Free Banking & Finance Articles | Free Banking & Finance Legal Articles

The Truth About the Truth in Lending Act

Thu, 06 Nov 2008 20:48:34 GMT

Since 1968, American consumers have been entitled to clear disclosure of credit terms and costs in lending agreements. It was in 1968 that Congress passed the Truth in Lending Act. The law applies to many types of personal credit including credit card debt and residential mortgages. It applies to personal consumers who are seeking or applying for credit but it does not apply to business or government borrowers.

The stated purpose of the act is to stabilize the economy and encourage competition amongst financial institutions by having consumers be informed about the terms and conditions of the credit for which they are applying and accepting. At the application stage, disclosure of terms and conditions will allow the consumer to compare credit offers from different financial institutions. At the acceptance stage, full disclosure of terms and conditions will allow the consumer to adequately predict how much the credit arrangement will cost him and whether it is a good financial move.

What Terms are Regulated by the Truth in Lending Act?

Two of the most important terms that are regulated by this Act include finance charges and the annual percentage rate. Both of these terms can be hard for the lay person to understand, can vary widely from lender to lender and, can greatly impact a consumer’s personal finances. The Act explains that the amounts of both the finance charges and the annual percentage rates need to be disclosed and may not vary significantly from the disclosed values. This is important to a consumer’s understanding of the credit terms and ultimate repayment amount.

The Three Day Waiting Period

In an effort to protect consumers from being pressured or coerced into credit arrangements that affect their home, the Truth in Lending Act provides consumers with a three day waiting period when they sign a home equity loan. That means that if consumer is taking a loan against his primary residence, he or she has three business days to rescind that agreement after agreeing to it in writing. The funds are not dispersed until the end of the three day waiting period. However, if there is an emergency for which the homeowner needs the fund sooner than three business days from the time of execution of the agreement, the three day period may be waived.

Violations of the Truth in Lending Act

There are both civil and criminal penalties that are possible for different violations of the Act. Creditors can be liable for violating the disclosure terms of the Act even if the consumer was not hurt by the violation unless the creditor fixes the error within 60 days of notification or proves that the error was made unintentionally.

If a creditor does not comply with the requirements of the Act then the consumer can file a lawsuit within one year of the alleged violation. The court may award the consumer actual damages, attorney’s fees, court costs, statutory damages and more.

Willful violations of the Act could result in criminal charges being brought and sentences of fines and prison time being imposed.

The credit market is an important part of the American economy. Therefore, it is important that consumers understand their individual terms of credit and that creditors are truthful in their disclosures.

What happens if my bank fails?

Fri, 19 Dec 2008 02:37:20 GMT

In today’s economy, you might wonder what will happen to your money if your bank fails, or if a federal or state banking regulatory agency closes down your bank. Although bank failures are unlikely, they can occur when a bank does not have enough money to meet its obligations to all of its customers. Therefore, placing your money in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”) is your best defense against failing banks.

FDIC is essentially a federal insurance agent for banks. This means that if your bank fails, and your bank is insured by FDIC, then you are guaranteed to get a certain amount of your money back from the bank, which is generally up to $250,000.00 per depositor. The FDIC is in charge of not only insuring customers’ deposits, but also selling off the assets of a failed bank and distributing the proceeds to the customers who are owed money by the bank. If you have a bank account containing more than $250,000.00, then, you can file a claim for the excess amount, and you may receive more of your money back as FDIC sells the bank’s assets and distributes the proceeds.

The FDIC covers checking accounts, savings accounts, money market accounts, and time deposits such as certificates of deposit. If your bank fails, then FDIC will use its premiums that have already been paid by insured banks to pay your claim, up to the insurance amount mentioned above, or it may arrange for a financially sound bank to buy the failed bank in order to protect your money. Payments by FDIC can occur very quickly, and FDIC will also notify you by mail if your bank has failed, so it is important to always keep your address current with your bank.

