Indiana Department of Financial Institutions

BANKING BASICS
A Mini-lesson for:
elementary and secondary teachers
adult and community educators
students and parents
This mini-lesson includes learning objectives, background information, discussion questions, an
activity and sources of additional information.
Objectives
Students will:
earn what a bank is
!hat different accounts banks offer
!hat checks are and how they work
earn about electronic banking
earn about bank failures
earn about the "ederal #eserve
$pening a bank account is a big step because you%re putting your money in someone else%s hands.
&ou%re counting on someone else to handle your money responsibly. 'efore you do that, it might
be a good idea to understand how a bank operates.
What is a Bank?
( bank is a business. 'anks sell services - financial services such as car loans, home mortgage
loans, business loans, checking accounts, savings accounts, certificates of deposit, and credit card
services. Some people go to the bank in search of a safe place to keep their money. $thers go to
the bank seeking money for loans to buy houses or cars, start businesses, e)pand farms, or do any
of the other things that require borrowing money.
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!here do banks get the money to lend* They get it from all the people who open savings and
other types of accounts. 'anks act as a go between the people who save and people who need to
borrow. +f savers didn%t put their money in banks, the banks would have little or no money to lend.
&our savings are combined with everyone else%s savings to form a big pool of money. The bank
uses that pool of money to make loans. The money doesn%t belong to the bank%s president, board
of directors, or stockholders. +t belongs to the depositors. That%s why banks have a special
obligation not to take big risks when they make loans.
o! "i" Bankin# Be#in?
,o one knows who started the world%s first bank, but it%s safe to say that banking has it roots in the
early trading civili-ations of the .editerranean ocean. !ithout trade there would have been little
need to establish banks. !ithout banks there would have been less money to finance trading
ventures.
+magine for a moment that you are a merchant in ancient /reece or 0hoenicia. &ou make your
living by selling to distant ports with boatloads of olive oil and spices. &ou don%t grow the olive oil
and spices yourself1 you buy them from growers or other merchants. +f all goes well, you will be
paid for your cargo when you reach your destination, but before you can sail, you must have money
to outfit your ship.
&ou find it by seeking out people who have money sitting idle. They agree to put up the money for
your cargo and supplies in e)change for a share of your profits when you return from your voyage. .
if you return. The people with the idle money are among the world%s first lenders and you are
among the world%s first borrowers. &ou complain that they%re demanding too large a share of your
profits. They reply that your voyage is perilous and they run a risk of losing their entire investment.
enders and borrowers have carried on this debate ever since.
Today, most people who want to borrow money go to banks rather than to wealthy individuals. 'ut
the basic concepts of borrowing and lending haven%t really changed. 0eople don%t let you have their
money for nothing. +t%s risky to lend money. There%s no guarantee that a lender will get the money
back, even if the borrower is an old friend. So why lend money* !hy take the risk* 'ecause
lending presents an opportunity to make even more money. 0eople will often take a financial risk if
they believe there is a good chance of making more money.
+f a bank lends 234,444 to a borrower, the bank isn%t satisfied to just get its 234,444 back. +n order
to make a profit, the bank charges interest on the loan. +nterest is the price borrowers pay for using
someone else%s money. +f a loan seems risky, the lender will charge more interest to offset the risk.
5+f you take a bigger risk, you want a bigger return6. $f course, the opportunity to earn lots of
interest won%t mean much if a borrower fails to repay a loan. That%s why banks often refuse to make
loans that seem too risky.
'anks also use interest to attract savers. (fter all, people who have e)tra money don%t have to put
it in the bank. They have lots of choices. 'ut in addition to all of the different types of accounts
banks offer depositors, the added advantage is being able to get to their money quickly.
o! is a Bank Starte"?
The process varies from state to state, but here%s a simple version of what it takes to start a bank.
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7. +ndividuals get together and decide to start a bank.
8. They file an application with the federal and state banking authorities. +n +ndiana, it%s the
+ndiana 9epartment of "inancial +nstitutions.
:. 0eople at the state banking authority review the application. They look closely at the financial
condition and the character of the applicants.
;. (fter reviewing the application, the federal and state banking authorities will either approve
or deny it.
Wh$ are %here so Man$ &ifferent %$'es of
Banks?
,ot all banks are e)actly the same. There are commercial banks, savings banks, savings and loan
associations, S < cooperative banks, and credit unions. They now offer many of the same
services, but in the past, they were very different from one another.
Commercial banks originally concentrated on meeting the needs of business and industry. They
served places where business could safely deposit their funds or borrow money when necessary.
.any commercial banks also made loans and offered accounts to individual customers but they put
most of their effort into serving business 5commercial6 customers.
Savings banks , S & Ls, and cooperative banks are classified as thrift institutions or =thrifts=
rather than banks. $riginally, they concentrated on serving people whose banking needs were
ignored or unmet by commercial banks. The first savings banks were founded in the early 7>44s to
give blue-collar workers, clerks, and domestic workers a secure place to save for a =rainy day.=
Savings banks were usually started by public spirited citi-ens who wanted to encourage the =thrift
habit= among people who didn%t earn much money. Savings and loan associations and cooperative
banks were first established during the 7>44s to help factory workers and other wage earners
become homeowners. S < s accepted savings deposits and used the money to make loans to
homebuyers. .ost of the loans went to people who didn%t make enough money to be welcome at
traditional banks.
Credit unions began as a 7?th-century solution to the emergency needs of people who were
unable to borrow money from traditional lenders. 'efore the opening of credit unions, ordinary
citi-ens had no place to turn when they faced une)pected home repairs, medical e)penses, or other
emergencies. @redit unions were started by people who shared a common bond such as working
at the same factory, belonging to the same house of worship, or farming in the same community.
.embers pooled their savings and used the money to make small loans to one another.
(lthough there are still differences between banks and thrifts, they now offer many of the same
banking services to their customers. .ost commercial banks now compete to make car loans,
many thrifts have begun to make commercial loans, and some credit unions make loans to
homebuyers.
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o! "o I Choose a Bank?
+n the 7?34s and 7?A4s banks used to give away toasters or other appliances to new depositors.
@hoosing a bank was easy. &ou went to the one that gave away the best appliance.
,ot many banks give appliances away anymore and choosing a bank is a little more complicated
than it used to be. "or starters you should shop around to find out which banks offer the most
competitive services. Some banks charge a monthly fee if your account falls below a certain level
and sometimes that fee can be higher than the interest your account may earn.
Some states prohibit banks from charging fees on savings accounts held by people under 7> or A3
and over. "ind out if your state has such a law.
$ther things you might want to consider:
9oes your bank pay its depositors a competitive interest rate*
+s the bank in a convenient location and are its business hours convenient to you*
+s your deposit fully insured by the federal government*
+s the bank a good corporate citi-en* 9oes it invest in your neighborhood*
ast, but certainly not least, does your bank provide courteous and efficient service* 'efore you
open an account, ask a few people if they are happy with their bank. (ll banks are not the same.
+t%s up to you to do some comparison shopping before you open an account.
What %$'es of Acco(nts "o Banks Offer?
0eople use banks for different purposes. Some have e)tra money to save and others need to
borrow. 'anks help their customers meet their needs by offering a variety of accounts.
Savings accounts are for people who want to keep their money in a safe place and earn interest at
the same time. &ou don%t need a lot of money to open a savings account and you can withdraw
your money any time.
Checking accounts offer safety and convenience. &ou keep your money in a checking account
and write a check when you want to pay a bill or transfer some of your money to someone else. +f
your checkbook is lost or stolen, all you need to do is to close your account and open a new one so
that nobody can use your old checks. 5!hen cash is lost or stolen, you rarely see it again.6
(nother attractive feature of a checking account is that every month your bank sends you all the
checks you have or a list or copies of the checks1 which you can use as receipts if there%s ever a
disagreement over whether or not you paid a bill. 'usinesses use checking accounts to hold the
money they receive and to transfer money to other people or other businesses. The one drawback
to checking accounts is that some do not earn interest.
NO accounts are checking accounts that pay interest 5,$! stands for ,egotiable $rders or
!ithdrawals6. Sometimes banks require you to keep a certain minimum amount of money 5a
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minimum balance6 in your ,$! account in order to keep earning interest. $nly non-business
customers may open ,$! accounts, businesses must use regular checking accounts.
!one" market deposit accounts usually pay a higher rate of interest and require a higher
minimum balance 5usually 28,3446.
Certificates of deposit 5@9s6 are savings deposits that require a customer to keep a certain
amount of money in the bank for a fi)ed period of time 5e)ample: 27,444 for two years6. (s a rule
the rate if interest your money earns is higher if you agree to keep your money on deposit for a
longer period of time. 5That%s because banks can plan on using your money for a longer period of
time.6 'anks do not offer check-writing privileges on certificates of deposit.
"inally, banks don%t always call their accounts by the same names. $ften they choose distinctive
names in hopes of attracting customer. 'ut sometimes there can be a real difference between one
bank%s accounts and another%s, so shop around.
Is it &iffic(lt to O'en an Acco(nt?
!hen you have decided on a bank you want to do business with and want to open a savings
account, you take your money you want to deposit to the bank. ( service representative will help
you with the paperwork. The only form you need to fill out is a signature card which requires you to
sign your name and then print your name, address, telephone number, date of birth, social security
number, and your mother%s madden name 5as a means of identification6.
The service representative will take your money and open an account for you. &ou will receive a
=passbook= or deposit slip which will show your new account number and the amount of money that
is in your new account. !henever you make a deposit or withdrawal, the transaction will be
recorded in your =passbook= or deposit or withdrawal slip.
&ou don%t need a lot of money to start a savings account. Some banks let you open one with as
little as five dollars. ,or do you need to wait until you are 7>. +n most cases, you can open a
savings account as soon as you are old enough to sign your name or even earlier if you open the
account with a parent or guardian.
See Study Bnit: #ank on It at: http:CCwww.in.govCdfiCeducationC.oneyDSmartCbankDonDit.htm$
What are Checks an" o! "o %he$ Work?
'ecause they are safe and convenient, checks have become a very popular method of paying for
things or transferring money. 'ut what e)actly is a check* +n simple terms, a check is a written set
of instructions to your bank. !hen you write a check, you are instructing your bank to transfer a
specific amount of money from your checking account to another person or an organi-ation. &ou
can even write a check just to convert some of the money on deposit in your checking account into
cash.
!hen you fill in the blank spaces on one of your checks, you are telling your bank how much of
your money you want to transfer and to whom you want it transferred. &ou authori-e the transfer by
signing y our check. $ne reason why checks are so popular is that people can use a cancelled
check to prove they paid a bill. +n most cases a cancelled check is as good as a receipt because it
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bears the endorsements of all the persons, banks, companies, or other organi-ations that have
handled it. "or e)ample if the landlord claims you didn%t pay your rent, all you need to do is find
your cancelled check and point out that it was endorsed by your landlord and your landlord%s bank.
%racin# a Check %hro(#h the )e"eral *eserve+s
Check Collection Net!ork
7. &our (unt sent you a 284 @heck for your birthday.
8. &ou deposit the check in your savings account at your bank.

