirements; competitive fixed interest rates; and limitations on closing costs.

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Components of a Mortgage Loan Payment







Your mortgage payment (PITI) will reflect the following costs:
P = Principal. The amount applied to the outstanding balance of the loan.
I = Interest. The amount of the charge for borrowing money.
T = Taxes. 1/12th of the estimated annual real estate taxes on the home.
I = Insurance. 1/12th of the annual homeowner’s insurance premium.

This figure will include flood insurance and private mortgage insurance
(PMI), if required.

You will most likely pay the taxes and insurance along with the principal and interest to the lender every month. In some cases, however, the lender may allow you the option to pay the taxes and insurance separately.

If the lender requires you to pay the taxes and insurance as part of your mortgage payment, the lender will open an escrow account to hold this money until the payments are due. Many people consider this convenient because they don’t have to make separate payments. If you live in certain states, the escrow account will also earn interest.

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Sample Predatory Loan Offer


The following is an example of a predatory loan offer. Recognizing these characteristics of predatory lending is the first step to helping you avoid these misleading tactics.

Take notice of the high pressure and misleading sales pitch. Also, be sure to notice that loan terms (fees, interest rates, payment conditions) are not given upfront.

Dear Homeowner,

Do you want extra cash? AAA Lender can help you get the money you have been hoping for. Our free services have already helped thousands of homeowners get low-interest loans to consolidate bills and get out of debt.

We are a top-rated professional referral agency, and our mission is to provide homeowners, like yourself, with carefully selected lenders. We use the best network of affiliated mortgage banking companies in the country! We have hundreds of lenders across the United States ready to meet your needs.

We can provide you with lenders who will loan you up to 125% of your home’s value of$100,000, even if you have no equity in your home or have a bad credit history!

Best of all, our lenders offer the lowest interest rates available, and they can set you up with an incredibly low monthly payment!

There are no upfront fees! This means you won’t pay a dime, so you have absolutely nothing to lose!

Here are just some of the ways you could put this cash to use:

  • Home improvements
  • Credit card debt
  • College tuition
  • Dream vacation
  • A new car
  • Start your own business
  • Or whatever else you need!

Your loan can often be approved within 24 hours, and you can have the cash in your hands within 1-2 weeks.

You owe it to yourself to request a free loan evaluation. Call now and find out how easy it is. Act now! This is a limited time offer.

Sincerely,
AAA Lender


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Rejection: What to do if you are Turned Down



What do I do if I have been turned down for a loan?
If you’ve been turned down for a loan, use this table to identify the steps you can take to improve your credit:
  1. Pay off your entire bill each month on existing credit cards. If you can’t, try to pay more than the minimum balance due. This will reduce finance charges and total interest paid.
  2. Pay all bills on time to avoid late fees and to protect your credit. If you cannot pay on time, call your creditor(s) immediately to explain the situation. They may waive late fees or be willing to make different payment arrangements.
  3. Always check your monthly statement to verify transactions. Call your
    creditor(s) right away if you see errors in your statement.
  4. Ignore offers that creditors may send you to “reduce” or “skip” payments.
    You will still be charged finance charges during these “free” periods.
  5. Think about the cost difference if you purchase desired items with cash versus if you purchase them with credit: For example, if you purchase a $500 stereo with a credit card with a 20% APR, it will cost about $1,084 and take 9 years to pay off if you only pay the $10 minimum monthly payments.

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Cards

Cash Cards
Cash cards, similar to prepaid phone cards contain a set amount of value, which can be read by a special cash card reader. Participating retailers will use the reader to debit the card in increments until the value is gone. The cards are like cash because they have no built-in security; if lost or stolen, they can be used by anyone. Check with the card issuer to see whether you can register the card so you can cancel it in the event it is lost or stolen.


Stored Value Cards
Stored value cards include:

  • Telephone cards with prepaid minutes.
  • International gift cards that can be used anywhere the VISA or MASTERCARD logo is
    displayed.

Some items to keep in mind about stored value cards:

  • Reduce or eliminate check-cashing fees.
  • Offer 24-hour access to funds; no need to wait in lines.
  • Make money transfers more easily available to families.
Be sure to ask about any fees associated with a stored value card, such as monthly fees or
inactivity fees.

Smart Cards
A smart card resembles a credit card in size and shape, but inside it is completely different. The inside of a smart card usually contains an embedded microprocessor or computer chip. The chip is under a gold contact pad on one side of the card.

The most common smart card applications are:
  • Credit cards.
  • Electronic cash.
  • Wireless communication.
  • Loyalty systems (like frequent flyer points).