In the case of a bank failure, you might also wonder what will happen to your paychecks if your employer deposits them directly into your bank account. If the FDIC has arranged for another bank to take over the failed bank, then the direct deposits will automatically be rerouted to the new bank. If there is no new bank, however, the FDIC will find another bank to at least temporarily take over all direct deposits until more permanent arrangements can be made, so that you can continue to have access to your money.

FDIC takes similar action with regard to checks or other banking transactions that have not cleared prior to your bank’s failure, or loans that you owe to a failed bank. If there is a new bank, all of your transactions should continue to process as usual. If there is no new bank, however, your check will be returned with a notice to the creditor, or the company or person to whom you owe money, stating that your bank has failed. This does not negatively affect your credit rating, but it is your responsibility to provide the creditor with another source of funds to complete the transaction. Likewise, you still have to pay on loans that you owe, even if the bank has failed. FDIC will contact you with information about where to direct your loan payments.

Can I use a loan modification program in order to save my home from foreclosure?

Fri, 19 Dec 2008 03:13:49 GMT

With mortgage foreclosures at an all time high, major banks across the nation have begun offering loan modification programs for people who are in danger of losing their homes to foreclosure. While eligibility for loan modification programs differs from one bank to the next, the common goal of these programs is to restructure existing mortgage loans so that borrowers have lower payments. Because foreclosure is costly not only for the homeowner, but for the bank itself, the bank has a strong interest in helping people maintain their obligations under their mortgages, especially in today’s rocky economy.

In general terms, a loan modification program is a lot like refinancing your mortgage in order to make the payments more affordable. The only difference is that instead of taking out a new mortgage to replace your old mortgage, you are simply changing the terms of your existing mortgage loan. If you are unable to make your current mortgage payments and not eligible to refinance your mortgage due to some financial hardship that you are experiencing, then you may be eligible for a loan modification program through your bank or mortgage company.

Whether you will qualify for a loan modification depends on the requirements of your bank’s loan modification program, as well as your own financial situation. While these requirements vary, the most common eligibility requirements for loan modification programs include being behind on your mortgage payments by at least three months, experiencing some sort of financial hardship that makes you unable to make your regular monthly payments, using the mortgaged home as your primary residence, and never having filed for bankruptcy.

In order to check your eligibility for a loan modification program, you must contact the bank or mortgage company that owns your mortgage. Keep in mind that with banks being bought and sold on a regular basis, especially in the current economy, you need to make sure that you are contacting the correct company about your mortgage loan, because the owner of your mortgage is the only company that can grant you a loan modification. In any case, you need to communicate with your bank about your financial situation, take any steps you can to meet your monthly mortgage payments, and cooperate with any requests for information necessary to participating in the loan modification program.

IndyMac Bank, which was taken over by the FDIC, was the first major bank to offer a broad loan modification program to its customers. Other major mortgage companies such as Fannie Mae, Freddie Mae, Bank of America, JP Morgan Chase, and Citigroup have followed IndyMac’s lead in offering widely available loan modification programs to their customers. IndyMac, for instance, is contacting some customers who are seriously delinquent on their mortgage payments directly in order to help them enter into their loan modification program. Under the IndyMac program, the interest rate and length of repayment for your mortgage loan could be lowered in order to make your mortgage payments more affordable in terms of your current income and expenses. Thus, if you are not able to afford your mortgage payments, be sure to check your eligibility for your bank’s loan modification program rather than risk losing your home.

The Mortgage Forgiveness Debt Relief Act of 2007

Thu, 20 Nov 2008 01:41:25 GMT

In December 2007, the federal government enacted the Mortgage Forgiveness Debt Relief Act. The Act was meant to provide tax relief to taxpayers who had debt forgiven on their primary residence and to help struggling homeowners.

The Purpose of the Mortgage Forgiveness Debt Relief Act

The idea behind the law was to help homeowners avoid foreclosures by not taxing them when they refinanced their mortgages. The law was designed to be an incentive for homeowners and lenders to work together to renegotiate adjustable rate mortgages that were rapidly rising at a time when home values were decreasing and to allow more homeowners to remain in their homes while lenders were paid on the outstanding debt.