:. &our bank endorses the check and sends it to its "ederal #eserve 'ank.
;. The "ederal #eserve 'ank gives your bank credit for the check by adding the amount of
the check to your bankEs reserve account or clearing balance.
3. The "ederal #eserve Transportation system flies the check to your (unt%s 'ank "ederal
#eserve 'ank.
A. That "ederal #eserve 'ank forwards the check to your (unt%s bank and deducts the
appropriate amount from that bank%s reserve account.
F. &our (unt%s bank deducts the 284 from your (unt%s checking account.
@heck 87 is a sweeping new federal law effective $ctober 8>, 844; that takes away your
ability to get back your original paper checks. Bnder this law, consumers could be more
likely to bounce checks and may find themselves paying higher bank fees. The
complicated new law gives you some rights, but those rights depend on a variety of factors,
including how the merchant and the bank decide to process your check. Gisit the "#'%s
web site on the new law: http:CCwww. federalreserve. govCpaymentsystemsCtruncationC.
What is ,lectronic Bankin#?
Hlectronics and computers have made banking an around-the-clock business. &ou can now do
much of your banking even when your bank is closed. &ou no longer need to plan your schedule
around your banks business hours.
(utomated Teller .achines 5(T.s6 are computers that are much like limited-service bank
branches. &ou can use them to make a withdrawal, make a deposit, make a payment, transfer
money from one account to another, or check your account balance. +n some cases, (T.s of
different banks are linked together so you can use them when you travel to a different part of town
or even to another state. (ll you need to use an (T. is a plastic card from your bank and your own
personal password called a 0+, number.
&ou can also have your employer electronically deposit your pay directly to your bank account each
payday. 9irect deposit is also popular among people who receive Social Security checks or
pension checks because it saves them the bother of standing in line at the bank, battling bad
weather, or worrying about being robbed on the way home from the bank
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(nother electronic banking service is called electronic funds transfer or H"T. 'y using H"T, a bank
can transfer large amounts of money to another bank by wiring an electronic message. There is no
need to write a check or load up an armored car with cash and there%s no long wait for the money to
be moved. Hlectronic transfers take only an instant. (n electronic message instructs a computer to
deduct a certain amount of money from one bank account and then add the same amount to
another bank account. ,o cash changes hands, but money is transferred just the same.
0eople have been predicting for years that electronic banking will someday replace checks and
cash, but so far the predictions haven%t been accurate. Hlectronic banking has grown steadily but
so has the use of checks and the amount of cash in circulation. 0eople like to use cash and checks
because they are familiar and convenient methods of payment.
See our eb Sites%
&utomatic Debit Scams at: http:CCwww.in.govCdfiCeducationC(utomScm.html
Credit and &'! Cards at: http:CCwww.in.govCdfiCeducationC@r(T..html
Debit Cards vs$ Credit Cards at: http:CCwww.in.govCdfiCeducationCdebitDvs.htm
&o Banks Kee' -ar#e A.o(nts of Gol" an" Silver
in %heir /a(lts?
'anks rarely keep gold or silver in their vaults anymore. That%s because our paper money is no
longer backed by gold or silver and our coins do not contain precious metal. The B. S, government
still holds millions of ounces of gold and silver but citi-ens and foreign governments can no longer
e)change their B. S. paper money for the precious metals. The government%s gold and silver are
considered valuable assets rather than forms of money.
Today%s coins and paper money 5currency6 are backed by the promise of the B. S. government. To
most people, that promise is as good as gold. $f course, coins and currency are not the only forms
of money. &ou won%t have to keep your money in the form of cash. .oney held in a savings
account or a checking account is still money. +t just isn%t cash.
Other )or.s of Mone$
@ontrary to popular belief, credit cards are a form of money even though people often refer to
them as =plastic money. = @redit card users are actually taking out a loan and sooner or later, they
will have to pay the bill for all those things they have charged. They are buying something now and
agreeing to pay for it at a later date with money, usually a check.
.any banks issue credit cards, even to people who aren%t regular customers. 'efore issuing you a
credit card, a bank will require you to complete an application form and will e)amine your credit
record to see if you have a history of paying back your debts on time. .any people run up credit
card bills that are too big to pay off every month. !hen that happens customers must pay a
monthly finance charge that can run anywhere from 74 percent to 8; percent a year. +n addition,
many banks and other companies that issue credit cards charge their cardholders an annual fee
usually 284 to 234 a year. Hven customers who pay off their entire credit card bill every month still
have to pay the annual fee. 'anks and credit card companies also charge merchants a fee for
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making the credit card service available. "inance charges, annual fees, and merchant fees have
become an important source of profit for banks.
"inally there%s another plastic card that resembles a credit card in appearance but is actually very
different in functionthe debit card. ( debit card is much more like an (T. card than a credit card.
!hen someone uses a debit card at the gas pump or at a store, the amount of the purchase is
electronically deducted from the user%s bank balance. There%s no monthly bill because the amount
of cash purchase is deducted almost immediately from the userEs account.
What a''ens to 0o(r Mone$ After 0o( &e'osit
it in 0o(r Bank Acco(nt?
The bank begins by adding the amount you%re depositing to the amount that%s already in your
account 5your e)isting balance6. &our deposit and new balance are entered into your =passbook=
and into the bank%s computer system. The money you deposited is mi)ed in with all the other cash
the bank received that day.
!hen you and other customers deposit money in a bank, the bank puts most of it to work. 0art of
the money is set aside and held in reserve, but much of the rest is loaned to people who need to
borrow money in order to buy houses and cars, start or e)pand businesses, buy farm equipment or
to plant crops, or do any of the other things that require people to borrow money.
Interest ( Compounding
!hen you keep your savings in a bank, the bank pays you e)tra money, which is called interest.
The interest is added to your account on a regular basisusually once a month or once every three
months 5quarterly6. @ompounded interest means that interest is added to your balance 5usually
quarterly6, then the ne)t quarter the interest is computed on your money deposited plus the last
quarter interest.
)*ample: ,ew 'alance I 2344. 44 +nterest rate I 3J (nnual I 283. 44
,ew 'alance I 2344. 44 +nterest rate I 3J @ompounded quarterly I 283. F8
&ou would earn 2. F8 more with the interest compounded quarterly and the annual yield rate would
be 3. 7;J. 'anks must disclose to you if the savings account is compounded and how often it is
compounded and give you the annual yield rate as a result of the compounding. Some banks may
compound interest as often as daily. The shorter the compound period, the higher the yield rate
would be.
There is another side to interest. !hen someone borrows money from a bank, the bank charges
them interest and it charges borrowers a higher rate than it pays savers. "or e)ample, it might pay
savers 3J and charge borrowers >J on up to as high as 83J imposed on some bank credit cards.
Wh$ "o Banks )ail an" What a''ens When %he$
"o?
( bank is a business and like other businesses, banks sometimes fail. 'ut why should banks go
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out of business* Sometimes banks fail because the people who run them make poor business
decisions such as e)panding too quickly, pushing too much money into one type of loan, or using
bad judgment making loans. Sometimes banks fail because of fraud. .aybe the president makes
questionable loans to friends or hires unqualified people and pay them huge salaries.
Things like that happen and they sometimes lead to bank failures. 'ut in most cases, banks go out
of business because changing economic conditions make it difficult or impossible for borrowers to
repay their loans. The economy might slow down and many people are laid-off. (s a result, real
estate values may fall drastically and banks that have made a large number of real estate loans
could be faced with unpaid loans or property that is worth much less now than when the loan was
made.
"inally, the bank lost so much money to bad loans that government regulators stepped in and
