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Summer 2016

Choosing and Using the Right Account Tips for getting more out of your checking and savings

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Depositing a Check Small Charges on Your The FDIC’s Greatest Hits: Preparing Your Finances Smart: The FDIC’s With Your Smartphone Credit or Can Popular Topics for a Flood, Fire Free Financial or Tablet Signal a Big Crime for Readers or Other Disaster Education Curriculum

FEDERAL DEPOSIT INSURANCE CORPORATION Whichever method you choose, Choosing and Using the Right track every transaction — be it a Tips for getting more out of your checking and savings deposit, check, ATM transaction, debit card transaction or online bill When managing your money, Read the agreement from the payment — to handle your money the right tools can make all the bank that describes the account’s effectively and avoid spending more difference. That’s why it helps to terms and conditions before than you’re comfortable with. You start by opening a bank account making a final decision. Federal also can monitor your transactions that best fits your lifestyle and your rules require certain information to using online services provided by financial goals.FDIC Consumer be disclosed to consumers before your bank. In addition, many News provides some simple pointers opening an account. You can review offer alerts via email or text to to help you choose wisely and a bank’s account agreements online notify customers when their account streamline how you manage your or by stopping by a branch. Looking balance drops below a specified level checking and savings accounts. at a legal document may appear or when a check has cleared. intimidating or time-consuming, Before You Open an Account Understand how to avoid overdraft but many banks offer simplified fees for withdrawing more than Consider what you need or want disclosures and knowing how the what is in your account. Opening from a bank account. Think about account works is worth it to ensure a checking account has long your day-to-day life and how you like that you understand all aspects of been the way customers establish to handle your money. For example: the account, including the potential a relationship with a financial Do you receive a fixed paycheck or fees and when they may be assessed. institution. However, a traditional pension on a regular basis or does That’s the best way to avoid surprises. checking account may not be for the amount and frequency of your income vary? Do you prefer to pay for purchases using cash, credit cards, debit cards, paper checks or online bill-paying services? Is one of your personal financial goals to set aside money regularly for savings? Are you concerned about possible overdrafts and the fees you might incur as a result? The answers to questions like these will help you make an informed decision about opening a bank account that works for you. Comparison shop. There are many types of bank products and services, and the fees, interest rates and special promotional offers will vary from institution to institution. Some banks will charge fees for using another bank’s automated teller machines (ATMs), while others won’t charge fees and they may even reimburse customers for fees (up to a certain dollar amount) charged by the ATM owner. So if you often withdraw cash from ATMs, you may want to look closely at how ATM fees are handled before signing up. Managing an Account everyone and can quickly become Also, some bank accounts may have harmful to your finances if you’re minimum balance requirements or Follow your transactions and not careful about incurring fees, monthly maintenance fees. Many balance your accounts. Some including overdraft fees. banks will reduce or even eliminate consumers use pen and paper, these requirements if you have a check register, a computer Today, many financial institutions your paycheck directly deposited spreadsheet, a website or an app offer a “checkless” checking account. or you have a minimum number of to ensure that they stay on top of These types of accounts generally electronic transactions. what is happening in their accounts. do not come with the ability to write

FDIC Consumer News Summer 2016 2 paper checks, but enable customers an overdraft fee. Find out how the “Be aware of limitations on how to pay bills, make purchases fees compare by reviewing the bank’s soon you can withdraw funds from and otherwise withdraw money account agreement or fee schedule. a without electronically by banking online or These documents are usually paying a penalty, and restrictions using debit cards or mobile apps. available online or can be picked up on the number of withdrawals at a local bank branch. during a month from a savings Checkless accounts may be a great account,” said Luke W. Reynolds, option for consumers who prefer The easiest way to avoid overdraft chief of the FDIC’s Outreach and to use their computer, smartphone charges is to keep a close eye on Program Development