The Details of the Mortgage Forgiveness Debt Relief Act

The law applies to debt that is forgiven on primary residences in 2007, 2008 or 2009. The general rule is that income that is realized as a result of a mortgage relief measure is considered income for federal income tax purposes. However, the Mortgage Forgiveness Debt Relief Act changes that rule if the mortgage relief, such as a restructuring or foreclosure sale, is done for a primary residence and happens in 2007-2009. In order to qualify, the debt must have been used to buy, build or substantially improve that primary residence and must have been secured by the residence. It does not apply to second homes, credit card debt, car loans or any other type of debt. The provision applies in full as long as the dollar amount of the loan was less than 2 million dollars.

While the majority of people who take advantage of this provision are doing so as a result of a mortgage restructuring or foreclosure sale there is no requirement that the mortgage forgiveness be provided in those ways. Other forms of mortgage forgiveness such as short sales and deeds in lieu of foreclosure also qualify.

One of the biggest criticisms of the Act is that it is providing too little relief too late for the many homeowners who have been suffering. President Bush made clear when he signed the legislation that it was only one step in the necessary process of helping homeowners who have been hurt by the decline in the housing market.

How to Take Advantage of the Mortgage Forgiveness Debt Relief Act

It is important to note that while income earned in the manner described above will not be taxed for 2007-2009, it still must be reported to the IRS on Form 982. Your mortgage lender will send you a form 1099-C Cancellation of Debt that should be used when completing Form 982 and your tax returns. Like all other tax forms, Form 982 is available from the IRS or from your accountant.

The Mortgage Forgiveness Debt Relief Act of 2007 is one action by the federal government to try to help struggling homeowners achieve mortgage debt relief without incurring the penalty of higher income taxes and it is important to understand the details of the Act if you find yourself in a situation requiring debt relief.

What You Need to Know about 401k Withdrawals

Tue, 21 Apr 2009 12:43:35 GMT

401k plans are common retirement investment tools for United States workers. The plans, named for the section of the IRS code that defines them, allow workers to save for retirement and to defer income taxes until the time the money is withdrawn. However, with these tax benefits come restrictions on when money can be withdrawn from the plan without financial penalties.

401k withdrawals

Typically, specific criteria must be met before a person can withdraw funds from a 401k retirement plan. Usually no financial penalties will be incurred if an employee withdraws from a 401k plan and is 59 ½ years old or older, the plan holder dies or becomes permanently disabled, the plan terminates and no successor plan is identified by the employer or the plan holder has a financial hardship that qualifies for an exception to the general rule. 401k plan holders must take care to make sure that what they consider to be a financial hardship will be defined as a financial hardship by the IRS. Otherwise, if a 401k plan holder fails to meet any of the withdrawal criteria described above, then he or she is likely subject to a 10 percent penalty tax for an unqualified 401k withdrawal in addition to the ordinary income tax that is always assessed on 401k distributions.

Required 401k distributions

While many people are concerned about how soon they can take money out of a 401k plan, it is also important to be aware that there are certain circumstances which mandate a 401k distribution. Most plans require that a retired person or a working person who owns more than 5% of the employer maintaining the plan begin to make withdrawals by April 1 of the calendar year in which they turn age 71 ½. If neither of those criteria is met then this required distribution age is put off until April 1 of the calendar year in which the employee retires from the service of that employer.

A 401k distribution may also be required when an employee stops working for an employer. Unlike previous generations of workers, today’s employees often change employers several times during their careers. Employees should make sure that they do not forego any retirement savings in the process of changing jobs and should request that any 401k money be rolled over into an eligible retirement account. Funds that are properly rolled over into eligible retirement accounts will not be subject to either the 10 percent penalty tax for early withdrawals or income tax at the time of the rollover.

401k Loans

Some 401k plans have specific provisions that allow plan holders to take loans out against their 401k investments. If your 401k plan permits loans then the IRS will allow plan holders to borrow up to 50% of the vested account balance up to a maximum of $50,000. Borrowers should be aware that the loan must be repaid within 5 years, unless it is used to buy a primary residence and that substantially level repayments must be made over the life of the loan. Failure to adhere to these rules could result in a tax assessment against the borrowed amount.

