Tips will help consumers avoid costly fees, financial pitfalls

Office of Financial and Insurance Services Commissioner Linda A. Watters today issued a warning to consumers to use caution and avoid common pitfalls when using their checking accounts, credit cards and other financial services.

“With the holiday season upon us, consumers need to be even more careful with their money,” Commissioner Watters said. “"These financial management tools can help consumers prevent unintended losses and the consequences that may occur during the stress and frenzy of the holiday season.”

The FDIC recently issued a list of financial pitfalls in its online newsletter, FDIC Consumer News. Some of the more common slip-ups that can trigger fees, penalties or other costs are:

• Not checking up on your checking account. Lack of attention to the account balance can result in fees for bounced checks or for going below a required minimum balance. Also, if a customer fails to spot fraudulent transactions, fixing those can be costly and time consuming.
  
  
• Paying a credit card bill late, even if it's only by a day. A late card payment can trigger a fee of about $30 or more. In addition, the consumer also may face a major hike in the interest rate – often to between 29 and 35 percent – on this credit card and possibly other cards or loans, especially if the person's credit record shows other signs of risk.
  
  
• Signing up for a new credit card without understanding the costs. "Zero-percent interest" and other incentives for applying for a credit card may sound great, but the various freebies could end up being expensive if the consumer is penalized for not following the rules of the new card. Repeatedly signing up for new cards also can send signals that the person is more of a credit risk, which can result in a higher interest rates being charged the next time he or she applies for a mortgage or other loans.

Consumers should also be on the lookout for scams, such as fraudulent e-mails claiming to be from the FDIC in an attempt to obtain valuable information from consumers and businesses, or unsolicited e-mails supposedly from a financial institution or government agency. These emails are really from criminals asking consumers to call a phone number to provide bank account and other "needed" information using their telephone keypad. Once the information is entered, it can be used by crooks to gain unauthorized access to bank accounts or commit identity theft.

More tips and information on financial matters are available online at the FDIC Consumer News. The fall 2006 issue can be viewed at www.fdic.gov/consumers/consumer/news/cnfall06.

For more information on the Office of Financial and Insurance Services, visit www.michigan.gov/ofis or call toll-free at (877) 999-6442.

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