Section. or other mobile device for banking. your account balance and on how “Your institution may also offer a Generally, these accounts do much you plan to spend. Also, make different checking account product not come with the ability to be sure you have enough in the account that pays a higher rate of interest, overdrawn, so users will not be to cover any automatic (typically but you might need to meet certain subject to the high overdraft or monthly) payments you have set up. requirements, such as having a set insufficient funds fees that come with number of debit card withdrawals many traditional checking accounts. post to your statement during the For those who prefer typical Track every transaction — be it a month. Be sure you are likely to meet checking accounts, a careful deposit, check, ATM transaction, any requirements based on how you decision should be made regarding normally handle your finances.” whether or not to “opt in” (agree) debit card transaction or online Help guard your accounts from to overdraft coverage. Most banks bill payment — to handle your theft and fraud. Check your offer overdraft programs that money effectively and avoid accounts regularly for suspicious allow customers to make ATM transactions. Protect your passwords withdrawals or perform certain spending more than you’re and PINs. Also avoid clicking debit card transactions that exceed comfortable with. on links or responding to emails the customer's available balance. requesting personal information These overdraft transactions trigger such as Social and bank fees that may reach $35 or more Direct deposit your pay and account numbers, no matter how per overdrafted item, but banks benefit checks. Direct deposit legitimate they may look. That’s are only allowed to assess fees for allows your money to be safely and because criminals create fictitious paying an ATM or one-time debit securely electronically deposited websites and emails claiming to be card transaction if the customer has into your bank account. With this from government agencies or trusted opted in to overdraft coverage. feature you don’t have to worry companies. In general, legitimate about finding time to make deposits If you choose not to opt in, be aware companies will never contact you yourself. Using the service may also that ATM and one-time debit card unprompted requesting sensitive help you with savings, as you can transactions that go over the amount information. Contact your bank set up your direct deposit to have of funds in your account will be to learn more about the security a certain amount from each check declined. features it offers or tips it suggests automatically sent to your savings for customers. “Think carefully before deciding account. to opt into this kind of fee-based The bottom line: Having a bank In addition, some banks offer overdraft program,” said Heather account brings important benefits, incentives if you sign up for St. Germain, a senior consumer including access to safe and direct deposit, such as increasing affairs specialist at the FDIC. “You affordable in good the account’s interest rate or could be charged several overdraft times and bad. If you choose well waiving certain minimum balance fees in a single day because most and manage wisely, your banking requirements and fees. banks will assess a separate fee for relationship can evolve and grow as each transaction that exceeds your Earn more interest, but be you do — affording you access to account balance, so the costs can mindful of any conditions. If you more options for credit, savings and add up quickly.” have money in your checking account investment when you are ready and that you do not expect to use right when you need them. Another option is to ask your away, moving it to a bank if you can link your savings For more tips and information on or a certificate of deposit (for a account to your checking account opening and managing a checking set period of time) can be a good to automatically transfer funds to or savings account, search by personal-finance strategy for building cover transactions when you don’t topic in recent issues of FDIC short-term savings and earning have enough money in your checking Consumer News (at www.fdic. more interest. But before switching account. A bank may charge a fee gov/consumernews) and at www. accounts, find out if there may be for this automatic transfer service, mymoney.gov. restrictions or requirements. Q but the fee is typically smaller than FDIC Consumer News Summer 2016 3 How Do You Deposit a Check with Your The FDIC’s Greatest Hits: Smartphone or Tablet? Popular Topics for Readers Start by taking photos ... and taking precautions Take a look at what many consumers available for withdrawal. “If you are interested in reading (based in do not find this information on the large part on "hits" on the FDIC's bank’s app or website, talk to an website) and consider which ones employee,” said Luke W. Reynolds, you might find helpful. Chief of the FDIC’s Outreach and Protecting