1 Credit Menu Your Credit Rating The Importance of a good credit rating. Maintain A+ Credit Tips for maintaining your good credit. Credit Warning Sign Warning signs to be aware of to avoid ruined credit. Result of Bad Credit The negative effects of damaged credit. Fix a Credit Report Steps to take in order to correct an inaccuracy. Credit Building Build a better credit record. Credit Scoring Discover how creditors rate your credit. Credit Repair Scams Avoid con artists and crooked credit repair firms. New Credit Identity Find out about the new credit identity scam. Credit and Divorce Learn how divorce may affect your credit. Your Credit Rights Understand credit laws that protect your rights. Credit and Seniors Getting credit when you're over 62. Card Applications Banks issuing credit cards to those with problem credit. Finance Menu Bad Credit Loans  Use them to get approved for that loan you need. Credit Counseling Credit counselors can help restore credit ratings. Getting Out Of Debt Take control of your debt and finances. Money Management Steps to successfully manage your money. Savings Guide Developing a sound savings plan. Fiscal Fitness Choosing the right credit counselor. Credit Cards Choosing and using credit cards. Mortgage Financing How to get the best mortgage for your home.

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1   Guidelines for Saving Often a very short time seems to elapse between the minute you put money away for a rainy day and the unexpected thunderstorm. The average American saves or invests about 6 percent of the household income. Saving requires that you not spend your money for current satisfaction but that you accumulate it for emergencies or major expenditures. Saving is a practiced habit you support to have more money to use in the future. A savings plan makes it possible to spread consumption over a lifetime. Savings are usually placed with institutions that promise to preserve capital and offer a steady income. Investments can be made to insure financial independence as your savings grow. Saving -- Part of the Total Package Saving is at the base of the investment pyramid and is a part of the total investment portfolio. It is necessary to save to further an investment development. Savings may earn fixed or variable rates of interest. How Much To Save What are your reasons for short-term savings? Long-term savings? Your goal for emergency savings should be whatever makes you feel comfortable. Financial advisors suggest two to six times your monthly expenses for an emergency fund. Calculate how much money you need for short-term or irregular expenses, such as car tag, taxes, or insurance premiums. If you need a total of $600 for irregular expenses for one year, you must put $50 a month into a short-term savings program. Review your long-term goals. How much money do you need to put aside annually to reach your goals? Divide the annual amount by 12 to determine monthly savings for long-range goals. Where Can You Put Savings? Banks Savings and Loans Brokerage Firms Credit Unions Who Can Open a Savings Account? Banks and Savings and Loans -- In Mississippi, a savings account may be opened in any name that has a Social Security number (tax ID). Identification must be furnished. Credit Unions -- You must hold membership in the credit union. Cost of membership varies from $5 up. Minimum deposits are sometimes required. Basic Information You must choose between immediate spending or saving for later spending. Effective management of cash flow can increase savings. A spending plan should accompany a saving plan. (A financial plan should help you reach your goals.) Establish goals for saving. Involve your family in identifying goals. Savings are to take care of emergencies as well as long-term and short-term wants and needs. If you save a small amount per pay period, your savings account will grow steadily. There are several interest-earning accounts in which to put your savings. Ways To Save Get into the habit of saving on a regular schedule. Pay yourself first. Save refunds or bonuses. Fill a coin jar with change. Use debt-to-credit switch. At end of installment payment, switch that payment to a savings program. Kick-the-habit plan. If you are a smoker spending $15 a week for cigarettes, cut out or at least cut down on cigarettes and put up to $780 in savings yearly. Put overtime money in savings. Develop a short-term austerity program. Buy nothing unless you really need it. When you get a raise, save it. Put monetary gifts into savings. Use automatic deduction -- to credit union from payroll check, or automatic transfer to savings account from checking account. Mississippi Law and Dormant Accounts The Uniform Disposition of Unclaimed Property Act became law