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Banking

Banks, credit unions, or thrifts (also called "savings and loans") allow you to open accounts for managing money. Reasons people have an account include:

The following resources will help you choose an account that works for you and better understand banking options and regulations.

Correcting Bank Account Errors

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Do you check your bank account and credit account statements regularly? Do you go through a process to verify their accuracy? What do you do if there’s a problem?

We have consumer rights to correct account errors. The Fair Credit Billing Act and Electronic Fund Transfers Act establish procedures for resolving mistakes on credit account and bank account statements.

When many customers find a mistake on their bill, they pick up the phone and call the company to correct the problem. This is good to do but just telephoning doesn’t trigger the legal safeguards under the law. To be protected, you must send a separate written billing error notice to the creditor. Your notice must reach the creditor within 60 days after the first bill containing the error was mailed to you. This rule generally applies to ‘open end’ credit accounts, such as credit cards or revolving charge accounts, such as department store cards.

The Electronic Funds Transfer Act applies to electronic fund transfers in transactions using ATMs, debit cards, and other electronic banking transactions that can result in the withdrawal of money from your bank account. Under this law you again have 60 days to notify your financial institution of the problem.

However, if you misplace or lose a debit or credit card and do not report the missing card within two days of realizing it’s gone, you may lose from $50 to $500. Not reporting an unauthorized transfer or withdrawal within 60 days of the statement being sent to you puts you at risk for unlimited loss.

The word to the wise is to watch for and check your account statements, whether from the bank or a creditor, to safeguard your money.

Dealing With a Closed Checking Account

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Have you bounced yourself out of a checking account? Consumers who frequently write bad checks may find that their bank or credit union decides to close their account. This means it will be difficult to open another account at another financial institution.

Financial institutions track negative information related to how consumers use their account. This is done through a consumer reporting service. Under the Fair Credit Reporting Act, a bounced check may stay on your record for as many as seven years. Being on a check reporting systems’ list means you may have a hard time opening a checking account.

What steps can you take to fix a problem? First, order a free copy of a report on you, if there is one. You then need to review the report and dispute any incorrect information. Beware of companies that promise they will clean up your record for a fee. There is no quick fix for negative information that’s legitimately reported to a consumer reporting service.

Don’t give up on obtaining a traditional checking account. There are banks and credit unions that are willing to open checking accounts for people who have a negative past. These are often called ‘second chance’ checking accounts. But be sure to review the terms of the account including any fees that need to be paid and any conditions that need to be met for the account.

If you do get a new account, work hard to use the new account responsibly. That means closely monitoring the money going in and out of the account, including deposits, fees, debit card transactions, automatic payments and other withdrawals.

Avoid bouncing yourself out of another bank account.

Source

Order Your ChexSystems® Consumer Report. ChexSystems®, Inc. (2009). Woodbury, MN: ChexSystems®, Inc.

Money Transfer Scams

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Wiring money is like sending cash. Once it’s gone, you can’t get it back. That’s one reason scammers often insist that people wire money, especially to addresses overseas. It’s nearly impossible to reverse the transfer, trace the money, or track the recipients.

Money transfers can be useful if you want to send money to someone you know and trust. The recipient of a money transfer gets the money quickly, but again remember it is nearly impossible to reverse the transfer if you realize you’ve made a mistake.

Don’t wire money to a stranger or someone you haven’t met in person. That includes:

  • Anyone who insists on wire transfers for payment
  • An online love interest who asks for money
  • Someone advertising an apartment or vacation rental online
  • A potential employer or someone who is hiring you to be a mystery shopper
  • Someone who claims to be a relative or friend in need. They say they’re in a foreign hospital or jail, and they beg you not to tell the rest of the family.

A variation of this scam is when someone asks you to deposit a check for them, and then wire money back to them. The scam is that the check is a fake. It will bounce and you’ll owe your bank the money you withdrew. It can take weeks to uncover a fake check.

If you think you’ve wired money to a scam artist, contact the money transfer company immediately to report the fraud and file a complaint. Ask for the money transfer to be reversed. It’s unlikely to happen, but it’s important to ask. Then file a complaint with the Federal Trade Commission.

