1. Financial Planning Factors – The Nuts & Bolts Beyond Money Presentation for the Retirement Planning Club for Women September 16, 2009 Newton Free Library Kip Child, Community Affairs Specialist kchild@fdic.gov; 781-794-5636 New England Area Office of the Federal Deposit Insurance Corp (FDIC)

2. What Does The Federal Deposit Insurance Corporation (FDIC) Do?  Insures Deposits on Personal Accounts and IRAs up to … $250,000 until 12/31/13. Thereafter, $100,000. IRAs and certain other retirement accounts will remain at $250,000 indefinitely. (insures about 8200 banks as of 3/31/09)  Examines Banks for Safety and Soundness (supervises about 5200 banks as of 12/2008)  Examines Banks for compliance with consumer laws including the CRA (Community Reinvestment Act)  Facilitates community development partnerships with financial institutions thru initiatives such as financial education & the Alliance for Economic Inclusion.

3. www.fdic.gov/edie

4. Money Smart curriculum developed in 2001  Over 750,000 copies distributed  Over 2.4 million consumers trained  Over 1,600 organizations are members of the Money Smart Alliance

5. Two Versions for Adults - One for Adolescents Self-Paced Tutorial Instructor-Led

6. How Do I Get It?  Ten modules, for instructors only  Order any of 9 versions - FREE  Or take the course online at the above address.  Or listen on the Money Smart Podcast Network (MSPN) – available from the above web site http://www.fdic.gov/moneysmart English Spanish Chinese Hmong Korean Russian Vietnamese Large Print Braille Young Adult Version Newest Additions

7. 5 Ways Communities Benefit From Financially Capable Residents þ Increased purchasing power and standard of living. þ Less dependency on government services þ Less victimization of residents, requiring less regulation and law enforcement services. þ More economically and socially integrated community þ Financially astute electorate

8. Source: Fed Res H.19 Stat. Release + another $21.6 billion decrease in July Fed Res Stats: G19

9. Credit Cards “Let Me Count The Ways”  Cash cards  Smart cards  Stored value cards  Secured  Unsecured  Gold Cards, Platinum Cards, etc.  Reward Cards  Pre-Approved cards  Affinity Cards H

10. Credit Card Facts  The average graduate student has 6 credit cards and one in 7 owes more that $15,000.  A typical credit card purchase will cost 112% more than if cash was used.  People using credit cards for fast food usually spend 50% more than if they paid cash. (Total = $51Billion in 2006)  Average credit card debt among all American households is about $8,400.  The average interest rate on credit cards is 18.9%  In 2004 the credit card industry took in $43 billion in card fees alone (not interest)

11. Cost of Making the Minimum Payment H

12. Changes Coming 7/01/2010 to “Unfair” Credit Card Practices  Cannot use the two-cycle billing method to calculate interest  Consumer must receive a reasonable amount of time to make payments (bills must be mailed 21 days in advance)  Cannot apply monthly payments to unfairly maximize interest charges (pro-rata). Must pay high APRs first.  Cannot increase the rate on an existing card balance w/o 45 days notice (does not include intro or teaser rates).  Universal Default eliminated. Any penalty rate increase must be based solely on activity on the subject card.  Prohibits over-the-limit fee unless consumer opts-in (allows creditor to put the transaction through).

13. 36 Month Auto Loan FICO® scoreAPR [?][?]Monthly payment 720-850 6.059%$761 690-719 7.625%$779 660-689 8.608%$790 620-659 10.997%$818 590-619 14.306%$858 500-589 15.203%$869

14. Identifying Levels of Subprime ABCD Predatory FICO Credit Score High 700’s<720-650<670-550550-400 Bad Credit Low Income Minority/Immigrant Elderly Lates, Collections, Bankruptcy 01-32-4, CO, Collect Multiple “Bad Credit OK” “No verification” FeesKnown @ Appl More, Higher Borders on Excessive AMAP “No Fees” “No Problem” “Free” RatesStandard Published +1-5 points5+ ? “It will only cost you $ per week” APRDisclosed Maybe (subject to T&C) Not Mentioned

15. Predatory Lending Occurs when companies offer loan products, using deceptive and exploitive:  Marketing tactics.  Collection practices.  Loan terms. Although a loan might be very expensive, that does not mean it is predatory.

16. 9. If you are approved for this RAL, the total Bank One fees, including the Bonu$ Direct Account processing fee, the Bank One RAL fee, which is a FINANCE CHARGE, and any other fees which you have authorized us to deduct will be deducted from your loan amount. You prepay all fees, including the FINANCE CHARGE. The chart below shows the FINANCE CHARGE, and calculates the corresponding ANNUAL PERCENTAGE RATE under the Truth-In-Lending Act, based upon an assumption of a 10 day repayment period. This chart does not include other fees you authorize Bank One to deduct from the amount of the RAL. Loan Amount (Amount Financed): $615.00 BONU$ Direct Account Fee: $16.00 RAL Fee (Finance Charge): $28.95 Estimated Repayment Period (Days): 10 Corresponding APR: 180.305%

17. WWW.ANNUALCREDITREPORT.COM 877-322-8228 £ Effective for all New England states beginning September 1, 2005 £ Entitled to one report free each year, from each of the 3 major bureaus £ Use the above web site to order one credit report every 4 months from one of the major bureaus and you will have a rolling record of most of your credit activity (for example – Experian in January, TransUnion in May, Equifax in September)  Effective way to monitor for Identity Theft

20. No Interest 5% Daily Compounding Year 1$1,825 Year 5$ 9,125 Year 10$ 18,250 Year 30$ 54,750 $ 1,871 $ 10,366 $ 23,677 $ 127,077 P Pay Yourself First Saving $5 a Day H

22. The Glue  Improving financial understanding gives people the knowledge, skills and the tools to make wise financial decisions, and acquire, build and retain assets  More important now than ever, because of Increased Complexity of products of Aggressive Marketing of products Your future will depend a lot on your level of financial knowledge

23. More Glue  Want to Protect Your savings and investments? Help others become more knowledgeable. EITC/VITA Program, here and 345 Walnut St Boys & Girls Clubs, Watertown St YMCA, 276 Church St Newton Senior Center, 345 Walnut St