401k plans are designed to be retirement savings plans. While the IRS allows for early withdrawals in certain circumstances, plan holders must be aware of the potential penalties for unauthorized early withdrawals in order to protect themselves from unwarranted tax penalties.

Should You Borrow Money From Your 401k?

Tue, 21 Apr 2009 12:44:32 GMT

It can be frustrating and often frightening when due to unemployment, a recession, or other factors, a person’s available cash is not enough to meet his or her obligations. Sometimes when this happens, a person does have money in his or her 401k plan that could help the person pay his or her bills. However, it is important to understand the potential penalties for borrowing or withdrawing funds from a 401k plan before it is done.

Borrowing from Your 401k Plan

In order to borrow money from your 401k plan, the plan must explicitly allow it. If the plan allows a plan holder to borrow money from the plan then the plan holder may qualify to take a loan of up to 50% of the plan’s assets with a maximum of $50,000. If the borrower makes substantially level payments over the life of the loan and the loan does not exceed 5 years then the IRS will not impose the traditional 10% tax for early withdrawals on the borrowed money.

However, just because the loan can be repaid without penalty does not necessarily make it a smart financial move even in difficult financial times. Plan holders need to think very carefully about all of the risks and all of the costs associated with a loan. For example, some employers are now offering 401k debit cards that allow plan holders to easily access the money in their 401k accounts. Plan holders should be aware, however, that using a 401k debit card is not the same as using a debit card that is linked to your checking account.

A 401k debit card requires you to pay fees and interest on the money that you borrow. That means that you will need to repay more money then you actually borrow in order to replenish your 401k account. If you fail to replenish your 401k account within the 5 year time limit then you will owe income tax on the money borrowed plus incur a 10% penalty if you are not at least age 59 ½.

Early Withdrawals from a 401k Plan

401k holders should also consider whether they qualify for an early withdrawal from their 401k plan. While unqualified early withdrawals are subject to a 10% tax, a 401k holder who meets one of the criteria described below may be able to withdraw the money without paying the 10% tax and without having to repay the money as is required when the 401k holder borrowers money from his or her 401k plan.

An investor may be able to avoid the typical 10 percent tax for early withdrawals if:

The employee dies and his or her beneficiary seeks to withdraw the money;
The employee becomes completely and permanently disabled;
The employee is at least age 55 and no longer works for the employer associated with the 401k plan;
A qualified domestic relations order (QDRO) is issued by a court that requires that the assets in a 401k plan be split between two divorcing spouses;
The employee has medical expenses that are greater than 7.5% of his or her income and needs the money in his or her 401k plan to pay the medical bills.

The purpose of a 401k plan is to save for retirement. If funds are borrowed or withdrawn prior to that time then your loan or withdrawal must meet the standards set forth by the IRS and by your individual 401k plan in order to avoid expensive penalties. Therefore, each loan or withdrawal should be very carefully considered.

The Federal Reserve Boards New Credit Card Protections for the Consumer

Wed, 06 May 2009 18:29:57 GMT

Are the days of unfair credit card practices over? While the credit card companies may mourn their passing, American consumers are seeking fair credit card practices that they can understand. In an effort to protect American consumers, the Federal Reserve Board enacted new rules in December 2008 that are set to go into effect on July 1, 2010. The new rules are part of a coordinated effort with the Office of Thrift Supervision and the National Credit Union Administration. The Federal Reserve’s rules were passed after consumer testing and reviewing more than 60,000 comments.