closed the bank. The bank had fallen victim to changing economic conditions, falling real estate
values, and a high concentration of real estate loans.
(lso, for e)ample, take a bank that gets too big too fast. The bank%s president was determined to
turn the conservative old institution into the region%s biggest bank. The bank%s loan officers got the
message and started making as many loans as they could. oan applications weren%t always
checked as closely as they had been in the past and some of the loans were approved more quickly
than they were in the old days. 'ut nobody seemed too concerned because the local economy was
strong and real estate values were rising rapidly. Then the economy slowed down and things took
a turn for the worse. 'usinesses the bank had loaned money to began to close and failed to make
their payment to the bank on their loans. +n the end, the bank was losing so much money on bad
loans that government regulators were forced to step in and close it. The regulators tried to find a
buyer for the bank, but no other bank wanted to get stuck with all the loans that had turned sour.
Hventually another bank agreed to buy the bank if the federal government would agree to keep
many of the problem loans.
&o &e'ositors -ose %heir Mone$ When a Bank
)ails?
The "ederal 9eposit +nsurance @orporation 5"9+@6 has protected bank deposits up to a certain
amount since 7?:;. +n all that time, no one has lost money in an "9+@ insured account. The "9+@
covers most types of deposits, including savings deposits, checking deposits, and certificates of
deposit. The basic insured amount is 2744,444 per depositor.
+n the days before federal deposit insurance, the B. S. banking system was plagued by bank =runs=
or =panics.= (t the slightest hint of trouble, depositors would run to the bank and line up to withdraw
their money. (ll too often, only the first few people in line had any hope of ever seeing their money
again, others lost everything. Hven healthy banks sometimes failed after rumors caused depositors
to panic and withdraw their money.
"or many years the public seemed willing to accept the tragic losses that resulted from bank
failures. 'ut then came the /reat 9epression of the 7?:4s. Kard times forced thousands of banks
to close their doors forever. "inancial losses ran into the hundreds of millions of dollars. The
human suffering was impossible to calculate. The wave of bank failures and shattered public
confidence in the banking system caused (mericans to look to the federal government for help.
@ongress responded by establishing the "9+@ which provides deposit insurance coverage of up to
28,344 per depositor. 0ublic confidence rebounded and bank failures declined from appro)imately
;,444 in 7?:: to A7 in 7?:;.
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$ver the years the amount of the federal insurance has increased and has helped to maintain
public confidence in the B. S. banking system. 'ank failures have not been eliminated, but long
lines of panic stricken depositors have become an uncommon sight. !hen people are confident
that their money is safe, they don%t panic and rush to withdraw it.
See !eb Site )lectronic Deposit Insurance )stimator at: http:CCwww8.fdic.govCedie
&o &e'ositors -ose Mone$ if %heir Bank is
*obbe"?
No$ ,early all banks have private insurance that covers them if they are robbed. 5+t is not the same
as federal deposit insurance.6 +n addition, most banks take elaborate measures to safeguard the
cash and other valuable items left in their care. 'ank vaults have long been protected by steel
reinforced concrete walls, time locks, and metal alloy doors that resist drilling and e)plosions.
(t one time, armed security guards stood watch over banks, but nowadays most banks seem to
have decided 5wisely6 that they would rather not e)pose their customers and employees to gun
play. Shotguns and revolvers have been replaced largely by closed-circuit television cameras that
maintain a constant watch over everyone who enters or e)its the bank.
(nother fairly recent innovation is the e)ploding dye pack. +n certain cases, bank employees are
able to place a package of red dye in with the robber%s stash of stolen cash. ater, when the crook
opens the stash, the concealed dye pack e)plodes covering the robber and the stolen money with
dye that won%t wash off.
What is the )e"eral *eserve an" o! &oes it )it
Into the 12 S2 Bankin# S$ste.?
(lthough the "ederal #eserve is often in the news, not everyone understands what it is and
what it does. 0erhaps the best way to e)plain is with "ederal #eserve Luestions and (nswers to
cover some of the most common questions that people ask:
+$ hat is the Federal ,eserve-
&$ It is the central banking s"stem of the .nited States$
+$ hat does it do-
&$ 'he Federal ,eserve has three main duties%
1. &s a bank for banks, it provides banks, thrift institutions, and credit unions /ith such
services as check processing and electronic funds transfers0
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2. &s a bank for the .$ S$ government, it holds man" of the governments accounts and
acts as the .$ S$ 'reasur"1s agent /hen it sells 'reasur" securities and .$ S$ savings
bonds0 and
3. It is responsible for making policies that /ill affect ho/ much mone" and credit /ill
be available to the .$ S$ econom"$
+$ hen /as the Federal ,eserve established-
&$ Congress created the Federal ,eserve S"stems in 2324 to help make the .$ S$ banking
s"stem safer and more efficient$
+$ 5o/ man" Federal ,eserve #anks are there-
&$ 'here are 26 Federal ,eserve #anks, 67 branches to those banks and 22 regional check
processing centers /hich are limited(service branches that onl" process checks$ )ach of
the 26 ,eserve #anks serves its o/n Federal ,eserve District$
+$ here is the head8uarters for the Federal ,eserve-
&$ 'he S"stem1s head8uarters is in ashington, DC It is called the #oard of 9overnors of
the Federal ,eserve S"stem$
+$ Does the Federal ,eserve lend mone" to people /ho /ant to start businesses or bu"
cars and houses-
&$ No$ 'he Federal ,eserve does not lend mone" to private borro/ers, but it sometimes
lends mone" to banks /hen the need arises$
+$ Does the Federal ,eserve print .$ S$ paper mone"-
&$ No$ &lthough the Federal ,eserve Notes account for almost 2:: percent of the .$ S$
paper mone" in circulation, the notes are actuall" printed b" the #ureau of )ngraving and
;rinting in ashington, DC and Fort orth, 'e*as$ 'he paper mone" is then shipped to the
Federal ,eserve #anks and their 67 branches$ hen banks need cash for their customers
needs, the" order it from the Federal ,eserve #anks in their District$
+$ Do all Federal ,eserve #anks store gold bars in their vaults-
&$ Onl" the Federal ,eserve #ank of Ne/ <ork has a /orking gold vault and almost all of
the gold in the vault is foreign(o/ned$ 'he .$ S$ government gold is held at Fort =no*,
=entuck", the .$ S$ !ints in Denver and ;hiladelphia, the San Francisco &ssa" Office of the
.$ S$ !int, and the .$ S$ #ullion Depositor" in est ;oint, Ne/ <ork$
+$ Do all checks /ritten in the .nited States go through the Federal ,eserve S"stem-
&$ No$ 'he Federal ,eserve #anks handle more than one(third of all .$ S$ checks$ 'he
others are processed b" private banks$
+$ Is the Federal ,eserve responsible for regulating and supervising the entire .$ S$
banking s"stem-
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&$ No$ It shares the responsibilit" /ith other regulator" agencies including the Office of the
Comptroller of the Currenc", the Federal Deposit Insurance Corporation, the Office of 'hrift
Supervision, the National Credit .nion &dministration, and the banking commis(sions in
each state$
+$ Does the Federal ,eserve set interest rates-
&$ 'he Federal ,eserve is responsible for .$ S$ monetar" polic", /hich means that it makes
policies that influence ho/ much mone" and credit /ill be available to the .$ S$ econom"$
Interest rates often go up and do/n in response to the Federal ,eserve1s monetar" polic"
decisions, but onl" the discount rate is set directl" b" the Federal ,eserve$ 'he discount
rate is the rate paid b" banks /hen the" borro/ from the Federal ,eserve$
See eb Site on 'asics of +nterest #ates at% http://ecedweb.unomaha.edu/ve/library/BOIR.PDF
(crobat file.
12
&ISC1SSION 31,S%IONS
7. !hat is a bank and what kinds of banks are there*
8. !hat kinds of accounts can you open at a bank*
:. !hat is the difference between an (T. card, a credit card, and a debit card*
;. 9iscuss how a bank earns money.
3. 9iscuss what can cause a bank to fail.
A. !ho regulates the B. S. monetary system*
13
AC%I/I%0
Hncourage students to open a savings account at the bank their parents may have their deposits.
9iscuss the advantages of putting their e)tra money in a savings account instead of keeping it in a
piggy bank.
Kave students that open a savings account e)plain to the class the procedure for opening the
account.
Kave your class take the #anking Services +ui>.
/ive students a copy of our #rochures.
;o/er;oint presentation for this .ini-lesson at:
http:CCwww.in.govCdfiCeducationC.iniessonsC'ankingJ84'asicsJ84mini.ppt
14
BANKING S,*/IC,S 31I4

