Winter 2013/2014
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
Be in Charge of
Your Credit CardsOur Latest Tips for Choosing and Using Them
Also Inside
10 Ways to Protect Your Personal
Information and Your Money
Money and Banking Tips for
the Tax Season
Test Your Deposit Insurance IQ
Do You Owe on a Home Equity
Line? Prepare for Rising Payments
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
Be in Charge of
Your Credit CardsOur Latest Tips for Choosing and Using Them
Also Inside
10 Ways to Protect Your Personal
Information and Your Money
Money and Banking Tips for
the Tax Season
Test Your Deposit Insurance IQ
Do You Owe on a Home Equity
Line? Prepare for Rising Payments
2Winter 2013/2014FDIC Consumer News
Credit cards can offer numerous benefits
to consumers, including a convenient
way to pay for purchases, the ability to
build a credit history, and the potential
for rewards. But to make the most
of your credit cards, it helps to be an
informed consumer. First, remember
that any purchase you make with your
credit card is a loan that must be repaid.
And as with any loan, it’s important to
select the right product for you and to
use it wisely.
To help you maximize the benefits and
avoid the potential pitfalls, here are our
latest tips for choosing and using credit
cards.
Choosing a Credit Card
Maximize your ability to get a good
credit card by ensuring that your
credit report is accurate. Correcting
inaccuracies may help you improve
your credit history and credit score,
which card issuers will consider when
deciding whether to offer you a card and
how they will determine your interest
rate and credit limit. You also can find
out if an identity thief has opened credit
cards or other accounts in your name
(see tip # 8 on Page 4).
By federal law, you are entitled to one
free copy of your credit report every
12 months from each of the three
major nationwide consumer reporting
agencies (also called “credit bureaus”)
— Equifax, Experian and TransUnion.
Each company issues its own report,
and because some lenders do not furnish
information to all three of them, it’s
useful to request your report from each
one in order to get a comprehensive
view of your credit history. Go to
www.AnnualCreditReport.com or call
toll-free 1-877-322-8228 to order free
credit reports or for more information.
If you find errors, each reporting agency
provides ways to ask for an investigation
and a correction. In addition, you can
request a correction directly from
the entity that supplied the incorrect
information.
“Your credit reports play a large role
in what credit you will qualify for, so
Be in Charge of Your Credit Cards: Our Latest Tips
it’s important that they be accurate,”
said Jonathan Miller, Deputy Director
for Policy and Research in the FDIC’s
Division of Depositor and Consumer
Protection (DCP). “If you find any
mistakes on a report, you have both a
need and a right to have them corrected.
And, be wary of companies that promise
to ‘fix’ your credit report. If there is
negative information that is legitimate,
there is no way to remove it, although
it will expire from your report after a
period of time.”
Determine what type of card best
meets your needs. First, think about
how you will use the card. In particular,
do you expect to pay your card balance
in full each month or carry a balance
from month to month?
If you don’t pay your card balance in
full each month, the best card for you
will likely be one with a low Annual
Percentage Rate (APR). But if you do
plan to pay in full each month, you
might instead focus on whether there is
an annual fee, rewards or other features,
such as a waiver of foreign transaction
fees (helpful for international trips or
purchases).
Shop around and compare product
terms and conditions. Although you
may receive credit card offers, don’t
assume these are the best deals for you.
If you decide you need to apply for a
card, compare multiple products from
several lenders. Various Web sites can
help you compare product offerings
from different institutions, but be aware
that some sites list only companies that
pay to advertise there.
What factors should you consider?
Federal law requires creditors to disclose
important rate and fee information to
you before you apply. “This enables you
to make apples-to-apples comparisons
for the most important factors,” pointed
out Elizabeth Khalil, an FDIC Senior
Policy Analyst.
Here is additional guidance on how to
compare key terms and conditions:
• Annual Percentage Rate: The APR
represents the annual cost of the credit.
In general, there are three types of
APRs that might be applicable to your
card: those for purchases, for balance
transfers from another card, and for
cash advances. Also pay attention to
introductory rates. Some credit offers,
such as balance transfers, come with
special low interest rates that will
increase after the promotional period.
• Fees: These can include annual fees,
balance transfer fees and cash advance
fees (in addition to any interest you
might pay), foreign transaction fees, and
penalties for late payments or returned
payments. Determine if fees can change
over time, as many cards will waive an
annual fee for the first year but will
charge it in later years.
• Rewards: These programs can be
complicated, with specific eligibility
rules. Know what you need to do to
qualify for rewards, which might include
meeting spending requirements, and
how much you would have to spend to
accumulate enough points or miles to
get what you want. Also understand what
you need to do to maintain your reward
points, since they can sometimes expire
if an account is closed or considered
inactive.
