FDIC issues tips to help consumers save hundreds on loans, credit cards

Aug 17 - The Federal Deposit Insurance Corporation has issued a collection of 51 simple, practical tips that can help consumers save hundreds, if not thousands, of dollars on loans and credit cards. The advice, in a special edition of the agency's quarterly FDIC Consumer News, provides ideas and information on topics such as how to: get the best possible interest rates, avoid paying unnecessary fees, find "emergency" cash at affordable prices, and steer clear of credit-related rip-offs and scams.

The publication, entitled "51 Ways to Save Hundreds on Loans and Credit Cards," includes tips for saving money any time -- in a consumer's basic financial affairs, when shopping for new credit, and when using loans and credit cards.

Examples:

Pay bills on time to maintain a good credit record and qualify for low rates. People shouldn't wait until the last minute to pay monthly bills -- that can result in late-payment fees and, perhaps more importantly, higher interest costs. That's because payment history is a big factor lenders consider when setting an interest rate.

Check credit reports for accuracy. Something as simple as correcting incomplete or erroneous information in a credit record may be enough to qualify a consumer for a better interest rate on a loan or credit card and save hundreds of dollars each year in interest payments.

Periodically review existing loans and credit cards. For example, consumers can talk to a customer service representative to make sure existing credit accounts are still a good fit in terms of features and costs, especially if their financial situation has changed recently or new products are available.

Compare the products offered by a few competitors and then negotiate the best deal. It's fine for consumers to let their bank and other lenders know that they are shopping around for the best possible terms and that they are not afraid to negotiate.

Don't be afraid to ask for a break. Depending on the circumstances, a lender might be willing to reduce an interest rate or waive a fee or penalty, especially if the person has been a good customer.

In addition, the new FDIC publication includes special tips just for credit cards as well as home, auto, student and small business loans. There's also a section on how people who need a small amount of cash fast can find affordable alternatives to high-cost, nonbank service providers.

The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information on financial matters, free of charge. This special edition can be read or printed online at www.fdic.gov/consumers/consumer/news/cnsum07. There is also an online form for ordering up to two free paper copies.

The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in this special edition widely available to the public. The publication may be reprinted in whole or in part without advance permission. Organizations also may link to or mention the FDIC Web site. The special edition also is available on the FDIC website in a PDF format that can easily be reproduced in any quantity. Space on the back page of the PDF version was intentionally left blank so that an organization could add its name, logo, a special message and/or self-mailing information.

Current and past issues of FDIC Consumer News, including special editions for senior citizens, teens and young adults, are online at www.fdic.gov/consumernews. The FDIC also offers a free subscription service that provides an email about each new issue posted to the Web site and a link to stories of interest. Instructions for subscribing are posted at www.fdic.gov/about/subscriptions/index.html.

Members of the media interested in additional information or an interview with an FDIC expert should contact Jay Rosenstein in the FDIC Office of Public Affairs (202-898-7303 or jrosenstein(at)fdic.gov).

Banking

A bank is a commercial or state institution that provides financial services, including issuing money in form of coins, banknotes or debit cards, receiving deposits of money, lending money and processing transactions. A commercial bank accepts deposits from customers and in turn makes loans based on those deposits. Some banks (called Banks of issue) issue banknotes as legal tender. Many banks offer ancillary financial services to make additional profit; for example: selling insurance products, investment products or stock broking.

Currently in most jurisdictions commercial banks are regulated and require permission to operate. Operational authority is granted by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. A commercial bank is usually defined as an institution that both accepts deposits and makes loans; there are also financial institutions that provide selected banking services without meeting the legal definition of a bank (see banking institutions).

Banks have a long history, and have influenced economies and politics for centuries. In history, the primary purpose of a bank was to provide liquidity to trading companies. Banks advanced funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Commercial lending today is a very intense activity, with banks carefully analysing the financial condition of its business clients to determine the level of risk in each loan transaction. Banking services have expanded to include services directed at individuals and risk in these much smaller transactions are pooled.

A bank generates a profit from the differential between what level of interest it pays for deposits and other sources of funds, and what level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclic and dependent on the needs and strengths of loan customers. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on array of deposit activities and ancillary services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). However, lending activities still provide the bulk of a commercial bank's income.

The name bank derives from the Italian word banco, desk, used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth.

Cord blood bank

A cord blood bank is a place that stores umbilical cord blood for future use. Both private and public cord blood banks have developed since the mid to late 1990s in response to the success of cord blood transplants in treating diseases of the blood and immune systems, such as Fanconi's anemia and leukemia. Cord blood, once seen as waste to be discarded after a birth, is now viewed as a precious resource. Since the first successful cord blood transplant was performed on a child with Fanconi's anemia in 1988, over 3,500 patients have been treated with this procedure, including 14 who used their own blood cells. In 2004, 600 of those transplants took place in the United States. Following the 1988 transplant, the National Institute of Health awarded a Grant to cord blood pioneer, Dr. Pablo Rubinstein, to begin the first National Cord Blood banking Program (NYCP) at the New York Blood Center, for public placental blood storage and research.

Cord blood contains hematopoietic stem cells, progenitor cells that can form red blood cells, white blood cells and platelets. Cord blood stem cells are not embryonic stem cells, a pluripotent stem cell, which theoretically can develop into any type of human cell. The range of therapies using cord blood cells is currently limited to treating diseases of the blood and immune systems.

Public banks accept donations to be used for anyone in need. However, there are very strict regulations that public banks need to follow in order to enable the donated units to be added to a registry. Generally an expectant mother interested in donation should contact the bank before the 34th week of pregnancy. The National Marrow Donor Program has a list of public cord blood banks on their website. Once the blood is donated, it loses all identifying information after a short period of initial testing, so that families will not be able to retrieve their blood later.

Private banking allows families to preserve their blood for their own use. For-profit private banks charge a fee of around $2000 to preserve a newborn's cord blood for possible use by the family later.

Public cord blood banking is strongly supported by the medical community, but private cord blood banking is generally not recommended unless there is a family history of specific genetic diseases.[citation needed] Public and private banks offer free programs to store the cord blood of babies whose family members have a condition which can be treated with the blood cells.