7. ( pawnshop offers loans to people starting their own business.
True
"alse
8. $pening a checking account requires completing a signature card.
True
"alse
:. ( blank endorsement allows anyone to cash a check.
True
"alse
;. ( =smart card= stores a person%s bank balance right on the plastic card.
True
"alse
3. (n outstanding check refers to one written on an account with a very low
balance.
True
"alse
A. The highest loan rates usually occur when borrowing from a:
bank.
credit-card company.
pawnshop.
credit union.

F. ( 5fill in the blank6 is used to add funds to a bank account.
15
check
deposit slip
signature card
withdrawal slip
>. ( 5fill in the blank6 endorsement includes the words ="$# 9H0$S+T
$,&. =
full
special
blank
restrictive
?. $btaining cash from an (T. is similar to:
writing a check.
making a deposit.
opening a new account.
earning interest on your account.
74. ( service charge on your bank statement will result in:
a higher balance.
a lower balance.
earning more interest.
more outstanding checks.
16
BANKING S,*/IC, 31I4 ANSW,*S
7. ( pawnshop offers loans to people starting their own business. 'rue
8. $pening a checking account requires completing a signature card. False
:. ( blank endorsement allows anyone to cash a check. False
;. ( =smart card= stores a person%s bank balance right on the plastic card. False
3. (n outstanding check refers to one written on an account with a very low
balance. False
A. The highest loan rates usually occur when borrowing from a: pa/nshop.
F. ( 5fill in the blank6 is used to add funds to a bank account. deposit slip
>. ( 5fill in the blank6 endorsement includes the words ="$# 9H0$S+T
$,&. = restrictive
?. $btaining cash from an (T. is similar to: /riting a check.
74. ( service charge on your bank statement will result in: a lo/er balance.
17
So(rces Of A""itional Infor.ation
Articles
Accounts That Give Piggy Banks a Run For The Money, by 9ebra ,ussbaum. The ,ew &ork
Times, p. "F, 5Mune :4, 7??A6.
Students Tackle a Subject With Interest learning the !unda"entals o! investing can be a
#ro!itable lesson, by .artha .. Kamilton. The !ashington 0ost, p. !K?, 5.arch ;, 7??F6.
5a.'hlets
Federal ,eserve #ank of Ne/ <ork
0ublic +nformation 9epartment
:: iberty Street
,ew &ork, ,& 744;3
Supplementary .aterials 5free6.
Internet
!ore Information on the Federal ,eserve%
(dobe booklet on "ederal #eserve - ho e &re and hat e Do
http://ecedweb.unomaha.edu/ve/library/WWAW.PDF - Sketches the structure of the "ederal #eserve
System and the operations of the St. ouis "ed. 0hotographs, diagrams, and drawings.
"ederal #eserve ;urposes and Functions http://www.federalreserve.gov/pf/pf.htm
"ederal #eserve !eb Site on !onetar" ;olic" http://www.federalreserve.gov/policy.htm
"ederal #eserve 9eneral Information eb Site http://www.federalreserve.gov/general.htm
&#C1s of Figuring Interest (crobat file 5:F4 N'6 http://ecedweb.unomaha.edu/ve/library/ABF.PDF
/onc-y: 'ooklet, /rades: ? - 78 9iscusses the various ways of calculating interest and how this
can affect the dollar amount paid.
)conomics ( .niversit" of Omaha http://ecedweb.unomaha.edu/standards/!"#standards.htm
#asics of Interest ,ates (crobat file 5FA7 N'6 http://ecedweb.unomaha.edu/ve/library/B$%.PDF
#ichard 9. @. Trainer. /rades: > - 78 0rovides an elementary discussion on interest rates and
the effect on production, employment, income, and prices.
5o/ #anks Create !one" K'@.. 09" (crobat file 5;FA N'6
http://ecedweb.unomaha.edu/ve/library/&B'(.PDF yndi 'eale. /rades: ? - 78 This module e)plains how
the B. S. banking system uses e)cess reserves to create money in the form of new deposits for
borrowers.
)CONnections 5(dobe6:
h" e Save 5/rades N-86 http:CCecedweb.unomaha.eduClessonsCsaveN-8.pdf
!" !one" 5/rades ;, 3, < A6 http:CCecedweb.unomaha.eduCveClibraryC.&.$.09"
Life of a Dollar #ill 5/rades ;->6 http:CCecedweb.unomaha.eduCveClibraryC$9'.09"
18
,oad to ,oota 5/rades 8-F6 http:CCecedweb.unomaha.eduCveClibraryC#$$T.09"
! & ! Interesting 5/rades A->6 http:CCecedweb.unomaha.eduClessonsC.<.A->.pdf
Once .pon a Dime 5/rades A-?6 http:CCecedweb.unomaha.eduCveClibraryC9+.H.09"
!eb Sites if you have a @omplaint (gainst ( ,ational 'ank:
http:CCwww.federalreserve.govCpubsCcomplaints
,ote: The links in this .ini-lesson that go to web sites outside of this agency%s control are provided
as a convenience only. The 9epartment takes no responsibility for their content.
19
OPPORTUIT!. . . .
The Equal Credit Opportunity Act re)uires that all credit
applicants be considered on the basis of their actual
)ualifications for credit and not be turned away because of
age* gender* marital status* race* color* religion* national
origin* because they receive public income such as welfare or
+ocial +ecurity* or because they e,ercise their rights under
Federal credit laws such as filing a billing error notice with a
creditor. A creditor may not use any of those grounds to
discourage you from applying for credit- refuse you credit if
you )ualify- or lend you money on terms different from those
granted another person with similar income* e,penses* credit
history* and collateral. .he Act also provides that an individual
may choose to rely on the credit history of a spouse or former
spouse if it can be shown that the individual helped to build up
that history.
"U#$IF!I%. . . .
'reditors determine whether or not you/re a good credit ris0 by
evaluating:
Your ability to repay* as indicated by how much of your
income is left over after you pay your basic e,penses every
month. 'reditors as0 for employment information: your
occupation* how long you/ve wor0ed* and how much you earn.
.hey want to 0now your e,penses* how many dependents you
have* whether you pay alimony or child support* and the
amount of your other obligations.
Your assets* such as a house* ban0 account* or insurance
policy- anything that would serve as security for the creditor if
you couldn/t meet your payment. 'reditors want to 0now what
you may have that could be used to bac0 up or secure your
loan and what sources you have for repaying debts other than
income.
Your credit history* showing what debts you/ve had before
and how you/ve managed them. .hey loo0 at how much you
owe* how often you borrow* whether you pay bills on time* and
whether you live within your means. .hey also loo0 for signs
of stability: how long you/ve lived at your present address*
whether you own or rent* and length of your present
employment.
Your attitude is important* too* because the creditor has to
decide whether you/re the 0ind of individual who will act
responsibly in using credit. Appearance and behavior have
been 0nown to influence a creditor/s decision.
B&%II%. . . .
1ou may )ualify in all respects e,cept for a credit history.
Building a credit history ta0es time and patience. .his problem
affects young people 2ust beginning careers as well as older
people who have never used credit. 1ou may have to start in
a small way and build up slowly. &ere are some suggestions:
3stablish a savings and/or chec0ing account. 'reditors loo0 on them
as evidence that you/re able to handle money.
Borrow against the security of your savings account at the ban0. .he
interest you pay on the 4passboo04 loan will be partly offset by the
interest your account 0eeps on earning* so the loan will cost you less
than a regular small loan would.
Buy something on time at a ma2or store or open a local department
store charge account and pay your bills promptly. .his is a stepping
stone to other 0inds of credit.
Apply for a gasoline credit card.
f you can/t get credit on your own* you might as0 a relative or a friend
who already has a good credit standing to cosign your loan
application and share your liability. $nce you have repaid the debt*
try again to get credit on your own.
f you/re new in town* write for a summary of any credit record 0ept by
a credit bureau in your former town. 5As0 the ban0 or department
store in your old hometown for the name of the agency it reports to. 6
Before applying for credit* as0 whether the creditor reports credit
history information to credit bureaus serving your area. (ost
creditors do* but some do not. f possible* you should try to get credit
that will be reported. .his builds your credit history.
f you believe you/re creditworthy* 0eep trying to establish your credit.
Don/t be discouraged. +hop around. Persistence has a way of
paying off.
B&&FIT'. . . (#RI%. . . .
'redit is a good thing when used wisely. t lets you buy
necessities when you/re short of cash and lu,uries when you
want them. Without credit you might have to put off buying
what would be useful or desirable.
But* li0e other good things* credit can be misused. Borrowing
can be addictive and may be dangerous to your financial
health.
R&)&)B&R. . . .
'redit isn/t usually free. t/s paid for by interest charges that vary with
the type of creditor* 0ind of credit* and the time period involved.
'redit isn/t more money. t/s a convenience that lets you en2oy
certain benefits now that you/ll have to pay for later on.
t/s important to 0eep your payments up to date. f you run into a
problem because of unforeseen difficulties* discuss it with your
creditors.
t/s important to 0eep trac0 of how much you owe overall* so that
when you do get your credit established* you won/t ta0e on more debt
than you can handle.
Be wary of ads that promise you 4instant credit4 or 4a ma2or credit
card regardless of your lac0 of credit history or past credit record. 4 f
as0ed for money up"front to get you a loan* be aware* it may be a
scam and you/ll never see your money again and still won/t have a
loan.
.he people who get the most out of credit understand that:
*redit i+n,t a ri-ht to be e.pected. It,+ a
privile-e to be protected.
BORRO(I% B#RO)&T&R'. . . .
&ow much debt you can handle depends on your family
situation* assets* income* e,penses* employment status* age*
health* and a lot more. f your monthly payments are more
than what/s left over from your wee0ly paychec0 after basic
e,penses* you may be headed for trouble.
IF !OU,R& TUR&D DO(. . . .
f you are re2ected for credit* find out why. .here may be
reasons other than lac0 of credit history. 1our income may not
meet the creditor/s minimum re)uirement or you may not have
wor0ed at your current 2ob long enough. .ime may resolve
such problems. 1ou could wait for a salary increase and then
reapply* or simply apply to a different creditor. &owever* it is
best to wait at least 7 months before ma0ing each new
application. 'redit bureaus record each in)uiry about you.
+ome creditors may deny your application if they thin0 you/re
trying to open too many new accounts too )uic0ly.