Do your homework before signing up
for promotional offers or additional
products. Some credit cards come
with promotions that are enticing but
may cost you more money in the long
run. For instance, some credit cards
marketed by retail stores offer “no
interest” on balances for a certain period
of time, such as the first 12 months
after purchase. But if you don’t pay off
the entire purchase balance by the end
of the timeframe that was disclosed,
Credit cards can offer numerous benefits
to consumers, including a convenient
way to pay for purchases, the ability to
build a credit history, and the potential
for rewards. But to make the most
of your credit cards, it helps to be an
informed consumer. First, remember
that any purchase you make with your
credit card is a loan that must be repaid.
And as with any loan, it’s important to
select the right product for you and to
use it wisely.
To help you maximize the benefits and
avoid the potential pitfalls, here are our
latest tips for choosing and using credit
cards.
Choosing a Credit Card
Maximize your ability to get a good
credit card by ensuring that your
credit report is accurate. Correcting
inaccuracies may help you improve
your credit history and credit score,
which card issuers will consider when
deciding whether to offer you a card and
how they will determine your interest
rate and credit limit. You also can find
out if an identity thief has opened credit
cards or other accounts in your name
(see tip # 8 on Page 4).
By federal law, you are entitled to one
free copy of your credit report every
12 months from each of the three
major nationwide consumer reporting
agencies (also called “credit bureaus”)
— Equifax, Experian and TransUnion.
Each company issues its own report,
and because some lenders do not furnish
information to all three of them, it’s
useful to request your report from each
one in order to get a comprehensive
view of your credit history. Go to
www.AnnualCreditReport.com or call
toll-free 1-877-322-8228 to order free
credit reports or for more information.
If you find errors, each reporting agency
provides ways to ask for an investigation
and a correction. In addition, you can
request a correction directly from
the entity that supplied the incorrect
information.
“Your credit reports play a large role
in what credit you will qualify for, so
Be in Charge of Your Credit Cards: Our Latest Tips
it’s important that they be accurate,”
said Jonathan Miller, Deputy Director
for Policy and Research in the FDIC’s
Division of Depositor and Consumer
Protection (DCP). “If you find any
mistakes on a report, you have both a
need and a right to have them corrected.
And, be wary of companies that promise
to ‘fix’ your credit report. If there is
negative information that is legitimate,
there is no way to remove it, although
it will expire from your report after a
period of time.”
Determine what type of card best
meets your needs. First, think about
how you will use the card. In particular,
do you expect to pay your card balance
in full each month or carry a balance
from month to month?
If you don’t pay your card balance in
full each month, the best card for you
will likely be one with a low Annual
Percentage Rate (APR). But if you do
plan to pay in full each month, you
might instead focus on whether there is
an annual fee, rewards or other features,
such as a waiver of foreign transaction
fees (helpful for international trips or
purchases).
Shop around and compare product
terms and conditions. Although you
may receive credit card offers, don’t
assume these are the best deals for you.
If you decide you need to apply for a
card, compare multiple products from
several lenders. Various Web sites can
help you compare product offerings
from different institutions, but be aware
that some sites list only companies that
pay to advertise there.
What factors should you consider?
Federal law requires creditors to disclose
important rate and fee information to
you before you apply. “This enables you
to make apples-to-apples comparisons
for the most important factors,” pointed
out Elizabeth Khalil, an FDIC Senior
Policy Analyst.
Here is additional guidance on how to
compare key terms and conditions:
• Annual Percentage Rate: The APR
represents the annual cost of the credit.
In general, there are three types of
APRs that might be applicable to your
card: those for purchases, for balance
transfers from another card, and for
cash advances. Also pay attention to
introductory rates. Some credit offers,
such as balance transfers, come with
special low interest rates that will
increase after the promotional period.
• Fees: These can include annual fees,
balance transfer fees and cash advance
fees (in addition to any interest you
might pay), foreign transaction fees, and
penalties for late payments or returned
payments. Determine if fees can change
over time, as many cards will waive an
annual fee for the first year but will
charge it in later years.
• Rewards: These programs can be
complicated, with specific eligibility
rules. Know what you need to do to
qualify for rewards, which might include
meeting spending requirements, and
how much you would have to spend to
accumulate enough points or miles to
get what you want. Also understand what
you need to do to maintain your reward
points, since they can sometimes expire
if an account is closed or considered
inactive.
Do your homework before signing up
for promotional offers or additional
products. Some credit cards come
with promotions that are enticing but
may cost you more money in the long
run. For instance, some credit cards
marketed by retail stores offer “no
interest” on balances for a certain period
of time, such as the first 12 months
after purchase. But if you don’t pay off
the entire purchase balance by the end
of the timeframe that was disclosed,