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Tips for Repairing Your Credit History






Repairing Credit on Your Own
  1. Start by contacting credit reporting agencies to get a copy of your credit report.
  2. If there are errors on your credit report, you can contact the credit-reporting agency to request an investigation.
  3. Contact your lenders to renegotiate payment plan
  4. Opt out of receiving unsolicited offers for credit cards to avoid the temptation of applying for them.

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Tips for Building Your Credit History


How to Build Your Credit:

Remember, if you have a problematic credit history, building credit can take some time. Here are some steps to help you build your credit.
  • Get a copy of your credit report and review it for errors. Take action to address any errors
    you find.
  • Apply for a small loan at the bank, thrift, or credit union where you have checking and
    savings accounts.
  • Apply for credit with a local store, such as a department store. They typically have a
    lower credit limit and a higher annual percentage rate (APR), but are generally more
    willing to lend you money. There is usually no fee for department store cards.

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The Cost of Credit

When you get a loan, there are generally two costs you must pay: fees and interest.

Fees
Fees are charged by financial institutions for activities such as reviewing your loan application
and servicing the account. Examples of fees include:

  • Maintenance fees
  • Service charges
  • Late fees

Interest
Interest is the amount of money a financial institution charges for letting you use its money.
The rate of interest can be either fixed or variable.

  • Fixed rate means the interest rate stays the same throughout the term of the loan.
  • Variable rate means the interest rate might change during the loan term. The loan agreement will show the details of the rate changes.

Truth in Lending disclosures
Credit terms can appear confusing because of the various rates and fees lenders charge. The Federal Truth in Lending law requires banks to state charges in a clear and uniform manner so you can easily compare the actual cost of borrowing. The section on credit cards describes these disclosures for credit cards. For most other types of loans, lenders must disclose the:

  • Amount financed.
  • Annual percentage rate (APR).
  • Finance charge.
  • Total payments.


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Circumstances Under Which Your Credit Report is Provided Free of Charge


Everyone is entitled to one free credit report a year from each of the three credit bureaus. In addition to your one free credit report, you are also able to obtain another free copy of your credit report if you:


  • Have been denied credit recently based on your credit history.

  • Have been denied employment or insurance recently based on your credit history.

  • Suspect someone has been fraudulently using your account.

  • Are unemployed and intend to apply for employment within 60 days.

  • Receive public welfare assistance.


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Credit Counseling vs. Debt Management

Credit Counseling

If you are having challenges adhering to your budget, cannot work out a repayment plan with
your creditors, or cannot keep track of mounting bills, consider contacting a credit counseling organization.

Many credit counseling organizations are nonprofit and work with you to solve your financial problems. Reputable credit counseling organizations offer free educational materials and
workshops and can:

  • Advise you on managing your money and debts.
  • Help you develop a budget.

The counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting.
Counselors discuss your entire financial situation with you and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Debt Management

If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP).

A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has thoroughly reviewed your financial situation and has offered you customized advice on managing your money. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you are participating in the plan.

Be aware of scams from entities involving dealing with debt. See www.ftc.gov/credit/ or http://www.hereiaminc.com/ for more details before paying money to entities that claim to be able to help you get out of debt.

Repairing Credit Using Credit Counseling Agencies
If you decide to use a credit counseling agency, the Federal Trade Commission provides the following tips for choosing a credit counseling agency and questions to ask regarding services and fees and repayment plans:

  1. Interview several credit counseling agencies before signing a contract.
  2. Check with your state attorney general, local consumer protection agency, and the Better
    Business Bureau to find out if consumers have filed complaints about the agency you are
    considering. A reputable agency will send you free information about itself and the
    service it provides without requiring you to provide any details about your situation. If
    the agency will not do this, find another agency.
  3. Ask questions about services and fees and a repayment plan.

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Checklist For Credit Decisions

Here are some questions you might be asked when applying for credit:


Capacity Capital

  • How much money do you have in your checking and savings accounts?
  • Do you own a house?
  • Do you have investments or other assets (e।g., a car)?

Character

  • Have you had credit in the past?
  • How many credit accounts do you have?
  • Have you ever:
  1. Filed for bankruptcy?
  2. Had any outstanding judgments?
  3. Had property repossessed or foreclosed upon?
  4. Made late payments?


Collateral

  • Do you have assets to provide as collateral to secure the loan beyond your capacity to pay it off?

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Information on "Opt Out"

If you prefer to limit the promotions you receive or do not want marketers and others to have your personal financial information, you must take some important steps. Federal privacy laws give you the right to stop or “opt out of” some sharing of your personal financial information. You can opt out of most information sharing with other companies.