Your Plastic from Program Development Section. High-Tech Criminals “Also confirm the cutoff time for (www.fdic.gov/consumers/ deposits to be considered received consumer/news/cnspr13/ that day; this may not be the same protectplastic.html) as the bank’s normal closing time.” Financial Tips for Seniors Take steps to avoid potential (www.fdic.gov/consumers/ At an increasing number of banks, problems. RDC creates the consumer/news/cnsum13) consumers can use a smartphone risk that a check could be or tablet to deposit a check into deposited more than once. That 5 Common Misconceptions their account from anywhere they could happen accidentally if, for About FDIC Insurance ... and can access their account remotely. example, a wife deposits a check the Real Facts Simply endorse the check (just like electronically using RDC and then https://www.fdic.gov/consumers/ you would at the ATM or teller), her spouse, not realizing that the consumer/news/cnfall14/ use your mobile device to snap a check is already deposited, sees the misconceptions.html photo of the front and back, and paper check and deposits it at the You’ve Been Turned Down for deposit the check using the bank’s bank. Or, a fraudster could steal a Checking or Savings Account. mobile application (app). a check, alter it and attempt to Now What? This service — often called “remote deposit the funds. (www.fdic.gov/consumers/ deposit capture” or RDC — is Shaw advises writing “for mobile consumer/news/cnfall13/ becoming more common at banks deposit only” or “deposited” on deniedchecking.html) and more popular with consumers. the back of the paper check and When a Broker Offers a Bank Still, there are potential costs and securely storing the check for as CD: It Pays to Do Some Research security risks. FDIC Consumer long as required according to your (www.fdic.gov/consumers/ News is offering our latest tips and bank’s policies. After the bank’s consumer/news/cnspr13/ reminders. recommended retention period cdsfrombrokers.html) Review and understand your ends, RDC users should shred the Need to Stop a Payment? Know bank’s RDC policies and fees. paper check. Who to Contact and How This information will generally Always monitor your accounts. (www.fdic.gov/consumers/ be on the bank’s app or website. As you would if you were consumer/news/cnwin1213/ “For example, find out if there is depositing money any other way, stoppayment.html) a limit on the total dollar amount make sure deposits and other or number of checks that you can transactions have been properly Shopping Tips for and deposit via RDC in a certain time posted to your account. “You Credit Cards: Ways to be a period,” said Deborah Shaw, an can check your account online or Better-informed Consumer FDIC senior technology specialist. through the mobile app,” Shaw (www.fdic.gov/consumers/ consumer/news/cnfall15) Additionally, you should determine said. “Your bank also may provide how long the bank requires you to email alerts about changes in and Payments: keep the original check after you account balances or unusual activity New Uses for Phones...and deposit it using RDC. on your account.” She added that Even Watches your bank also may be able to (www.fdic.gov/consumers/ Confirm when the funds from notify you by email or text message consumer/news/cnsum15/ your deposited check will be when RDC deposits are posted mobilebanking.html) made available to you. Federal to your account or if there is a rules allow banking institutions to problem with a deposit. Person-to-Person (P2P) Payments put a temporary “hold” on certain Online: What to Know Before You deposits, and require institutions For more help or information Click and Send That Money to provide disclosures to customers regarding remote deposits, contact (www.fdic.gov/consumers/consumer/ your bank. stating when their funds will be Q news/cnspr14/p2p.html ) Q FDIC Consumer News Summer 2016 4 card accounts, it is a good idea to When Small Charges Can Signal a Big Crime check them regularly, perhaps weekly, Counting every penny on your credit and debit card statements for suspicious activity.” can help detect fraud Immediately contact your bank Most people looking at their bank investment or payment purposes, many or issuer if you see a statements would probably notice if banks and other payment providers transaction that you didn’t authorize their credit or debit card were used may make test charges or deposits of and ask for it to be reversed. Debit without their approval to purchase a less than $1 to verify that the proper card users in particular should big ticket item, and they would quickly arrangements have been made. promptly report an unauthorized call their bank or card issuer to report transaction. While federal protections the error or fraudulent transaction. for credit cards cap losses from But consumers are less likely to be “When thieves fraudulently fraudulent charges at $50, a suspicious of very small charges, obtain someone else’s credit or consumer’s liability limit for a debit including