The +ndiana 9epartment of "inancial
+nstitutions, 9ivision of @onsumer @redit
has many other credit related brochures
available, such as:
(nswers to @redit 0roblems
(pplying for @redit
(t Kome Shopping #ights
'ankruptcy "acts
'uried in 9ebt
@harge @ard "raud
@hoosing ( @redit @ard
@o-Signing
@redit and 9ivorce
@redit #eporting and Scams
9ebt @ollection 0roblems*
9eep in 9ebt*
Hqual @redit $pportunity
"air @redit #eporting
"air 9ebt @ollection
/old @ards
Kang up on "raud
Kigh #ate .ortgages
Kome Hquity @redit ines
Kow to (void 'ankruptcy
Kow to @ut the @osts of @redit
+dentity Theft
ook 'efore you ease
.ortgage oans
$lder @onsumers
#epossession
#everse .ortgage oans
#ule of F>s O !hat is it*
Secured @redit @ard Scams
Shopping for @redit
Bsing @redit @ards
Gariable #ate @redit
!hat is a 'udget*
!hat is the 9"+*
@all our toll-free number or write to the
address on the cover for a copy of any of
the brochures listed or for further consumer
credit information.
#pplyin- /or
*redit
D);&,'!)N' OF FIN&NCI&L
INS'I'.'IONS
@onsumer @redit 9ivision
:4 South .eridian Street, Suite :44
+ndianapolis, +ndiana ;A84;
:7F-8:8-:?33
7->44-:>8-;>>4
Fraudulent telemarketers have found yet another way to
steal your money, ths tme from your !he!kn" a!!ount.
#onsumers a!ross the !ountry are !om$lann" a%out
unauthor&ed de%ts 'wthdrawals( from ther !he!kn"
a!!ounts.
)utomat! de%tn" of your !he!kn" a!!ount !an %e a
le"tmate $ayment method* many $eo$le $ay mort"a"es
or make !ar $ayments ths way. +ut the system s %en"
a%used %y fraudulent telemarketers. ,herefore, f a
!aller asks for your !he!kn" a!!ount num%er or other
nformaton $rnted on your !he!k, you should follow
the same warnn" that a$$les to your !redt !ard num%er
-- do not give out checking account information over
the phone unless you are familiar with the company
and agree to pay for something. Remember, f you
"ve your !he!kn" a!!ount num%er over the $hone to a
stran"er for .verf!aton. or .!om$uter $ur$oses,. that
$erson !ould use t to m$ro$erly take money from your
!he!kn" a!!ount.
HOW THE SC! WOR"S
/ou ether "et a $ost!ard or a tele$hone !all sayn" you
have won a free $r&e or !an 0ualfy for a ma1or !redt
!ard, re"ardless of $ast !redt $ro%lems. 2f you res$ond
to the offer, the telemarketer often asks you r"ht away,
.3o you have a !he!kn" a!!ount4. 2f you say .yes,. the
telemarketer then "oes on to e5$lan the offer. 6ften t
sounds too "ood to $ass u$.
7ear the end of the sales $t!h, the telemarketer may ask
you to "et one of your !he!ks and to read off all of the
num%ers at the %ottom. 8ome de!e$tve tele-marketers
may not tell you why ths nformaton s needed. 6ther
de!e$tve telemarketers may tell you the a!!ount
nformaton wll hel$ ensure that you 0ualfy for the
offer. )nd, n some !ases, the le"tmate telemarketer
wll honestly e5$lan that ths nformaton wll allow
them to de%t your !he!kn" a!!ount.
6n!e a telemarketer has your !he!kn" a!!ount
nformaton, t s $ut on a .demand draft,. wh!h s
$ro!essed mu!h lke a !he!k. ,he draft has your name,
a!!ount num%er, and states an amount. 9nlke a !he!k,
however, the draft does not re0ure your s"nature.
:hen your %ank re!eves the draft, t takes the amount
on the draft from your !he!kn" a!!ount and $ays the
telemarketers; %ank. /ou may not know that your %ank
has $ad the draft untl you re!eve your %ank statement.
WHT #O$ C% &O TO 'ROTECT
#O$RSE()
2t !an %e dff!ult to dete!t an automat! de%t s!am
%efore you suffer fnan!al losses. 2f you do not know
who you are talkn" to, follow these su""estons to hel$
you avod %e!omn" a v!tm<
3on;t "ve out your !he!kn" a!!ount num%er over
the $hone unless you know the !om$any and
understand why the nformaton s ne!essary.

2f someone says they are ta$n" your !all, ask why.

3on;t %e afrad to ask 0uestons.

#om$anes do not ask for your %ank a!!ount
nformaton unless you have e5$ressly a"reed to
ths $ayment method.
*TS THE (W
8n!e 3e!em%er 31, 1995, a seller or telemarketer s
re0ured %y law to o%tan your verfa%le author&aton to
o%tan $ayment from your %ank a!!ount. ,hat means
whoever takes your %ank a!!ount nformaton over the
$hone must have your e5$ress $ermsson to de%t your
a!!ount, and must use one of three ways to "et t. ,he
$erson must tell you that money wll %e taken from your
%ank a!!ount. 2f you author&e $ayment of money from
your %ank a!!ount, they must then "et your wrtten
author&aton, ta$e re!ord your author&aton, or send
you a wrtten !onfrmaton %efore de%tn" your %ank
a!!ount.
2f they ta$e re!ord your author&aton, they must
ds!lose, and you must re!eve, the follown"
nformaton<
,he date of the demand draft*

the amount of the draft's(*
the $ayers; name 'who wll re!eve your money(*
the num%er of draft $ayments 'f more than one(*

a tele$hone num%er that you !an !all durn"
normal %usness hours* and

the date that you are "vn" your oral
author&aton.
2f a seller or telemarketer uses wrtten !onfrmaton to
verfy your author&aton, they must "ve you all the
nformaton re0ured for a ta$e re!orded author&aton
and tell you n the !onfrmaton not!e the refund
$ro!edure you !an use to ds$ute the a!!ura!y of the
!onfrmaton and re!eve a refund.
WHT TO &O *) #O$ RE +*CT*!
2f telemarketers !ause money to %e taken from your
%ank a!!ount wthout your knowled"e or author&aton,
they have volated the law. 2f you re!eve a wrtten
!onfrmaton not!e that does not a!!urately re$resent
your understandn" of the sale, follow the refund
$ro!edures that should have %een $rovded and re0uest a
refund of your money. 2f you do not re!eve a refund,
t;s a"anst the law.
2f you %eleve you have %een a v!tm of fraud, !onta!t
your %ank mmedately. ,ell the %ank that you dd not
okay the de%t and that you want to $revent further
de%tn". /ou also should !onta!t your state )ttorney
=eneral. 3e$endn" on the tmn" and the !r!um-
stan!es, you may %e a%le to "et your money %a!k.

!ORE *%)OR!T*O%
,o learn more a%out your r"hts under the
telemarket-n" 8ales >ule and how to $rote!t
yourself from fraudulent tele$hone sales
$ra!t!es, re0uest a free !o$y of Straight Talk
About Telemarketing. #onta!t.
#onsumer >es$onse #enter
Federal ,rade #ommsson
:ashn"ton 3# 20580
'202( 326-2222
,33< '202( 326-2502

,he 2ndana 3e$artment of Fnan!al
2nsttutons, 3vson of #onsumer #redt has
many other !redt related %ro!hures avala%le,
su!h as<
)nswers to #redt ?ro%lems
)$$lyn" for #redt
)t @ome 8ho$$n" >"hts
+ankru$t!y Fa!ts
+ured n 3e%t
#ar Fnan!n" 8!ams
#har"e #ard Fraud
#hoosn" ) #redt #ard
#o-8"nn"
#redt and 3vor!e
#redt and 6lder #onsumers
3ee$ n 3e%t4
A0ual #redt 6$$ortunty
Far #redt >e$ortn"
Far 3e%t #olle!ton
=old #ards
@an" u$ on Fraud
@"h >ate Bort"a"es
@ome A0uty #redt Cnes
@ow to )vod +ankru$t!y
2ndana 9nform #onsumer #redt #ode
Cook +efore you Cease
Bort"a"e Coans
>e$ossesson
>everse Bort"a"e Coans
>ule of 78s D :hat s t4
8!orn" for #redt
8ho$$n" for #redt
9sn" #redt #ards
Eara%le >ate #redt
:hat s a +ud"et4
:hat s the 3F24
#all our toll-free num%er or wrte to the address on
the !over for a !o$y of any of the %ro!hures lsted or
for further !onsumer !redt nformaton.
utomatic
&ebit
Scams
&E'RT!E%T O) )*%%C*(
*%ST*T$T*O%S
#onsumer #redt 3vson
30 8outh Berdan 8treet, 8ute 300
2ndana$ols, 2ndana 46204
317-232-3955
1-800-382-4880
hat 'o Do If 'he"1re Lost or
Stolen
(any people find it easy and convenient to use credit and
A.( cards. .he Fair 'redit Billing Act 5F'BA6 and the
3lectronic Funds .ransfer Act 53F.A6 offer procedures for you
and businesses to use if your cards are lost or stolen.
$imitin- !our Financial $o++
%eport the loss or theft of your credit and A.( cards to the
card issuers as )uic0ly as possible. (any companies have
toll"free numbers and 89"hour service to deal with such
emergencies. t/s a good idea to follow up your phone calls
with a letter. nclude your account number* when you noticed
your card was missing* and the date you first reported the loss.
1ou also may want to chec0 your homeowner/s insurance
policy to see if it covers your liability for card thefts. f not*
some insurance companies will allow you to change your
policy to include this protection.
*redit *ard $o++. f you report the loss before the cards are
used* the F'BA says the card issuer cannot hold you
responsible for any unauthori:ed charges. f a thief uses your
cards before you report them missing* the most you will owe
for unauthori:ed charges is ;!< per card. .his is true even if a
thief uses your credit card at an A.( machine to access your
credit card account.
&owever* it/s not enough simply to report your credit card loss.
After the loss* review your billing statements carefully. f they
show any unauthori:ed charges* send a letter to the card
issuer describing each )uestionable charge. Again* tell the
card issuer the date your card was lost or stolen and when you
first reported it to them. Be sure to send the letter to the
address provided for billing errors. Do not send it with a
payment or to the address where you send your payments
unless you are directed to do so.
#T) *ard $o++. f you report an A.( card missing before it/s
used without your permission* the 3F.A says the card issuer
cannot hold you responsible for any unauthori:ed withdrawals.
f unauthori:ed use occurs before you report it* the amount
you can be held liable for depends upon how )uic0ly you
report the loss. For e,ample* if you report the loss within two
business days after you reali:e your card is missing* you will
not be responsible for more than ;!< for unauthori:ed use.
&owever* if you don/t report the loss within two business days
after you discover the loss* you could lose up to ;!<< because
of an unauthori:ed withdrawal. 1ou ris0 unlimited loss if you
fail to report an unauthori:ed transfer or withdrawal within 7<
days after your ban0 statement is mailed to you. .hat means
you could lose all the money in your ban0 account and the
unused portion of your line of credit established for overdrafts.
f unauthori:ed transactions show up on your ban0 statement*
report them to the card issuer as )uic0ly as possible. $nce
you/ve reported the loss of your A.( card* you cannot be held
liable for additional amounts* even if more unauthori:ed
transactions are made.
Protectin- !our *ard+
.he best protections against card fraud are to 0now where
your cards are at all times and to 0eep them secure. For A.(
card protection* it/s important to 0eep your Personal
dentification =umber 5P=6 a secret. Don/t use your address*
birth date* phone or social security number. (emori:e the
number. +tatistics show that in one"third of A.( card frauds*
cardholders wrote their P=+ on their A.( cards or on slips of
paper 0ept with their cards.
.he following suggestions may help you protect your credit
and A.( card accounts.
For *redit *ard+:
Be cautious about disclosing your account number over
the phone unless you 0now you are dealing with a
reputable company.