The New Rules

According to the Federal Reserve’s press release, the new rules are designed to accomplish several major objectives including:

Limiting When Credit Card Companies Can Charge Late Fees: The new rules require credit card companies to provide consumers with a reasonable amount of time to pay their bill before they impose late fees. Late fees may be imposed if the bill is sent at least 21 days prior to its due date and the payment is not received by the due date.
Directing How Payments Will Be Applied: Credit card companies may legitimately charge different interest rates for different types of transactions. For example, the interest rate on cash advances may be significantly higher than the interest rate on point of sale purchases. However, the new rules require that payments made in excess of the minimum amount due be applied first to the amounts owed with the highest amounts of interest.
Limiting When Interest Rates Can Be Raised: All scheduled changes in interest rates that will apply in the first year should be disclosed to the consumer at the time the consumer signs up for the credit card. After the first year, interest rates may increase on new purchases as long as the consumer is provided with at least 45 days prior written notice in accordance with the rules. Interest rates can be raised if the minimum balance is not received within 30 days of the billing cycle due date. Finally, interest rates that are tied to a variable index may be raised in accordance with that index at any time.
Ending Two Cycle Billing: Currently, if a consumer pays a bill in full one month but carries a balance the following month, the credit card company can calculate interest using time from the previous cycle. This practice will be prohibited by the new rules.
Reducing High Fee / Low Credit Accounts: The new rules seek to provide some balance with regard to the fees charged for low credit limit accounts. The new rules provide that fees for the first year of the account may not exceed 50% of the available credit limit.
Making Applications Easier to Understand: Changes will be required for credit card applications and solicitations so that they are easier to understand for the consumer.

According to Federal Reserve Chairman Ben Bernanke, the rules adopted are “sweeping reforms” that are designed to allow consumers to access credit on fair and easily understandable terms. Time will tell if Chairman Bernanke’s assessment of the rules is correct and if consumers will in fact be provided with important and meaningful protections.

How to Prevent Automatic Withdrawal Scams

Wed, 06 May 2009 18:33:52 GMT

Every year many Americans become victims of automatic withdrawal scams. They may be offered a free item only to find that it was not in fact free, they may be charged recurring withdrawals which they did not expect or they may be otherwise taken advantage of and charged unexpected fees. While the situation is serious and troublesome, there are some steps that the government, the banks and the individual consumer can take to prevent these types of scams from succeeding.

The Government

The government has three critical roles to play in reducing the occurrence of automatic withdrawal scams. First, the government can educate people about the potential for automatic withdrawal scams in order to increase awareness and thereby decrease the occurrence of such scams. This can be accomplished through public service announcements, information on government websites and press releases. Second, the government may be able to prosecute companies that make unauthorized withdrawals since they are defrauding banks which are federally regulated. Third, the government can make sure that there are stringent laws in place which appropriately punish those who make unauthorized automatic withdrawals.

The Banks

When a consumer discovers that an unauthorized automatic withdrawal has been made, the consumer contacts his or her bank in order to report the unauthorized charge and to stop future withdrawals from occurring. The bank then investigates the allegation and should look at all information supporting the authorization for withdrawal. This puts banks in a unique position of knowing when a business is repeatedly making unauthorized withdrawals from customer accounts. Banks can then refuse to let companies that repeatedly make unauthorized withdrawals from automatically withdrawing money from customer accounts.

Banks can also set policies that allow bank employees to thoroughly screen any businesses that would like to make automatic withdrawals from customer accounts. If they feel that a business is seeking to commit fraud or be dishonest with its customers then it could refuse to allow them to conduct automatic withdrawals and instead require them to present a signed check or point of sale receipt for each transaction.

The Individual Consumer

Consumers can also take proactive steps to avoid unauthorized withdrawals. Individuals should be careful to never give out their bank account information over the phone, especially if they do not regularly do business with the company. It is safer to provide credit card information over the phone if there really is a deal that is too good to pass up. Consumer should also carefully review their banks statement each month and immediately report any unauthorized activity to the bank. Since many unauthorized withdrawals occur when telemarketers convince people to provide bank account information over the phone, consumers should be wary of any high pressure sales talk or refusal to provide information in writing.

The government, the banks and individual consumers can reduce the prevalence of automatic withdrawal scams in the United States by making it harder for would be scammers to succeed and less lucrative for the ones who do succeed. However, in order for a meaningful reduction in the occurrence of automatic withdrawal scams to take place, the government, the banks and the individual consumers must work together to prevent scams from occurring.