For more information see:

Insured or Not Insured: Bank Products

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

When you see the FDIC sign on a banks door or the NCUA sign on a credit unions door, which means that the products they offer are insured, right? The correct answer is that some may be insured and others may not be. Banking institutions have evolved into financial supermarkets.

What is insured includes checking accounts, money market deposit accounts, NOW accounts, savings accounts, certificates of deposit and retirement accounts placed in deposits at insured institutions. The insurance level is at least $250,000 per depositor per insured institution.

Products that are NOT FDIC or NCUA insured, even if purchased from a bank or credit union, are those that are investment risks which includes the potential loss of principal. This includes mutual funds, annuities, stocks and municipal bonds. Treasury securities and savings bonds are not insured by the FDIC or NCUA but are backed by the U.S. Government. Contents of safe deposit boxes also are not protected by FDIC insurance.

While as consumers we can benefit from the convenience of going to one provider for many different services, we also need to be aware of the risk of loss. Be a smart consumer by understanding the products that you purchase, regardless of where you purchase them.

Sources

Federal Deposit Insurance Corporation (FDIC). (n.d.) Symbol of confidence. Washington, D.C.: Federal Deposit Insurance Corporation (FDIC).

National Credit Union Administration (NCUA) Office of Consumer Protection. (n.d.). Share insurance coverage. Alexandria, VA: National Credit Union Administration (NCUA) Office of Consumer Protection.

Bank Mergers and FDIC Deposit Insurance

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

We have seen a number of bank closures or mergers for a number of reasons. So how does the FDIC protect customer deposits when two banks become one?

Basic FDIC insurance amount is $250,000 per depositor, per insured bank. That means that you could have $250,000 at one bank, $250,000 at another bank and be fully insured. What if the two banks merge? Or, what if one bank fails and is purchased by the other bank?

First of all, remember if the combined balance of all your deposits at the surviving bank is less than $250,000 do not worry. Your money is fully insured. And even if the combined total exceeds $250,000, there’s no immediate need to withdraw money or restructure accounts. The FDIC has a special rule. It says when two banks merge, a customer’s deposits will be considered to be separately insured for at least six months and possibly longer for certificates of deposit or CD’s.

The depositor has time to review their insurance coverage and options. With a CD the FDIC allows the insurance coverage to continue until the CD matures so that the CD owner doesn’t have to pay a penalty for early withdrawal. Only in the future, which may be years, will decisions needs to be made about how to insure the excess above $250,000.

The CD interest rate could be an issue if a bank fails and is acquired by another bank. The acquiring bank has the right to lower the CD interest rate that the failed institution was paying. If that happens, you can move your money to another financial institution without paying an early withdrawal penalty.

The FDIC has more information on their website. Stay calm if your bank fails but know your rights.

Depositing Checks Over the Internet

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

You don’t feel like walking or driving to the bank to deposit a check or even taking the time to mail it? Technology continues to change many banking tasks. Now being added to the electronic options of automatic bill payment and managing your account online is depositing a paper check. Not all banks offer this service but more will be adding this to their list of optional services.

In the banking and technology industries this is called "remote deposit capture" or RDC. This service is mostly marketed to small businesses that typically are paid by check and want to be able to quickly deposit those payments. However, this could be a convenient option for consumers as well.

The consumer would need a scanner to take an image of the check and a personal computer to transmit the image online. Another option would be a cell phone equipped with a digital camera to do the same thing. This technology may give a bank customer quicker access to the funds deposited over the Internet. Internet deposits are generally available in one or two business days as opposed to five business days for regular paper checks.

If you use remote deposit capture, ask your bank how to properly transmit the check images and how to safeguard your privacy, your equipment and the original paper checks.

In this age of technology, your scanner or cell phone could also be your bank teller. For more detailed information search the Federal Reserve Board website and search for "remote deposit capture".

Source

Kopchik, J. (2009, June 29). Remote deposit capture: A primer. Washington, D.C.: Federal Deposit Insurance Corporation (FDIC).

New Bank Overdraft Rules

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Bank regulations on overdrafts have changed. New rules went into effect the summer of 2010. It’s important to open the mail since banks will contact their customers about either "opting in" or "opting out" in authorizing and paying overdrafts on an ATM and everyday debit card transactions.