=ever put your account number on the outside of an
envelope or on a postcard.
Draw a line through blan0 spaces on charge slips above
the total so the amount cannot be changed.
Don/t sign a blan0 charge slip.
.ear up carbons and save your receipts to chec0 against
your monthly billing statements.
$pen billing statements promptly and compare them with
your receipts. %eport mista0es or discrepancies as soon
as possible to the special address listed on your
statement for 4billing in)uiries. 4 >nder the F'BA* the
card issuer must investigate billing errors reported to
them within 7< days of the date your statement was
mailed to you.
?eep a record @ in a safe place separate from your
cards @ of your account numbers* e,piration dates* and
the telephone numbers of each card issuer so you can
report a loss )uic0ly.
'arry only those cards that you anticipate you/ll need.
For #T) card+:
=ever write your P= on the outside of a deposit slip* an
envelope* or on a postcard.
Don/t carry your P= in your wallet or purse or write it on
your A.( card.
.a0e your A.( receipt after completing a transaction.
%econcile all A.( receipts with ban0 statements as soon
as possible.
Buyin- a Re-i+tration 'ervice
For an annual fee of ;A< to ;B!* companies will notify the
issuers of your credit and A.( accounts if your card is lost or
stolen. .his service allows you to ma0e only one phone call to
report all card losses rather than calling individual issuers.
(ost services also will re)uest replacement cards on your
behalf.
Purchasing a card registration service may be convenient* but
it/s not re)uired. .he F'BA and the 3F.A give you the right to
contact your card issuers directly in the event of a loss or
suspected unauthori:ed use.
f you decide to buy a registration service* compare offers.
'arefully read the contract to determine the company/s
obligations and your liability. For e,ample* will the company
reimburse you if it fails to notify card issuers promptly once
you/ve called in the loss to the serviceC f not* you could be
liable for unauthori:ed charges.


.he ndiana Department of Financial nstitutions*
Division of 'onsumer 'redit has many other credit
related brochures available* such as:
(nswers to @redit 0roblems
(pplying for @redit
(t Kome Shopping #ights
'ankruptcy "acts
'uried in 9ebt
@ar "inancing Scams
@harge @ard "raud
@hoosing ( @redit @ard
@o-Signing
@redit and 9ivorce
@redit and $lder @onsumers
9eep in 9ebt*
Hqual @redit $pportunity
"air @redit #eporting
"air 9ebt @ollection
/old @ards
Kang up on "raud
Kigh #ate .ortgages
Kome Hquity @redit ines
Kow to (void 'ankruptcy
+ndiana Bniform @onsumer @redit @ode
ook 'efore you ease
.ortgage oans
#epossession
#everse .ortgage oans
#ule of F>s O !hat is it*
Scoring for @redit
Shopping for @redit
Bsing @redit @ards
Gariable #ate @redit
!hat is a 'udget*
!hat is the 9"+*
@all our toll-free number or write to the
address on the cover for a copy of any of
the brochures listed or for further
consumer credit information.
*R&DIT
#D
#T) *#RD'
D);&,'!)N' OF FIN&NCI&L
INS'I'.'IONS
@onsumer @redit 9ivision
:4 South .eridian Street, Suite :44
+ndianapolis, +ndiana ;A84;
:7F-8:8-:?33
7->44-:>8-;>>4
)s de%t !ards %e!ome n!reasn"ly $o$ular,
strans are a$$earn" amon" !ustomers,
mer!hants, and %anks.
,he $ro%lems ran"e from dff!ultes when the
!ards are lost or stolen to !om$lants from
mer!hants that the fees to a!!e$t these !ards
are too h"h.
%ot ll 'lastic is Created
E,ual
7ew !ar rental rules re$resent the frst !ase n
wh!h de%t !ards !annot %e used n the same
way as !redt !ards. ,he %" !ar rental
!om$anes, n!ludn" @ert& and )vs, have
re!ently sto$$ed lettn" $eo$le rent !ars usn"
1ust a Esa #he!k !ard or the smlar Baster
Boney !ard from Baster#ard. ,he !ard
!om$anes, and the %anks that ssue these !ards
known as de%t !ardsare furous* and so
are some !ustomers.
For years, the !ar rental !om$anes have used
$ossesson of a !redt !ard as a !rude way to
weed out $otentally rsky renters, 1ust as they
have usually ruled out renters under the a"e of
25. +ut ths test does not work wth de%t
!ards %e!ause %anks wll now "ve them to
nearly any one wth a %ank a!!ount.
#har"es on de%t !ards, wh!h "o under many
names, !ome dre!tly out of a !onsumer;s
!he!kn" a!!ount almost mmedately rather
than a$$earn" on a monthly !redt !ard
statement. 2n !ontrast to usn" a !redt !ard,
wh!h the de%t !ard $hys!ally resem%les, no
loan s nvolved n the transa!ton.
3e%t !ards .$rovde no 0ualf!aton of !redt-
worthness,. a @ert& s$okes$erson sad. #ar
rental !om$anes %eleve they are enttled to a
!ertan level of !onfden!e %e!ause n !ar
rental, unlke almost any other %usness, the
!ustomer s "ven total !ontrol of a veh!le
wth an a$$ro5mate value of F20,000.
,he rental !ar !om$anes are re0urn" a
!ustomer wth only a de%t !ard to follow the
same $ro!edures as someone who $ays !ash to
rent a !ar. ,hat nvolves makn" an
a$$l!aton several weeks n advan!e and
leavn" a su%stantal de$ost.
Higher )ees-
,he new de%t !ards have %e!ome more
$o$ular %e!ause they are easer to use and
more wdely a!!e$ted than those that re0ure
$ersonal dentf!aton num%ers. Boreover, for
the tens of mllons of )mer!ans who do not
0ualfy for a !redt !ard, the !ards are ther frst
o$$ortunty to $ut a !ard wth a Baster#ard or
Esa la%el n ther wallets.
9ntl re!ently, su!h !ards also $rovded the
easest way for su!h ndvduals, many of
whom have had fnan!al trou%les, to rent a !ar
or %uy mer!handse over the $hone.
+anks lke the de%t !ards %e!ause transa!tons
on them are less !ostly to $ro!ess than $a$er
!he!ks. )lso, some %anks !har"e !ustomers a
fee for the !ards. )nd for the Baster#ard and
Esa versons, %anks re!eve a fee from
mer!hants of a%out one $er!ent of the $ur!hase
$r!e. >etalers, thou"h, have %e!ome
n!reasn"ly unha$$y a%out the "rowth of these
de%t !ards $re!sely %e!ause they do not want
to $ay the fee.
#onfusn"ly, a sn"le !ard !an have %oth a
Esa or Baster#ard lo"o and the mark of an
automated teller ma!hne network lke 7/#A
or B)#. 2f a s"nature s used, rather than a
$ersonal dentf!aton num%er, the fee $ad %y
the mer!hant s h"her.
,he !redt !ard !om$anes say the h"her fee s
1ustfed %e!ause of the "reater rsk. Aven
thou"h %oth ty$es of transa!tons nvolve
ele!tron! verf!aton of the amount of money
n the !onsumer;s !he!kn" a!!ount, the !ard
!om$anes say ther e5$eren!e has %een that
the s"nature method results n more
overdrafts.
For !onsumers, the de%t !ards also !arry a
lttle more rsk. 2f the !ard s stolen, a thef !an
"o on a s$endn" s$ree wth the money n the
!ustomer;s !he!kn" a!!ount.
Federal law lmts la%lty to F50 f the
!ardholder notfes the %ank wthn two days of
ds!overn" the mssn" !ard. +ut the %ank has
u$ to 20 days to $ut the money %a!k nto the
!he!kn" a!!ount.
8ee our +ro!hure on #redt and ),B #ards.

