Adjustable-Rate Mortgage
Borrowers: Contact Your
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Borrowers: Contact Your
Lender Before Higher
Payments Put Your Home
at Risk ... Page 4
Speed Paying and Banking
High-tech cards and phones could change the way you
spend and manage your money
New technologies are constantly
adding speed, convenience and
flexibility to practically everything we
do - including how we bank
and pay for goods and services.
If you think banking over the Internet
is the latest trend, you may be in
for some surprises ... and for some
revolutionary new ways to conduct
your daily financial transactions using
pre-paid cards, credit and debit cards,
and cell phones.
"Banking and paying for goods and
services is becoming increasingly
wireless and mobile," said Ben
Vaughn, an FDIC manager in the
section that monitors technology
use by financial institutions. "Radio
waves are removing the tether from
credit cards, debit cards and personal
computers, allowing easier access to
our bank accounts." The consumer
benefits, Vaughn said, include "faster
and easier purchases in the checkout
line as well as being better able to
monitor your bank accounts, which
can help in the early detection of
errors, fraud and identity theft."
Many financial institutions as well as
retailers, cell phone service providers
and other companies are also offering
special incentives (including waiving or
reducing fees) to consumers who use
high-tech payment methods. "There's
a lot of competition going on, and
companies know that new banking
services can create greater customer
loyalty," noted Donald Saxinger, an
FDIC electronic banking specialist.
But while the new services can
provide benefits, they also can present
questions and concerns about security.
"There is always the possibility that
a customer could lose a cell phone
or bank card, so it is crucial to
safeguard passwords, monitor your
bank accounts and quickly report and
deactivate a lost device so it can't be
used to access an account or transfer
funds," Saxinger explained.
To help introduce you to new forms
of technology in banking, FDIC
Consumer News offers this overview.
Cards With a Pre-Loaded Value
These cards come in several varieties
that serve different purposes but
generally enable a cardholder to
pay for goods or services. With
each purchase, as the card is swiped
through a card reader, the value goes
down. It also may be possible to
add value onto some pre-paid cards.
Sometimes fees may be associated with
these cards, so be sure to ask about
the potential costs. Examples of the
increasingly common and popular pre-
paid cards include:
• Gift cards. Think of them as high-
tech gift certificates. Some are for use
at a specific store or service provider.
Others are "universal" gift cards that
generally can be used at any retailer
that accepts credit and debit cards but
usually cannot be used to obtain cash
from ATMs and other sources.
While gift cards are great for
birthdays or other occasions, they
come with potential risks and costs.
That's why you should always read
disclosures carefully and ask, for
example, if a card has an expiration
date that could wipe out a remaining
balance after a certain time period
(something prohibited under some
state laws) or if fees will be deducted
when the card is used - or not used.
• Pre-paid debit cards issued by
financial institutions for use at a
variety of businesses and ATMs.
These cards generally can be used
at most retailers that accept debit
or credit cards. They also may be
used to obtain cash from ATMs and
are especially useful as substitutes
for traveler's checks. Some pre-paid
debit cards also can be used to make
purchases on the Internet.
• Payroll cards. With these, an
employer deposits salary or benefit
payments into a bank account, which
an employee can access using a
special debit card to withdraw cash
at an ATM or make purchases at a
merchant sales terminal. "Payroll
cards are primarily good as substitutes
for paychecks for employees who
don't have a bank account and might
otherwise pay high fees to a check-
cashing store," said FDIC attorney
Christopher Beneke.
• Debit cards for Health Savings
Accounts. Consumers who are
eligible under IRS rules for these
tax-advantaged savings accounts at
banks and other financial institutions
can save for certain medical costs,
including doctor fees and long-term
care insurance payments, and then use
a debit card (or write a check) to pay
for qualified medical expenses.
Ifa pre-paid card is lost or stolen: A
consumer's liability for a lost card may
vary depending on the type of card
and who is issuing it. For example, a
pre-loaded card issued by a bank or a
major card network may provide more
consumer protections than one issued
by a retailer, "but to be sure you need
to shop around, read the card's terms
and conditions, and find out what to
do if you lose your card," said David
Nelson, a fraud specialist at the FDIC.
