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July 2006

Federal Insurance Coverage on IRA Accounts to Increase

Credit union members now enjoy increased share insurance coverage. Two new laws recently signed by President Bush, the Federal Deposit Insurance Reform Act of 2005 and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005, amend the share insurance coverage provided by the National Credit Union Administration (NCUA) through the National Credit Union Share Insurance Fund (NCUSIF) and thedeposit insurance provided by the FederalDeposit Insurance Corporation (FDIC).

Most notably, the new laws increased NCUSIF coverage on individual retirement accounts to $250,000 effective April 1, 2006.

In addition, beginning in 2010, the NCUA and FDIC will consider jointly whether an inflation adjustment to the maximum insurance amount is appropriate and in what amount it should be increased.  Thereafter, this issue will be examined every five years. The new laws will maintain parity between insurance coverage offered by NCUA and the FDIC.

Read the Fine Print!
Credit card companies’ top money grabbers

How many credit card offers do you receive in the mail each day? These offers seem like a great deal, but a closer look may reveal costly pitfalls like these:

The universal default penalties.  Many credit card companies have universal default clauses, allowing them to raise your interest rate if you are late making any payment even to someone else.

Bait-and-switch card offers.  Direct mail offers generally advertise the issuer’s premium card at an eye-popping low interest rate, while the fine print says the company can issue a more costly non-premium card with a higher annual percentage rate if you fail to qualify for the premium card. Just because you apply for a card with a low rate doesn’t mean the card that shows up in the mail actually carries that low rate.

Shrinking grace periods.  Historically, grace periods the time during which your transactions don’t accrue interest were 30 days. They now average 23 days, and some issuers have whittled the grace period to 20 days. Some cards have no grace period at all.

Two-cycle billing.  While most card issuers use the standard one-month method to calculate interest charges, some use a method that calculates interest on two previous months’ balances. Furthermore, your card may print the due date for your minimum payment, yet have a different due date to pay the entire balance on the card.

Inactivity charges. Credit card companies don’t make money if you don’t use your cards.  Inactivity fees can be as much as $15 if you haven’t swiped your card in six months, but charges may be incurred for shorter intervals.

Late payment fees. The national average for a late payment fee is $29. Some companies even require that the payment be received by a specific time on the due date. Some companies also periodically change their payment address, making your payments late.

Over-limit fees.  Exceed your credit limit by even one cent and you’ll be hit with over-limitfees of $25 to $39.  A $39 late fee can then trigger a $39 over-limit fee.


Federal Insurance Coverage on IRA Accounts to Increase
Read the Fine Print!
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