July 1, 1982. This law affects any bank customer who has a demand, savings, or matured-time deposit in which no interest is shown for 7 years or more. The customer may show an interest in his or her deposit by making a deposit or withdrawal, corresponding in writing with the bank about the account, or by receiving the account statement mailed by the bank. As long as the account statement is not returned to the bank for nondelivery, the account is considered active and will not be reported or paid to the state. Factors To Consider When Choosing a Savings Option Yield What interest rate does the savings earn? How is the interest computed? Is the interest fixed or variable? What is the base for the variable? How often is the variable subject to change? Dividends (interest) are usually paid quarterly and are based on the previous quarter's profit. As of March 19, 1993, banks are required to express advertised rates as the Annual Percentage Yield (APY). This percentage expresses the amount of interest that would be expected from a $100 deposit in 365 days. The Effect of Compounding -- Suppose there is a $1,000 savings account that earns an annual rate of 4.0 percent for one year. How much interest will you be earning with various compounding periods? Compounding Period Interest Earned Annual $40.00 Semi-annual 40.40 Quarterly 40.60 Daily (365) 40.81 When interest rates are stated as annual percentage yield, the effects of compounding are built into the quoted interest rate. Liquidity How easy is it to withdraw funds? Are you limited to the amount or number of times you can withdraw funds? Safety Mississippi requires any financial institution to carry federal insurance. Each depositor should ask -- How safe is my deposit? What type of insurance is offered? FDIC Federal Depositors Insurance Corporation (FDIC) insures deposits in federal and most state banks, including commercial, savings, and mutual savings banks. Each basic account is insured up to $100,000. Insured banks must display the official FDIC sign in each teller's window. Banks approved for FDIC insurance must adhere to standards determined regularly through bank examination. The FDIC is on hand and usually begins payment by check to the depositors within three to five days after the date of a bank's closure. If questions are not answered locally, FDIC provides a toll-free hotline for answering questions. The hotline number is 1-800-934-3342. · Savings and Loan insurance is a separate fund under the management of FDIC. It is backed by the federal government and insures accounts at savings and loan institutions up to $100,000. · Uninsured Money -- Consumers who have uninsured money in a federally insured institution wait in line with other creditors and might receive stock or a portion of total, uninsured deposits. · Brokerage Firm -- Protection is offered by regulations of the Securities and Exchange Commission. Security Investors Protection Corporation (SIPC) offers protection of $500,000 for every customer account in case of liquidation or bankruptcy of an SIPC firm. Cash or check limit is $100,000; the remainder may be securities. Some firms buy more insurance. Certificates of Deposit bought at brokerage firms usually are insured by FDIC. There is no insurance that guarantees safety of any specific company. SIPC does not protect against losses resulting from the rise or fall in market value of your investment. · Credit Union-NCUA -- The National Credit Union Administration (NCUA) provides protection for $100,000 per base account. NCUA district office is located in Atlanta, Georgia and moves in immediately in a bankruptcy. NCUA pays depositors by check. Questions concerning NCUA may be answered by calling 404-881-3127. Questions can be directed to Mississippi Credit Union System, 981-4552. Always discuss problems first with the local institution. Minimum Deposits What is the minimum deposit required to open and maintain an account? What is the minimum required to earn the maximum yield and avoid service charges? Convenience How much effort is it to open, maintain, or close the account? Can this be done by phone, written correspondence, or automatic machine? Charges Are there one-time or periodic service charges? Are you charged for each deposit or withdrawal? Other Services Does the account provide additional benefits, such as check-writing privileges or the ability to transfer funds between accounts? Types of Savings Accounts Individual -- owned by one person, an adult or a minor. Joint -- owned by two or more persons. Voluntary Trust -- can be opened by an adult in trust for a child or another person. Custodial -- similar to trust account except it is irrevocable and becomes property of the minor for whom it is opened. Landlord Trust -- an account made for the benefit of tenants whose lease-security deposits must be placed in such accounts. Fiduciary -- accounts opened by the administrators of an estate or a guardian for a minor or an incompetent person. Commercial Account -- offered by some credit unions (example -- Coffee Club Account for an organization). Rule of 72 Measuring how rapidly your money grows, at a given interest rate, is called the Rule of 72. It provides an approximation of how long it will take to double your money. Divide the rate of return into 72 and you obtain the number of years required to double your money at that rate. With figures based on interest compounded annually, savings at 6 percent double in about 12 years. Collateral Any type savings account is acceptable as collateral for loans. Borrowing An advantage of borrowing against a savings account is obtaining a lower rate than the current interest rate. Signature Cards Only those who have signed a signature card have access to a savings account. You can give power of attorney to another person to access your account by legal action. Taxes Interest earned on a savings account is taxable to the person whose Social Security number is on the account. The annual interest earned on the account is reported on Form 1099 before March 1 of the current year to the Internal Revenue Service. Silent Savings We can save "silently" in the forms of equity in real estate, cash value of a life insurance policy, pension funds, automatic reinvestment of dividends, and escalating market value of assets. The struggle of many families to make ends meet often centers around saving pennies by turning off the hall light. While this strategy should be continued, it is perhaps more important to examine your saving and spending habits. Develop the habit of saving, and review the saving instruments to get the highest interest. Summary of Financial Savings Investments Instrument Institution Interest rate Minimum deposit Withdrawal restrictions Safety Other benefits Service charge Statement or Passbook Saving1 Bank S & L Varies $50 & up None Govt. ins. Govt. ins. Small saver May be a charge if below required amount Shares Accounts CU Varies Varies $5 -- $100 None Govt. ins. Payroll Deduction Based on amount & number of withdrawals Certificates of Deposit Bank S & L Fixed $500 Penalties for early withdrawal Govt. ins. Locks in rate when interest rates are high. None Brokerage Firm Fixed Usually $1,000 & up No penalty2, sold on Secondary Market3 Govt. ins. if part of large insured CD4 Sells on Secondary Market None to minimal fee Share Certificate CU Fixed Set by CU Same as above Govt. ins. Collateral None Zero Coupon Certificate of Deposit Brokerage Fixed $200 & up Can be sold on Secondary Market Govt. ins. if part of ins. pkg. Could be sold on Secondary Market None Zero Coupon Treasuries Brokerage Fixed $125 & up Can be sold on Secondary Market Govt. ins. Requires low investment None Money Market Acct.5 Bank S & L, CU Variable Market Rate Set by institution None Govt. ins. Limited check writing May be a charge for excess withdrawals Share Drafts CU Up to market rate Varies None Govt. ins. Check writing None Money Market Funds Brokerage Variable Market rate $500 & up Firms vary Total accessibility number of checks & amount varies Depends on safety of investment firm Limited check writing Varies EE Savings Bond6 U.S. Govt. Bank Guaranteed 4% if held for 6 months and purchased 3/1/93 or after $25.00 Penalty for early withdrawal Govt. guaranteed Exempt from state income taxes tax deferred on Federal None Central Asset Account Banks and Brokerage Varies $2,500 & up Balance required Depends on institution debit/credit card Check writing Fee goes up if balances go down 1Regular passbook savings account is not offered by all banks. Some banks consider it obsolete. Each institution now sets rate. 2One month's interest is maximum penalty in commercial banks for certificates of 12 months or less. Three months' interest is maximum penalty in commercial banks for certificates of one year or more. 3Prices on secondary market vary. 4CD's purchased at brokerage firms are federally insured if large "base" quantity is covered with federal insurance. 5Money Market account rates depend on Treasury Bills. Money Market rates are subject to change each Tuesday. In accordance with the Depository Institution De-regulation Act, the minimum amount required for these accounts was eliminated January 1986. Banking institution may set its minimum rate. 6Interest on EE Bonds held 5 years or longer is set at 85 percent of the average return on 5-year Treasury marketable securities during the holding period, compounded semiannually. Rates change every 6 months (May and November). American Credit Repair Center