,he 2ndana 3e$artment of Fnan!al
2nsttutons, 3vson of #onsumer #redt has
many other !redt related %ro!hures avala%le,
su!h as<
)nswers to #redt ?ro%lems
)$$lyn" for #redt
)t @ome 8ho$$n" >"hts
+ankru$t!y Fa!ts
+ured n 3e%t
#ar Fnan!n" 8!ams
#har"e #ard Fraud
#hoosn" ) #redt #ard
#o-8"nn"
#redt and 3vor!e
#redt and 6lder #onsumers
3ee$ n 3e%t4
A0ual #redt 6$$ortunty
Far #redt >e$ortn"
Far 3e%t #olle!ton
=old #ards
@an" u$ on Fraud
@"h >ate Bort"a"es
@ome A0uty #redt Cnes
@ow to )vod +ankru$t!y
2ndana 9nform #onsumer #redt #ode
Cook +efore you Cease
Bort"a"e Coans
>e$ossesson
>everse Bort"a"e Coans
>ule of 78s D :hat s t4
8!orn" for #redt
8ho$$n" for #redt
9sn" #redt #ards
Eara%le >ate #redt
:hat s a +ud"et4
:hat s the 3F24
#all our toll-free num%er or wrte to the
address on the !over for a !o$y of any of the
%ro!hures lsted or for further !onsumer !redt
nformaton.
&E.*T
vs/
CRE&*T
CR&S
&E'RT!E%T O) )*%%C*(
*%ST*T$T*O%S
#onsumer #redt 3vson
30 8outh Berdan 8treet, 8ute 300
2ndana$ols, 2ndana 46204
317-232-3955
1-800-382-4880
F&S' F&C'S
3lectronic ban0ing* also 0nown as electronic fund transfer 53F.6*
uses computer and electronic technology as a substitute for chec0s
and other paper transactions.

An access device is a means of gaining access to your account*
such as a card or a code* for the purpose of initiating 3F.s. (ost
institutions use a personal identification number 5P=6 for this
purpose.

.a0e care of your 3F. card. ?now where it is at all times and
report its loss as soon as possible.

'hoose a P= different from your address* telephone number*
social security number* or birth date.

?eep and compare your 3F. receipts with your periodic
statements so that you can find and promptly report errors and
unauthori:ed transfers. Prompt reporting is necessary to limit your
liability for these problems
.o most of us* electronic ban0ing means having 89"hour access to
cash through an automated teller machine 5A.(6 or having our
paychec0s deposited directly into our chec0ing or savings accounts.
But electronic ban0ing offers several other services that you may find
useful.
.his brochure lists types of consumer transactions that are covered
under the federal 3lectronic Fund .ransfer Act 53F. Act6* discusses
the information financial institutions must disclose* e,plains what you
can do if you find errors on your monthly statements* discusses your
liability if your A.( card is lost or stolen* and describes your limited
stop"payment privileges.
&$&*TROI* FUD TR#'F&R'
3lectronic ban0ing* also 0nown as electronic fund transfer 53F.6*
uses computer and electronic technology as a substitute for chec0s
and other paper transactions. Because 3F.s are so convenient* you
may wish to 0now the full range of their services.
#utomated Teller )achine+ or 012hour Teller+ are electronic
terminals that permit you to ban0 at almost any time of the day or
night. .o withdraw cash* ma0e deposits* or transfer funds between
accounts* you generally insert a special A.( card and enter your
personal identification number 5P=6.

Direct Depo+it+ or (ithdrawal+ allow you to authori:e specific
deposits such as paychec0s and social security chec0s to go directly
to your account on a regular basis. 1ou also can arrange to have
recurring bills* such as insurance premiums and utility bills* paid
automatically. .his service applies only if you authori:e transactions
in advance.

Pay2by2Phone 'y+tem+ permit you to telephone your ban0 5or other
financial institutions6 with instructions to pay certain bills or to transfer
funds between accounts. 1ou must have an agreement in advance
with the financial institution to ma0e such transfers.

Point2o/2'ale Tran+/er+ allow you to pay for retail purchases with an
3F. 5or 4debit46 card. .his is similar to using a credit card* but with
one important e,ception "" the money for the purchase is transferred
immediately 5or soon thereafter6 from your ban0 account to the store/s
account. Both (aster'ard and Disa* among others* offer debit cards
that can be used at participating retailers* and an increasing number
of merchants are accepting this type of payment. For e,ample* these
transfers are becoming more common at grocery stores* oil
companies* and convenience stores. &owever* because point of sale
transfers are still relatively new* they might not yet be widely available
at retailers in your region of the country.
DI'*$O'UR&'
.he best way to understand your legal rights and responsibilities
regarding your 3F. account is to read the documents you receive
from the financial institution that issued you the 4access device. 4 An
access device is a card* code* or other means of gaining access to
your account for the purpose of initiating electronic fund transfers.
.he means may vary from institution to institution* but most use a P=
for this purpose. .his uni)ue number should be 0nown only to you
and to select employees of the financial institution.
Before you contract for 3F. services or ma0e your first electronic
transfer* the institution is re)uired to disclose to you the following
information in a form you can 0eep.
A summary of your liability for unauthori:ed transfers.
.he telephone number and address of the person to be notified
when you believe that an unauthori:ed transfer has been or
may be made* along with a statement of the institution/s
4business days. 4 .his information will tell you the number of
days you have to report suspected unauthori:ed transfers.
.he type of transfers you can ma0e* the amount of any charges
for transfers* and any limitations on the fre)uency and dollar
amount of transfers.
A summary of your right to receive documentation of transfers*
of your right to stop payment on a pre"authori:ed transfer* and
the procedures to follow to stop payment.
A notice describing the procedures you must follow to report an
error on a receipt for an 3F.* how to re)uest more information
about a transfer listed on your statement* and the time period in
which you must ma0e your report.
A summary of the institution/s liability to you if it fails to ma0e or
stop certain transactions.
'ircumstances under which the institution will disclose
information to third parties concerning your account.
n addition to these disclosures* you will receive for most transactions
two other types of important papers "" terminal receipts and periodic
statements. 5+eparate rules apply to passboo0 accounts from which
pre"authori:ed transfers are drawn. 1our contract for that account is
the best source of information about those rules. 6 1ou are entitled to
a terminal receipt each time you initiate an electronic transfer*
whether you use an A.( or ma0e a point"of"sale electronic transfer.
Among other things* the receipt must show the date and the amount
of the transfer and the type of the transfer* such as 4transfer from
savings to chec0ing. 4 When you ma0e a point"of"sale transfer* you
probably will get your terminal receipt from the salesperson. f you
ma0e a withdrawal from a cash"dispensing machine that cannot issue
receipts* the institution is re)uired to mail you a receipt on the ne,t
business day following the transfer.
ew provi+ion+ to the &FT#* effective immediately- compliance
mandatory as of $ctober A* 8<<A* re)uire A.( operators that impose
a fee for providing electronic fund transfer services to post a notice in
a prominent and conspicuous location on or at the A.(. .he
operator must also disclose that a fee will be imposed and the
amount of the fee* either on the screen of the machine or on a paper
notice* before the consumer is committed to completing the
transaction. n addition* when the consumer contracts for an
electronic fund transfer service* financial institutions are re)uired to
provide initial disclosures* including a notice that a fee may be
imposed for electronic fund transfers initiated at an A.( operated by
another entity.
1ou also are entitled to a periodic statement for each statement cycle
in which an electronic transfer is made. .his statement must show*
among other things* the amount of any transfer* the date it was
credited or debited to your account* the type of transfer and type of
account5s6 to or from which funds were transferred* and the address
and telephone number to be used for in)uiries. 1ou are entitled to a
)uarterly statement even if you made no electronic transfers within
that )uarter.
?eep and compare your 3F. receipts with your periodic statements
each month in the same way you compare your credit card invoices
with your monthly credit card statement or your chec0s against your
monthly ban0 statements. Doing so will enable you to ma0e the best
use of your rights under federal law to dispute errors and avoid
liability for unauthori:ed transfers.
&RROR'
1ou have 7< days from the date a problem or error appears on your
periodic statements or terminal receipt to notify your financial
institution. .he best way to protect yourself in the event of an error
5or a lost or stolen A.( or 3F. card6 is to notify the issuer by certified
letter* return receipt re)uested* so you can prove that the institution
received your letter. ?eep a copy of the letter you send for your
records.
After notification about an error on your statement* the institution has
A< business days to investigate and tell you the results. f the
institution needs more time* it may ta0e up to 9! days to complete the
investigation "" but only if the money in dispute is returned to your
account and you are notified promptly of the credit. At the end of the
investigation* if no error is found* the institution may ta0e the money
bac0* if it sends you a written e,planation.
f you fail to notify the institution of the error within 7< days* you may
have little recourse. >nder federal law* the institution has no
obligation to conduct an investigation if you have missed the 7<"day
deadline.
f your failure to notify the institution within the time periods allowed
was due to an e,tenuating circumstance* such as lengthy travel or
illness* the issuer must e,tend the time period for notification to what
is reasonable. Also* if state law or your contract imposes lower
liability limits* those lower limits apply instead of the limits in the
federal 3F. Act.
After reporting the loss or theft of your A.( card* you are not liable
for additional unauthori:ed transfers that may be made. Because
these unauthori:ed transfers may appear on your statements*
however* you should carefully review each statement you receive
after you report the loss or theft. f the statement shows transfers that
you did not ma0e or that you need more information about* contact
the institution immediately* using the special procedures provided for
reporting errors.
$I)IT&D 'TOP2P#!)&T PRI3I$&%&'
When you use an electronic fund transfer* the 3F. Act does not give
you the right to stop payment. f your purchase is defective or if your
order is not delivered* it is up to you to resolve the problem with the
seller and get your money bac0 "" 2ust as if you had paid cash.
.here is one situation* however* in which you can stop payment. f
you have arranged regular payments out of your account to third
parties* such as life insurance companies* you can stop payment if
you notify your institution at least three business days before the
scheduled transfer. .he notice may be oral or written* but the
institution may re)uire a written follow"up to be made within A9 days
of the oral notice. 1our failure to provide the written follow"up ends
the institution/s responsibility to stop payment. .his right to stop
payment does not apply to mortgage or loan payments you owe to
the institution that issued the 3F. access device.
Although federal law provides only limited rights to stop payment*
individual financial institutions may offer more rights or state laws may
re)uire them. f this feature is important to you* you may want to
shop around to be sure you are getting the best 4stop payment4 terms
available.
'U%%&'TIO'
f you decide to become an 3F. user* remember the following
precautions.
.a0e care of your 3F. card. ?now where it is at all times and
report its loss as soon as possible.