The Pros and Cons of Electronic Check Conversions

Wed, 06 May 2009 18:34:35 GMT

Today, many businesses are processing check payments as electronic check conversions. Typically, this allows businesses faster access to the funds in your checking account. Many consumers may be unaware that an ordinary paper check that is processed as an electronic check creates has different implications for them. This article will highlight some of the pros and cons of the electronic check conversion payment methods for the consumer.

Pros

If you have a dispute with a merchant and you paid via electronic check conversion then you have the right to have your financial institution investigate any transfers which you believe were unauthorized or incorrect. However, you only have 60 calendar days from the time the bank statement was sent to you to notify the bank of the problem. So, it is important for you to carefully review every statement that you receive.
Merchants typically cite several benefits to the electronic check conversion payment system. They claim that it reduces their bank fees, reduces the time that their employees spend on deposits and reduces fraud. While these benefits directly benefit the merchants, they may also benefit consumers by preventing price increases.
If you do not have a debit or credit card, many businesses will accept an electronic check conversion as a form of payment while they may not accept traditional checks. This may allow you to purchase things that you would not otherwise be able to do absent a credit or debit card and you can do so with the risk of credit card debt since the money is withdrawn directly from your bank account.

Cons

Some of the drawbacks of this payment method for the consumer include:

Funds are typically released from your bank account much faster than when you pay by ordinary check. Therefore, you must make sure that you have enough money in your account to immediately cover the payment.
You will not receive any copies of the cancelled checks from your bank, even if you provided a paper check for payment.

The Electronic Funds Transfer Act requires that you be provided prior notice if your payment may be processed as an electronic check conversion. The notice may be included with your paper bill for items that you pay through the mail or posted by the cash register in a retail shop. Notice, in the form of a detailed receipt must also be provided to you after the transaction. The receipt should include the merchant’s name, the date the transaction was processed and the amount of the transaction.

The Federal Trade Commission recommends that you carefully review your statement each month to make sure that all transactions were processed correctly and that you be vigilant in protecting your checking account number and other personal information since the information could be used to conduct an unauthorized electronic check conversion. If you believe that your rights have not been honored in an electronic check conversion transaction then you have the right to file a complaint with the Federal Trade Commission (FTC) by calling 1-877-FTC-HELP.

Protecting Your Personal Accounts From Unauthorized Charges

Wed, 06 May 2009 18:35:55 GMT

Life is busy and going through the mail takes time. However, when the mail includes your monthly bank or credit card statement then your time is well spent to review the statement carefully. Both your monthly checking account statement and your credit card statements will include automatic debits or automatic charges to your account. For one or more reasons, your account may include unauthorized automatic debits or charges and if you do not catch them and properly dispute them then you will pay the financial cost.

Why Unauthorized Debits or Charges Occur

There are several reasons why you may be a victim of unauthorized debits to your checking account or charges to your credit card. Those reasons include:

You have recurring payments set up and something goes wrong: Many people make arrangements to pay their regularly recurring bills through an automatic payment. For example, people may have their monthly mortgage, insurance payments, telephone or television payments automatically deducted from their checking accounts or billed to a credit card. These payments are valid and intended to make bill paying easier since they eliminate the need for writing checks and addressing envelopes. However, sometimes mistakes happen and the creditor or business billing your account makes a mistake by charging you the wrong amount, by billing you more than once or by billing you for services which you did not authorize.
Telemarketing scams: many people may be lured into providing their checking account information to telemarketers who promise to provide them with a “free gift.” A telemarketer may claim that he needs a checking account number or credit card to verify gift and then use that information to charge a fee for the so called “free gift”.
Fraud: Unauthorized debits or credit charges can occur if your account information is stolen. The information may be used to set up automatic withdrawals from your checking account since the person making the purchases would not have to show identification or even present a physical check.

