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FDIC's Consumer News: Deposit Insurance, Stopping Payments and Safe Mobile Banking

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The FDIC just published its Winter 2012/2013 Consumer News which provides advice on various banking topics. Most of the tips are probably well-known to those who are financially savvy. However, there are some useful reminders of federal regulations and protections. I've included a few excerpts that I found most useful.

Unlimited FDIC Insurance for Certain Transaction Accounts Comes to an End

This temporary unlimited deposit insurance created a lot of confusion. The important thing to know is that the temporary unlimited insurance is no longer in effect. However, the $250K standard coverage limit is permanent. This FDIC article has the details:

In 2008, Congress passed a law increasing the basic FDIC coverage from $100,000 to $250,000, but only through 2013. Then in 2010, the lawmakers approved a permanent increase to the $250,000 coverage amount. However, some depositors are still asking whether the standard deposit insurance coverage of $250,000 will revert back to $100,000 at the end of 2013. "The answer is no, Congress made permanent the standard coverage amount of at least $250,000 in 2010," Becker stressed.

FDIC Insurance: Understanding the Different Account Categories

By having different account categories at one bank, you can increase your deposit insurance amount far above $250K. This FDIC article provides some details and examples. Here's one example that it gave for two people with a joint account:

As an example, Kathy and her daughter Ellen would be fully insured for up to $500,000 in a joint account, in addition to any single ownership or other accounts they might have at the same bank.

If you want even more details, you may want to review the guide that's designed for bankers. It's called the FDIC Comprehensive Seminar on Deposit Insurance Coverage For Bankers. I reviewed this guide and showed how it's easy to insure $1.25 million at one bank in my post Maximizing Your FDIC Coverage with Beneficiaries.

Billing Errors and Debit Card Fraud

This FDIC article provides a brief overview of how two federal laws help protect consumers from billing errors and debit card fraud. Here's an excerpt about its advice on dealing with billing errors:

The Fair Credit Billing Act (FCBA) requires a consumer who is reporting a billing error — including a fraudulent transaction — to write to the credit card issuer at the address for billing disputes noted on the monthly statement.
[...]
In general, the creditor must resolve the dispute within 90 days after getting your letter.

And here's an excerpt about its advice on dealing with debit card fraud:

The Electronic Fund Transfer Act limits your liability for unauthorized transactions to $50 if your debit card was lost or stolen or you saw an unauthorized transaction from your account and you notify the bank within two business days. "But if you wait more than two business days, you may be responsible for up to $500 or even more," said Daniels.

Need to Stop a Payment? Know Who to Contact and How

This FDIC article includes another recommendation to use credit cards when you have any concern that the purchase may not go smoothly:

Unlike credit cards, debit cards are not covered by federal legal protections for damaged goods or faulty service.
[...]
Because federal consumer protections are stronger for credit cards than for debit cards in certain circumstances relating to disputes with stores or other merchants, "you might consider using a credit card if you're concerned that your purchase might not go smoothly,"

And the most important tip in trying to stop a recurring payment is to communicate requests in writing:

Any time you need to stop a recurring payment from your checking or credit card account, it's a good idea to put your requests to the vendor and to the financial institution in writing, so that you have a record of it in case of a dispute.

Avoiding Financial Scams

You have probably seen the tips in this FDIC article many times. Unless you're new to the internet, most of these tips should be well-known. One thing I found interesting is this warning from an FDIC official:

Criminals also create bogus Web sites in hopes that consumers will enter valuable personal information. "We've seen everything from fake bank Web sites to sites offering payday loans or credit repair services,"

I haven't seen any fake bank websites. It is something that I'm always concerned about since we constantly see new internet banks with new website addresses. I described steps to ensure a bank's website is legitimate in this blog post.

Safe Mobile Banking

Are you using your smartphone for mobile banking? It may be convenient, but there are new risks. One is the risk of your phone being lost or stolen. As recommended in this FDIC article, it's best to be pro-active:

Take additional precautions in case your device is lost or stolen. Check with your wireless provider in advance to find out about features that enable you to remotely erase content or turn off access to your device or account if you lose your phone.

I found more details about how you can remotely locate and erase iPhones and Android phones in this PCMag.com article.

Other Topics

The FDIC winter consumer news also has some updates and reminders on things like new mortgage rules, saving money at tax time and dealing with a disaster. If you find something interesting, please leave a comment.


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