However, you cannot opt out and completely stop the flow of all your personal financial information.

For example, the law permits a financial company to share certain information about you without giving you the right to opt out. The company might give your information:

  • To firms that help promote and market products offered by the company itself or
    jointly with another company.
  • To firms that provide data processing and mailing services for your company.
  • When a court orders it to do so.
  • To credit bureaus about your payment history on loans.

If you do not opt out within a reasonable period of time (generally about 30 days after the company mails the notice), the company is free to share certain personal financial information.


If you did not opt out the first time you received a privacy notice from a financial
company, it is not too late. You can always change your mind and opt out of certain
information sharing. Contact your financial company and ask for instructions on how to opt out.

Remember, your opt-out does not apply to personal financial information shared before
you opted out. In addition, you can call a toll-free number to opt out of receiving most pre-approved offers of credit or insurance. To opt out,
call 888-5-OPTOUT (567-8688)or visit http://www.optoutprescreen.com/


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FDIC Insurance Coverage



The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects against the loss of insured deposits if an FDIC-insured bank or savings association fails. FDIC deposit insurance is backed by the full faith and credit of the United States government. Since the FDIC was established over 75 years ago, no depositor has ever lost a single penny of FDIC-insured funds.

FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit (CDs). FDIC insurance does not, however, cover other financial products and services that insured banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or municipal securities.

There is no need for depositors to apply for FDIC insurance or even to request it. Coverage is automatic. The FDIC provides the maximum insurance coverage allowed by law. For additional information please visit www.fdic.gov/deposit.

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Avoid Identity Theft

What is identify theft?
Identity theft occurs when someone uses your personal information to obtain credit cards and loans or conduct other financial transactions in your name. These fraudulent transactions can affect your credit rating and finances if they are not identified and handled immediately.

How can you avoid identify theft?
How to minimize the risk of identity theft
  1. Protect your Social Security Number (SSN), credit card and debit card numbers,PINs (personal identification numbers), passwords, and other personal information.
    Never provide this information in response to an unwanted phone call, fax, letter,or
    email, no matter how friendly or official the circumstances may appear.To minimize the harm that arises from a lost or stolen wallet, carry only the identification, checks, credit cards, and debit cards you really need. The rest, including your Social Security card, are best kept in a safe place at home. Also, be extra careful if you have housemates or if you let others into your house, because they may find personal information and use it without your knowledge.
    Likewise, do not preprint your Social Security number, phone number, or driver's license number on your checks. It is easy for someone who sees your check to copy this personal information and even sell it to an identity (ID) thief. Remember that you have the right to refuse requests for your SSN from merchants, because they may have other ways to identify you. If your Social Security number is on your driver's license, ask to use another number.
  2. Protect your incoming and outgoing mail.
    Chances are that your mail carrier will deliver a credit card or bank statement, an
    envelope containing a check, or other items that can be very valuable to a thief. Or
    perhaps you will mail a check or papers containing account numbers or other personal
    financial information.

    For incoming mail: Try to use a locked mailbox or other secure location, such as a Post Office (P.O.) box. If your mailbox is not locked or in a secure location, try to promptly remove mail that has been delivered or move the mailbox to a safer place. When ordering new checks, ask about getting the boxes delivered to your bank branch instead of having them mailed to your home and running the risk of finding them sitting outside your front door.

    For outgoing mail containing a check or personal information: Deposit it in a US Postal Service blue collection box, hand it to a mail carrier, or take it to the post office instead of leaving it in your doorway or home mailbox. A mailbox that holds your outgoing bills is a prime target for thieves who cruise neighborhoods looking for account information. Even worse is putting up the flag on a mailbox to indicate that outgoing mail is sitting there.
  3. Sign up for direct deposit.
    Sign up for direct deposit of your paycheck or state or federal benefits, such as Social Security. Direct deposit prevents someone from stealing a check out of your mailbox and forging your signature to access your money.
  4. Keep your financial trash "clean."
    Thieves known as "dumpster divers" pick through garbage looking for pieces of paper
    containing Social Security numbers, bank account information, and other details they canuse to commit fraud. Examples of valuable trash include insurance information containing your SSN, blank checks mailed by financial institutions with offers to "write yourself a loan," canceled checks, and bank statements.