those less than a dollar ... debit card information and card could be up to $500 or more if which is why criminals like to make you don’t notify your bank within two them. create a counterfeit card, they business days after discovering the theft. “These small transactions might be might test it out with a small signs that someone has learned your transaction — like buying a pack Also ask your bank or credit card issuer account information and is using it of gum or a soda — to make sure about additional precautions it could to commit a crime,” said Michael take to prevent fraud on your account. Benardo, manager of the FDIC's the counterfeit card works before “For a period of time, it might Cyber Fraud and Financial Crimes using it to make a big purchase,” monitor your account more closely Section. “That’s why it’s important said Michael Benardo, manager for fraudulent transactions,” Benardo to be on the lookout for fraudulent said. “Or, it may determine that the transactions, no matter how small.” of the FDIC's Cyber Fraud and best course of action is to close your Financial Crimes Section. current account and issue you a new He added, “When thieves fraudulently card with a new account number.” obtain someone else’s credit or debit card information and create a What can consumers to do protect To learn more about how to keep counterfeit card, they might test it out themselves? Be on the lookout for your credit and debit cards safe from with a small transaction — like buying small transactions you don’t think fraud, see our article in the Spring a pack of gum or a soda — to make you’ve conducted or authorized. “The 2013 FDIC Consumer News (www. sure the counterfeit card works before best way to catch this kind of fraud fdic.gov/consumers/consumer/news/ using it to make a big purchase. If this is to regularly and thoroughly review cnspr13/protectplastic.html). For more test goes unnoticed by the true account your bank and credit card statements about your consumer protections, see holder, thieves will use the card to buy to look for transactions that you didn’t our Winter 2016 issue (www.fdic.gov/ something expensive that they want or initiate,” Benardo said. “If you have consumers/consumer/news/cnwin16/ that they can easily sell for cash.” online access to your bank and credit limit_losses.html). Q In one example, the Federal Trade Commission alleged that a group of individuals stole nearly $10 million by making charges to more than a million credit and debit cards that went unnoticed by most of cardholders because the transactions ranged from 20 cents to $10. Even a small deposit in your checking or savings account that you weren’t expecting could be a sign that criminals have learned your account information and are trying to link your account to theirs so they can fraudulently withdraw money, perhaps your entire balance. Note: Be aware that if you ask to link your accounts at two different financial institutions, such as when setting up automatic transfers for

FDIC Consumer News Summer 2016 5 Preparing Your Finances for a Flood, Fire or Other Disaster: Having a Plan Without warning, a flood, fire or checks and conduct other transactions other disaster could leave you with a using your smartphone or other severely damaged home, destroyed mobile device. (See the article on belongings and barriers to managing remote deposits on Page 4.) your finances. Gather and organize important Many people think of disaster documentation. Here are suggestions preparedness as having a stockpile of for what to collect, followed by where water, canned food, and flashlights, to keep these items: but people also need access to cash • A list of phone numbers, web and financial services. That’s why addresses and other contact it is important to include financial information for your bank, brokerage preparedness in your disaster plans. firms and insurance companies. Here is our latest summary of important preparations. • Originals and copies of identification Photo: Federal Emergency Management Agency documents such as your driver’s Periodically review your insurance license, passport, Social Security card to encrypt the sensitive material and coverage. You should have enough and birth certificate. These will be set your phone security to require a insurance to cover the cost to replace helpful if you have to prove you are PIN, a password, your thumbprint or or repair your home, car and other who you say you are. While it is best to another option recommended by your valuable property, as well as temporary have originals, it is important to have phone manufacturer to unlock your housing if you are displaced from copies in case the originals are lost or screen. your home. Those who do not own a destroyed. home should have renters insurance. • A safe deposit box at your bank: Also, make sure that you have the • Copies of credit and debit cards This may be the best place for right kind of coverage for the types of (front and back) and a check (front). important documents that