Also, remember the free trial of that magazine or satellite radio station that you signed up for? Many different companies offer free trial periods. However, if you do not cancel within the required time then the company may continue to take automatic payments from you. While their actions are not technically unauthorized, they may come as a surprise to you. So, be sure to check the fine print to find out when and how to cancel so that you do not keep paying month after month for the free trial.

What to Do if Your Account Has an Unauthorized Charge

It is important to review your monthly statements each month to determine if there has been any unauthorized use. If you find that there has been unauthorized use then you should immediately follow the instructions on the bill for filing a dispute. By filing a complaint immediately, your financial liability may be limited by law and you may stand the best chance of stopping the charges from recurring. You should also file a complaint with the Federal Trade Commission (FTC). While the FTC may not be able to recover your money, it can keep track of patterns of unauthorized charges being made by particular companies and prevent the company from taking advantage of other consumers.

Protecting Paperless Money: The Electronic Funds Transfer Act

Wed, 06 May 2009 18:37:15 GMT

With each passing year, technology becomes more integrated into fundamental parts of our lives. Our bank accounts and financial transactions are no exception. Today, more and more transactions are conducted electronically without the passing of a check or paper money. Some examples of electronic fund transfers include: transactions conducted at an ATM, transactions conducted with an ATM or debit card, regularly scheduled preauthorized transfers including automatic payroll deposits and automatic payments and one time authorized transfers. Consumers who make these types of transactions are protected by the Electronic Fund Transfer Act.

The Electronic Fund Transfer Act Protections

The Electronic Funds Transfer Act provides certain protects to consumers who make electronic transactions. Significantly, the Act allows consumers to:

· Get a receipt for all transactions: The receipt must show the amount of the transaction, the date and the name of the other party to the transaction. All of this information must also show up on your regular bank statement.

· Correct mistakes: You have the right to correct mistakes that were made with regard to your account. In order to correct mistakes you must notify the financial institution within 60 days of the time that the first statement showing the error was sent to you. It is important to make your claim in writing and to provide all of the relevant detail. The financial institution then has approximately 45-90 days to resolve the error, depending on the particular circumstances. If an error is found then it must be corrected and if no error is found then the financial institution must provide you with a detailed written explanation of how it came to that conclusion.

· Protect themselves from theft: However, the protection that accompanies this right is dependent on how quickly you notify the financial institution of the suspected theft. If you notify the financial institution within 2 business days of learning of the theft then your liability is limited to $50. If you do not report the transaction within 2 business days but do so within 60 days then you could lose up to $500 for unauthorized transactions. If you do not report the transaction within 60 days of receiving a statement that shows an unauthorized transaction then you may be responsible for all amounts associated with the theft of your debit card or bank account information.

· Refuse to pay a creditor with electronic funds: The law is explicit that a consumer cannot be required to pay a loan or other credit obligation with electronic funds. However, it is important to note that employers and government agencies can require employees and citizens to receiving payroll and other financial benefits through electronic funds. The person receiving the funds has the right to determine which account and in which financial institution the deposit is made.

Electronic fund transfers are part of the way America does business in the 21^st century. While it may be impractical to avoid ATMs, debit cards and other electronic transfers it is important to understand how to protect yourself and your money at all times.

Free Personal Finance Articles

Fri, 27 Nov 2009 11:36:55 GMT

Free Personal Finance Articles

Free Banking & Finance Articles | Free Banking & Finance Legal Articles

The Truth About the Truth in Lending Act

What happens if my bank fails?

Can I use a loan modification program in order to save my home from foreclosure?

The Mortgage Forgiveness Debt Relief Act of 2007

What You Need to Know about 401k Withdrawals

Should You Borrow Money From Your 401k?

The Federal Reserve Boards New Credit Card Protections for the Consumer

How to Prevent Automatic Withdrawal Scams

The Pros and Cons of Electronic Check Conversions

Protecting Your Personal Accounts From Unauthorized Charges

Protecting Paperless Money: The Electronic Funds Transfer Act

Free Personal Finance Articles

The Federal Reserve Boards New Credit Card Protections for the Consumer