    Your best protection against dumpster divers? Before tossing out these items, destroy
    them, preferably using a crosscut shredder that turns paper into confetti that cannot
    easily be reconstructed.
  5. Keep a close watch on your bank account statements and credit card bills.
    Monitor these statements each month and contact your financial institution immediately if there is 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 are a victim of fraud or theft, your protections may be stronger if you report the problem quickly and in writing.

    Contact your institution if a bank statement or credit card bill does not arrive on time. Such missing mail could be a sign someone has stolen your mail and/or account
    information and perhaps has changed your mailing address to run up big bills in your
    name from another location.
  6. Avoid ID theft on the Internet.
    "Hackers" and scam artists are finding ways to steal private information transmitted over the Internet or stored on computer systems. You can protect yourself while shopping, banking, emailing, or surfing the Web. For example, never provide bank account or other personal information in response to an unsolicited email or when visiting a Website that does not explain how your personal information will be protected.

    “Phishing” scams that arrive by email typically ask you to "update" your account
    information. However, legitimate organizations would not ask you for these details
    because they already have the necessary information or can obtain it in other ways. Do not respond to these emails, and do not open any attachments unless you independently confirm the validity of the request by contacting the legitimate organization the way you usually would, not by using the email address, Website, or phone number provided in the email. If you believe the email is fraudulent, consider bringing it to the attention of the Federal Trade Commission (FTC). If you do open and respond to a phony email, contact your financial institution immediately.

    To get more information about computer security and safeguarding personal information, visit the Federal Trade Commission's Website at www.ftc.gov/infosecurity. For more about avoiding phishing scams, or to obtain a brochure with tips on avoiding identity theft, visit http://www.fdic.gov/.
  7. Exercise your new rights under the Fair and Accurate Credit Transactions Act
    (FACTA) to review your credit record and report fraudulent activity. Your credit report, which is prepared by a credit bureau, summarizes your history of paying debts and other bills. Credit reports are used by lenders, employers, and others
    who have a legal and legitimate need for the information.

    FACTA allows you to get one free credit report each year from each of the three major
    credit bureaus that operate nationwide – Equifax, Experian, and TransUnion – with just a single phone call, letter, or electronic request. This is a change from previous law, because you can get a copy even if you do not suspect ID theft or any other problem withyour credit report. (See more details at http://www.annualcreditreport.com/, or call 877-322-8228.)

    After you get your credit report, look for warning signs of actual or potential ID theft.These include mention of a credit card, loan, or lease you never signed up for andrequests for a copy of your credit record from someone you do not recognize (which
    could be a sign that a con artist is snooping around for personal information).
  8. Get more information.
    Visit the Federal Trade Commission Website: www.ftc.gov/idtheft/, or
    call 877-IDTHEFT(438-4338)

    What to do if you suspect you are a victim of identity theft:

The FTC recommends the following actions if you believe you are a victim of identity theft. You
can also call the FTC’s Identity Theft Hotline at 877-IDTHEFT (438-4338) or visit
http://www.ftc.gov/idtheft/.

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Social Security Benefits

What is Social Security?
Social Security is a potentially valuable insurance plan. On some pay stubs, this is called FICA, which stands for Federal Insurance Contributions Act. Social Security is generally subtracted from your gross income, along with other important taxes.

Where does the money go?
Social security provides taxpayers with many important benefits. These benefits include:
  • Retirement coverage: Benefits paid every month to eligible retired workers, as early as
    age 62
  • Disability coverage: Benefits paid every month to eligible workers of all ages who have
    a severe disability
  • Family coverage: Benefits paid every month to the spouses and children of eligible
    retired and disabled workers
  • Survivors coverage: Benefits paid every month to the eligible widow or widower and
    children of a decreased worker
  • Medicare benefits: Provides help with hospital bills, as well as limited coverage of skilled
    nursing facility stays, hospice care, and other medical services at age 65 or younger, if
    you become disabled

If you are 25 or older and are not already receiving Social Security benefits…
You will receive a Social Security statement just before your birthday every year during your working years. You can also call 1-800-829-1040 to request a copy. This statement reflects your earnings and the Social Security taxes paid on your behalf. The statement also provides estimates of the monthly Social Security retirement, disability, and survivors benefits you and your family could be eligible to receive.

Is there a reason why you might not receive a Social Security Statement automatically?
You won't receive a Social Security Statement automatically if:

  • you are already receiving Social Security benefits on your record, or
  • if there is not a current mailing address for you, or
  • you are age 62 or older and receiving Social Security benefits on someone else's record, or
  • you are a Medicare beneficiary, or
  • you requested a Statement within the past 11 months or
  • you are under the age of 25.

For more information please visit http://www.socialsecurity.gov/


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