"Contactless" Credit and
Debit Cards
You're probably used to swiping your
credit or debit card's magnetic stripe
2 FDIC Consumer News Spring 2007
High-tech cards and phones could change the way you
spend and manage your money
New technologies are constantly
adding speed, convenience and
flexibility to practically everything we
do - including how we bank
and pay for goods and services.
If you think banking over the Internet
is the latest trend, you may be in
for some surprises ... and for some
revolutionary new ways to conduct
your daily financial transactions using
pre-paid cards, credit and debit cards,
and cell phones.
"Banking and paying for goods and
services is becoming increasingly
wireless and mobile," said Ben
Vaughn, an FDIC manager in the
section that monitors technology
use by financial institutions. "Radio
waves are removing the tether from
credit cards, debit cards and personal
computers, allowing easier access to
our bank accounts." The consumer
benefits, Vaughn said, include "faster
and easier purchases in the checkout
line as well as being better able to
monitor your bank accounts, which
can help in the early detection of
errors, fraud and identity theft."
Many financial institutions as well as
retailers, cell phone service providers
and other companies are also offering
special incentives (including waiving or
reducing fees) to consumers who use
high-tech payment methods. "There's
a lot of competition going on, and
companies know that new banking
services can create greater customer
loyalty," noted Donald Saxinger, an
FDIC electronic banking specialist.
But while the new services can
provide benefits, they also can present
questions and concerns about security.
"There is always the possibility that
a customer could lose a cell phone
or bank card, so it is crucial to
safeguard passwords, monitor your
bank accounts and quickly report and
deactivate a lost device so it can't be
used to access an account or transfer
funds," Saxinger explained.
To help introduce you to new forms
of technology in banking, FDIC
Consumer News offers this overview.
Cards With a Pre-Loaded Value
These cards come in several varieties
that serve different purposes but
generally enable a cardholder to
pay for goods or services. With
each purchase, as the card is swiped
through a card reader, the value goes
down. It also may be possible to
add value onto some pre-paid cards.
Sometimes fees may be associated with
these cards, so be sure to ask about
the potential costs. Examples of the
increasingly common and popular pre-
paid cards include:
• Gift cards. Think of them as high-
tech gift certificates. Some are for use
at a specific store or service provider.
Others are "universal" gift cards that
generally can be used at any retailer
that accepts credit and debit cards but
usually cannot be used to obtain cash
from ATMs and other sources.
While gift cards are great for
birthdays or other occasions, they
come with potential risks and costs.
That's why you should always read
disclosures carefully and ask, for
example, if a card has an expiration
date that could wipe out a remaining
balance after a certain time period
(something prohibited under some
state laws) or if fees will be deducted
when the card is used - or not used.
• Pre-paid debit cards issued by
financial institutions for use at a
variety of businesses and ATMs.
These cards generally can be used
at most retailers that accept debit
or credit cards. They also may be
used to obtain cash from ATMs and
are especially useful as substitutes
for traveler's checks. Some pre-paid
debit cards also can be used to make
purchases on the Internet.
• Payroll cards. With these, an
employer deposits salary or benefit
payments into a bank account, which
an employee can access using a
special debit card to withdraw cash
at an ATM or make purchases at a
merchant sales terminal. "Payroll
cards are primarily good as substitutes
for paychecks for employees who
don't have a bank account and might
otherwise pay high fees to a check-
cashing store," said FDIC attorney
Christopher Beneke.
• Debit cards for Health Savings
Accounts. Consumers who are
eligible under IRS rules for these
tax-advantaged savings accounts at
banks and other financial institutions
can save for certain medical costs,
including doctor fees and long-term
care insurance payments, and then use
a debit card (or write a check) to pay
for qualified medical expenses.
Ifa pre-paid card is lost or stolen: A
consumer's liability for a lost card may
vary depending on the type of card
and who is issuing it. For example, a
pre-loaded card issued by a bank or a
major card network may provide more
consumer protections than one issued
by a retailer, "but to be sure you need
to shop around, read the card's terms
and conditions, and find out what to
do if you lose your card," said David
Nelson, a fraud specialist at the FDIC.
"Contactless" Credit and
Debit Cards
You're probably used to swiping your
credit or debit card's magnetic stripe
2 FDIC Consumer News Spring 2007