will be disasters likely to occur in your area. During an emergency, you may need difficult or impossible to replace, and For example, homeowner’s insurance your account information from these that you won’t need to access. In case does not typically cover events such as documents to authorize payments over there’s a flood or other water damage, flooding or earthquakes, so you may the phone. seal these items in waterproof plastic want to consider whether you need bags or containers. Some states do • Originals and copies of insurance additional coverage. not allow immediate access to a safe cards and documentation of health, deposit box after death, so talk to a Build and maintain an emergency homeowner/renter, auto and life lawyer before deciding whether to savings fund. While your personal insurance coverage. leave your original will in your safe hazard insurance should cover most • An inventory of valuable personal deposit box. or all of the damage to your home property. “It’s fairly easy to take a and property, an emergency savings • A waterproof emergency video of your property, but you should fund deposited in an insured financial evacuation bag: In addition to also separately document the value of institution can provide for immediate personal safety items, it should include the items by keeping receipts, written expenses and help fill the gaps. copies of some of the important appraisals, and documentation of any documents discussed above (except Sign up for direct deposit of your home improvements,” Sen noted. perhaps a copy of your Social Security paycheck or government benefits. • Records of property ownership, such card or number in case your bag is lost “In a disaster, taking care of simple as a copy of your most recent property or stolen) and a small amount of cash things like depositing a check can be tax bill. (large amounts of cash are better off overwhelming,” said Surge Sen, chief in your FDIC-insured bank account). of the Supervisory Policy Section in Think about what to keep where. Keep your evacuation bag in a safe and the FDIC’s Division of Depositor and The following are options to consider. secure place in your home. Consumer Protection. “Direct deposit • Digital storage: Many documents will help you avoid missing out on For more information, including how can be kept electronically. When important income during a disaster.” to assemble a preparedness kit to grab deciding which documents to keep and go if you had only a few moments Consider arranging for online and/ electronically, security and access are to evacuate your home, read tips from or mobile banking. Your bank branch major considerations. Among other FEMA — the Federal Emergency may be temporarily inaccessible after things, consider whether and how Management Agency — at www.ready. a disaster. Most bank accounts enable to access the documents using your gov. Q you to pay bills online and deposit smartphone or a computer. Be sure

FDIC Consumer News Summer 2016 6 Updates and Reminders FDIC Consumer News The FDIC also has added a Web The Federal Trade Commission page to help consumers understand has recently issued consumer Published by the Federal Deposit when deposit insurance coverage information on how to avoid money Insurance Corporation would apply to funds on their wiring scams. For tips and a video on Martin J. Gruenberg, Chairman prepaid cards. A variety of entities how to spot requests to wire money market prepaid cards that state that to a thief posing as someone else, Barbara Hagenbaugh, Deputy to the they offer FDIC deposit insurance start at www.consumer.ftc.gov/blog/ Chairman for Communications coverage to cardholders. The new avoiding-money-wiring-scams. For David Barr, Assistant Director, page makes clear that the prepaid card additional guidance, see our Summer Office of Communications (OCOM) a consumer selects is insured by the 2013 article “Don't Get Taken by Jay Rosenstein, Senior Writer-Editor, FDIC if specific deposit insurance Scams” (www.fdic.gov/ OCOM requirements are met, and that the consumers/consumer/news/cnsum13/ coverage only applies if the bank fails wire-transfer-scams.html). Aileen Wu, Graphic Designer and not, for example, if the card is lost A series of “Newcomer’s Guides to FDIC Consumer News is produced or stolen. Learn more at www.fdic. Managing Money” from the CFPB quarterly by the FDIC Office of gov/deposit/deposits/prepaid.html. can help recent immigrants avoid Communications in cooperation with Educational resources from the financial pitfalls. The publications other Divisions and Offices. It is intended to present information in a federal government can help outline basic financial concepts for nontechnical way and is not intended to seniors avoid scams. One is a guide those new to the United States, be a legal interpretation of FDIC or other from the Securities and Exchange including those with limited English government regulations and policies. Commission and the Consumer proficiency, covering topics such as Due to periodic