Overdrafts can be very costly — most are between $20 to $35 each! In the past, some bank automatically enrolled you in their standard overdraft services for all types of transactions when you opened an account. Under the new rules, the bank must get your permission before you can be charged fees for these services on everyday debit card and ATM transactions.

If you do not "opt in" or agree, your banks’ standard overdraft services won’t apply to these transactions. What will happen is that these transactions will be declined when you don’t have enough money in the account. It saves you from being charged overdraft fees. For some users this lessens the chance of that $1.99 coffee quickly purchased with a debit card costing $31.99!

The new rules do not cover checks or automatic bill payments that you may have set up for mortgage or utilities. Your bank may still automatically enroll you in their standard overdraft services for these types of transactions.

Stay informed on your banking account options — open your mail! Make a decision on "opting in" or "opting out." For more information online read the Federal Reserve fact sheet New Overdraft Rules for Debit and ATM Cards.

Source

Board of Governors of the Federal Reserve System. (2010, June 22). What you need to know: New overdraft rules for debit and ATM cards. Washington, D.C.: Board of Governors of the Federal Reserve System.

Mobile Banking Safety Tips

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Making purchases and banking by mobile device is usually safe, but that doesn’t mean that it is risk free. There are actions you can do to protect your information, accounts and mobile device.

  • Number one tip is to guard your mobile device like your wallet. Don’t lend your phone to anyone you don’t know and trust. Find out if there is a way to delete the device’s content if it is lost or stolen.
  • Create strong passwords for both your device and all your banking and payment apps. Don’t use "Remember me" options to store passwords or payment information on sites or in apps. And regularly change your passwords.
  • Log off and close the browser window or the app when you’re finished with transactions.
  • Don’t send sensitive information via email or instant message; these are not automatically encrypted.
  • Avoid landing on a spoofed website by bookmarking your bank’s website while on the legitimate site.
  • Download apps only from trusted sources. Before using a new app, look into its policy regarding disputed or unauthorized transactions.
  • Use your wireless carrier’s network rather than public Wi-Fi for shopping or banking. Always check for "https" instead of just "http" in the web browser address bar. This indicates the site is secure and encrypted.
  • Confirm before making a payment or purchase that you will get a receipt. Keep your receipt until you receive, and are satisfied with your purchase.
  • Monitor your account activity regularly — even weekly or daily.
  • Know how long it takes for your transactions to be processed so that you correctly time your payment requests, deposits and other activity.
  • If you lose your phone, contact your wireless provider immediately. Call your bank if you need help in deactivating text banking and change passwords.

Get the most from banking and making payments by mobile technology by doing it safely.

Source

Consumer Action. (2011, August 23). Your digital dollars: Mobile banking and mobile payments. San Francisco: Consumer Action.

Insured or Not Insured: Bank Products — Even if you see the FDIC sign or NCUA sign on a bank or credit union door, don't assume that all of the products they offer are insured. Transcript and audio (1:45)

Bank Mergers and FDIC Deposit Insurance — Find out how the FDIC protects customer deposits when two banks become one. Transcript and audio (2:05)

New Bank Overdraft Rules — New rules went into effect the summer of 2010. Transcript and audio (1:50)

Correcting Bank Account Errors — The Fair Credit Billing Act and Electronic Fund Transfers Act establish procedures for resolving mistakes on credit account and bank account statements. Transcript and audio (2:15)

Mobile Banking Safety Tips — Making purchases and banking by mobile device is usually safe, but that doesn't mean it's risk-free. Transcript and audio (2:15)

Depositing Checks Over the Internet — In this age of technology, your scanner or cell phone could also be your bank teller. Transcript and audio (1:40)

Money Transfer Scams — Wiring money is like sending cash — once it's gone, you can't get it back. Transcript and audio (1:55)

Dealing with a Closed Checking Account — Consumers who frequently write bad checks may find that their bank or credit union decided to close their account. Transcript and audio (1:55)

Other Recommended Resources

Dollar Works 2 — Teach others how to manage their personal finances and make sound decisions about money. This comprehensive curriculum has a unit on using a bank account.

Digital DollarsConsumer Action — Information, advice, and training to help consumers navigate the new online economy. Resources in English, Spanish, Korean, Vietnamese, and Chinese.

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