BUSINESS & FINANCE
card issuer to skip a payment,” said Luke W. Reynolds, Chief of the FDIC’s Community Affairs Outreach Section. “It’s likely that interest will still be charged, so you’ll actually be paying more in interest because you’ll carry a higher balance on your card for a longer period of time.” In addition, pay your credit card bill on time. One reason is to avoid late fees. Another is that late pay- ments can damage your credit record. If repeated, they could even trigger interest rate increases on your credit cards and loans. n With your checking account, avoid fees for insufficient funds and bounced checks. “Record every depos- it and withdrawal in your checkbook — especially remember your debit card purchases and ATM withdraw- als,” said Reynolds. “It is important to know how much money you have in your account so you won’t overdraw your balance.” Your bank may offer various
“overdraft protection” services for your checking account, but be aware that these come with their own costs. Reynolds added that one of the least expensive options could be to ask your bank to cover insufficient funds by automatically transferring money from your savings account. n At the ATM, limit or avoid “sur-
charges” (access fees) by using your own bank’s machines or those owned by institutions that don’t charge fees to non-customers. If you definitely need cash when you’re out of town or otherwise not near an ATM owned by your bank, consider getting cash back when you use a debit card to make a purchase at a supermarket or another merchant. n Don’t be afraid to ask for a
break. Bounce a check or send in a late payment for the first time ever? Think the fees for your mortgage applica- tion are a bit steep? Depending on the circumstances, your bank might be willing to reduce or waive a fee or penalty, especially if you’ve been a good customer and don’t have a his-
46 HISPANIC NETWORK MAGAZINE
tory as a “repeat offender.” Understand your FDIC insurance
coverage so you can be fully protect- ed if your bank fails. If you (or your family) have $100,000 or less in all of your deposit accounts at the same in- sured bank, you don’t need to worry about your insurance coverage. Your deposits are fully protected under fed- eral law because the basic insurance coverage is $100,000 per depositor per insured institution. You also may qualify for more than
$100,000 in coverage at one insured bank. For example, the money you have in your individually owned ac- counts (not including your retirement accounts) is insured up to $100,000 sep- arately from your share of any joint ac- counts at the same bank. Deposits des- ignated to pass to named beneficiaries upon the death of the owner, such as in payable-on-death accounts, also can be insured for more than $100,000 under certain circumstances. And, some re- tirement accounts (notably Individual Retirement Accounts) are insured up to $250,000. Remember that investments can
lose value. Investment products in- clude stocks, bonds and mutual funds. Over the long term, investments might produce higher returns than bank de- posits. However, investments are not deposits, they are not FDIC-insured — not even the ones sold through FDIC- insured institutions — and they can lose value. Because of the risks associ- ated with any investment, always deal with a reputable, licensed salesperson and research the product before mak- ing a purchase. Certain annuities are a type of in- vestment. In general, an annuity is a contract with an insurance company. The consumer makes one or more pay- ments to the insurer, as an investment, and the insurer agrees to make a series of income payments to the consumer as long as he or she lives. Be particularly careful before investing in “variable” annuities, which frequently come with high fees and penalties if you with- draw money early.
Celebrating 19 Years of Diversity Be cautious when borrowing
against the “equity” in your home. If you have property valued at $300,000 and you owe $100,000 on your mort- gage, your equity is $200,000. Home equity loans and lines of credit are ways that homeowners can borrow money using their home’s value as col- lateral and gradually pay it back.
Home equity products are relatively
low-cost ways to borrow money, but they must be repaid like any other loan. Especially important to remember is that if you cannot pay a home equity loan, you risk losing your home. Prepare for the unexpected. Have
adequate insurance, especially for life, health, disability, personal liability, and coverage of property. Review your coverage annually to ensure that it is up to date. Consult an attorney or another
trusted advisor about having a will and/or establishing a formal “trust” to specify how your bank accounts, prop- erty and other assets should be dis- tributed upon your death. Periodically review your life insurance policies and retirement accounts — especially after a birth, death, divorce or other major life event — to ensure that the named beneficiaries are correct. Also build an emergency savings
fund, preferably of about three to six months of living expenses, so you have ready resources you can tap to pay your mortgage, insurance or costly home re- pairs or medical bills. The safest place for emergency savings is a federally in- sured deposit account. Simplify your financial life. Have
your pay and benefit checks depos- ited directly into your bank account. Arrange to automatically pay for re- curring expenses, such as a mortgage loan, insurance premium or utility bill. Banking and bill paying online or by phone also can be good options. These and other ideas can help you
save time, reduce stress, eliminate clut- ter, lower the fees you pay, and maybe help you earn a little extra on your sav- ings and investments. Source:
mymoney.gov
www.hnmagazine.com
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