changes in statutes and Financial Protection Bureau (CFPB) receiving wages or other payments, agency rules, always check the FDIC Web to help adults prepare for a time when opening a checking account, site — www.fdic.gov — for up-to-date they may lose the ability to manage paying bills and selecting financial information. Mention of a product, their money or property because of products and services. The guides service or company does not constitute a serious illness or advanced age. also include information on how to an endorsement. This publication may Called “Planning for Diminished submit a complaint. Both English- be reprinted in whole or in part. Please Capacity and Illness” (online at www. and Spanish-language versions are credit FDIC Consumer News. sec.gov/oiea/investor-alerts-bulletins/ available. To learn more, start at ib_illness.html), this guide features www.consumerfinance.gov/blog/ Send your story ideas, comments, tips on creating and organizing the-newcomers-guides-to-managing- and other suggestions or questions to: Jay Rosenstein, Editor, FDIC Consumer important documents and getting money. And for educational resources News, 550 17th Street, NW, Washington, help sooner rather than later from from the FDIC in Spanish, including DC 20429, e-mail [email protected]. trusted individuals. The resources can tips for parents and caregivers to help be useful for adults preparing for the children learn more about money, Find current and past issues at future as well as those who may be start at https://fdic.gov/quicklinks/ www.fdic.gov/consumernews or request helping a parent or loved one who has spanish.html. paper copies by contacting the FDIC diminished financial capacity. Public Information Center. Call toll-free Reminder: As children go back to 1-877-ASK-FDIC (1-877-275-3342) or The CFPB separately offers tips school, parents and teachers can e-mail [email protected]. for seniors on how to work with go to the FDIC’s website for free a financial institution to reduce resources on helping young people Subscriptions: To receive an e-mail the risk of financial abuse (go to learn about money management. notice about each new issue with links www.consumerfinance.gov/blog/ These include age-appropriate tips to stories, go to www.fdic.gov/about/ subscriptions/index.html. To receive older-americans-are-not-alone-in- and conversation-starters in the FDIC Consumer News in the mail, free the-fight-to-stop-financial-abuse). Spring 2015 FDIC Consumer News of charge, call or write the FDIC Public In addition, “Money Smart for (www.fdic.gov/consumers/consumer/ Information Center as listed above. Older Adults” is an educational news/cnspr15) and in our new tool from the FDIC and CFPB to “Money Smart for Young People” help prevent and respond to elder curriculum (www.fdic.gov/consumers/ For More financial exploitation. The resource consumer/moneysmart/young.html). Help or Information guide for consumers is at http://files. To access these and other FDIC Go to www.fdic.gov or call the FDIC consumerfinance.gov/f/201306_cfpb_ resources for parents and teachers, toll-free at 1-877-ASK-FDIC msoa-participant-guide.pdf. Materials start at www.fdic.gov/education. Q for educators are available at https:// (1-877-275-3342) catalog.fdic.gov.

FDIC Consumer News Summer 2016 7 Money Smart at 15: The FDIC’s Free Financial Education Curriculum The key to building a financially Since its inception in 2001, Money secure future is making financially Smart has grown from financial sound decisions starting today. For the education just for adults to a range past 15 years, the FDIC has offered of curriculums including ones free financial education resources for children Pre-K through 12th through the Money Smart program grade, adults age 62 or older, and that can help consumers make more entrepreneurs hoping to achieve informed choices on matters from their dream of successful business shopping for a bank account to ownership. Along the way, more than avoiding unnecessary fees. three million people have received training using Money Smart. Money Smart materials are developed to help individuals learn on their own “Our research shows that adults who (including podcasts suitable for all ages participated in Money Smart training to learn financial lessons on the go) or were more likely to open deposit in a classroom, workshop or seminar. accounts, save money, use a budget, They are available online. The and comparison shop for financial curriculum also has been translated in services than they were before the multiple languages and is available in training,” said Luke W. Reynolds, large-print and Braille editions. And, chief of the FDIC’s Outreach and the FDIC’s Money Smart News is a Program Development Section. quarterly online newsletter featuring To learn more about the Money Smart tips, updates and success stories for family of products and resources, go to financial educators. It includes articles www.fdic.gov/moneysmart. on how the curriculum is used to help Q consumers of all ages.