'hoose a P= different from your address* telephone number*
social security number* or birth date. 'hoosing a different number
will ma0e it more difficult for a thief to use your 3F. card.

?eep and compare your 3F. receipts with your periodic
statements so that you can find and promptly report errors and
unauthori:ed transfers.
f you believe the institution that issued your 3F. access device has
failed to fulfill its responsibilities to you under the 3F. Act* in addition
to informing the issuer* you may wish to complaint to the federal
agency that has enforcement 2urisdiction over that issuer
.he ndiana Department of Financial nstitutions* Division
of 'onsumer 'redit has many other credit related
brochures available* such as:
(nswers to @redit 0roblems
(pplying for @redit
(t Kome Shopping #ights
'ankruptcy "acts
'uried in 9ebt
@ar "inancing Scams
@harge @ard "raud
@hoosing ( @redit @ard
@o-Signing
@redit and 9ivorce
@redit and $lder @onsumers
9eep in 9ebt*
Hqual @redit $pportunity
"air @redit #eporting
"air 9ebt @ollection
/old @ards
Kang up on "raud
Kigh #ate .ortgages
Kome Hquity @redit ines
Kow to (void 'ankruptcy
+ndiana Bniform @onsumer @redit @ode
ook 'efore you ease
.ortgage oans
#epossession
#everse .ortgage oans
#ule of F>s O !hat is it*
Scoring for @redit
Shopping for @redit
Bsing @redit @ards
Gariable #ate @redit
!hat is a 'udget*
!hat is the 9"+*
&$&*TROI*
B#4I%

D);&,'!)N' OF FIN&NCI&L
INS'I'.'IONS
@onsumer @redit 9ivision
:4 South .eridian Street, Suite :44
+ndianapolis, +ndiana ;A84;
:7F-8:8-:?33
7->44-:>8-;>>4

(5#T I' # *R&DIT R&PORT6
1our credit report contains important information about you. t
generally includes facts about your identity* where you wor0* live*
your bill"paying habits* and public record information. 'redit grantors
use credit reports to determine whether or not you will be e,tended
credit. dentity information includes your name* address* marital
status* +ocial +ecurity number* date of birth* number of dependents*
and previous addresses. 3mployment data includes your present
position* length of employment* income* and previous 2obs. Factual
information about your credit history consists of your credit
e,periences with specific credit granters. Public record information
includes civil suits and 2udgments* ban0ruptcy records or other legal
proceedings recorded by a court. A credit report does not contain
information on arrest records* specific purchases* or medical records.
'ompanies called credit reporting agencies or credit bureaus compile
and sell your credit report to businesses* which use it to evaluate your
applications for credit* insurance* employment* and other purposes
allowed by federal law. .herefore* it is important that your credit
report contain complete and accurate information.
t is advisable that you review your credit report every three or four
years to chec0 for inaccuracies or omissions. 1ou also may want to
chec0 your report sooner if you are considering a ma2or purchase*
such as buying a home.
5O( *# I OBT#I # *R&DIT R&PORT6
f you have been denied credit* insurance* or employment because of
information that was supplied by a credit reporting agency* the Fair
'redit %eporting Act re)uires the report recipient to give you the
name and address of the credit reporting agency that supplied the
information within B< days after the credit was denied. f you contact
that agency within 7< days of receiving the denial notice* you can
receive a /ree copy of your credit report.
f you simply want a copy of your report* call the credit reporting
agencies listed in the 1ellow Pages under 4credit4 or 4credit rating and
reporting. 4 'all each credit report agency listed since more than one
agency may have a file on you* some with different information. 1ou
may have to pay a reasonable charge for each report.
.hree large national credit bureaus supply most credit reports:
3,perian* 3)uifa,* and .rans >nion. 1ou may want to contact each
of them for a copy of your report.
&.perian 5Formerly .%W 6 http://www. e,perian. com
P. $. Bo, E9E
Allen* .F G!<AB"<E9E
5###6BEG"BG98
Free
&7ui/a. *redit In/ormation 'ervice+* nc. http://www. e)uifa,. com
P. $. Bo, G9<89A
Atlanta* HA B<BG9"<89A
5#<<6 7#!"AAAA
;# Fee
Tran+ Union *orporation http://www. transunion. com
.rans >nion 'onsumer %elations
G7< West +proul %oad* P. $. Bo, BE<
+pringfield* PA AE<79"<BE<
5#<<6 EA7"##<<
;# Fee
When you show proper identification* the credit reporting agency
must then disclose to you all its information and identify the sources
of that information. .he law re)uires the credit bureau to disclose the
4nature and substance4 of the information in the file. 1ou must also
be informed about anyone who obtained reports for employment
purposes in the past two years* plus the names of all others who
re)uested credit reports or other information about you in the past si,
months.
A consumer reporting agency will send a /ree report once in any A8"
month period upon re)uest of a consumer i/ the consumer is
unemployed and intends to apply for employment in the 7<"day
period beginning on the date on which the certification is made* is a
recipient of public welfare assistance* or has reason to believe that
the file on the consumer at the agency contains inaccurate
information due to fraud.
5O( *# I *ORR&*T &RROR' O )! *R&DIT
R&PORT6
1ou have the right* under the Fair 'redit %eporting Act* to dispute the
completeness and accuracy of information in your credit file. When a
credit reporting agency receives a dispute* it must reinvestigate and
record the current status of the disputed items within a 4reasonable
period of time*4 unless it believes the dispute is frivolous or irrelevant.
4
f the credit reporting agency cannot verify a disputed item* it must
delete it.

f your report contains erroneous information* the credit reporting
agency must correct it. For e,ample* if your file showed an account
that belongs to another person* the credit reporting agency would
have to delete it.

f an item is incomplete* the credit reporting agency must complete it.
For e,ample* if your file shows you were late in ma0ing payments on
accounts* but failed to show that you were no longer delin)uent* the
credit reporting agency must show that your payments are now
current.
At your re)uest* the credit reporting agency must send a notice of
correction to any report recipient who has chec0ed your file in the
past si, months.
(5#T *# I DO IF I 5#3& # DI'PUT&6
1ou must ma0e your dispute directly to the credit reporting agency.
Although the Fair 'redit %eporting Act does not re)uire it* the Federal
.rade 'ommission staff recommends that you submit your dispute in
writing* along with copies 5=$. originals6 of documents that support
your position.
n addition to providing your complete name and address* your letter
should clearly identify each item in your report you dispute- e,plain
why you dispute the information- state the facts- and re)uest deletion
or correction. 1ou may want to enclose a copy of your report with the
items in )uestion circled.
+end your dispute by certified mail* return receipt re)uested and 0eep
copies of your dispute letter and enclosures.
DUT! TO *ORR&*T #D UPD#T&
IFOR)#TIO . .
A person who furnishes information to one or more consumer
reporting agencies and has furnished to a consumer reporting agency
information that the person determines is not complete or accurate*
shall promptly notify the consumer reporting agency of that
determination and provide any corrections to that information to the
agency and any additional information that is necessary to ma0e the
information provided by the person to the agency complete and
accurate. .he person shall not thereafter furnish to the agency any of
the information that remains not complete or accurate.
*$O'&D #**OUT'. . . .
A person who regularly and in the ordinary course of business
furnishes information to a consumer reporting agency regarding a
consumer who has a credit account with that person shall notify the
agency of the voluntary closure of the account by the consumer* in
information regularly furnished for the period in which the account is
closed.
!OUR 'ID& OF T5& 'TOR!. . . .
f a reinvestigation does not resolve your dispute* you can file a
statement of up to A<< words to e,plain your side of the story. .he
credit reporting agency must include this e,planation in your report
each time it sends the report out. As well as to each report made
within 7< days prior to your re)uest. 'redit reporting agency
employees often are available to help you word your statement.
#R& #$$ )! #**OUT' $I'T&D I )! *R&DIT
R&PORT6
(ost credit grantors report their data to credit bureaus at least
monthly. +ome smaller lenders* however* do not report information to
credit bureaus.
5O( $O% (I$$ IFOR)#TIO 'T#! O )!
R&PORT6
Be aware that when negative information in your report is accurate*
only the passage of time can assure its removal. 'redit reporting
agencies are permitted by law to report ban0ruptcies for A< years and
other negative information for G years.
Also* any negative information may be reported indefinitely for use in
the evaluation of your application for:
;A!<*<<< or more in credit-.

a life insurance policy with a face amount of ;A!<*<<< or more- or

consideration for a 2ob paying ;G!*<<< or more.
#DDI% #**OUT' TO !OUR FI$&8
1our credit file may not reflect all of your credit accounts. Although
most national department stores and all"purpose ban0 credit card
accounts will be included in your file* not all creditors supply
information to credit reporting agencies.
f you have been told that you were denied credit because of an
4insufficient credit file4 or 4no credit file4 and you have accounts with
creditors that do not appear in your credit file* you can as0 the credit
reporting agency to add this information to future reports. Although
they are not re)uired to do so* many credit reporting agencies will add
other verifiable accounts for a fee.
(5#T #BOUT # *R&DIT R&P#IR *O)P#!6
t is recommended that a credit repair company be loo0ed at long and
hard before being used. .he law gives a consumer certain rights to
accuracy in the credit report. f a credit report is repairable* it can be
done by the consumer. f it contains accurate* negative information*
handing money to a credit repair company will not help. .hey cannot
remove accurate information or information you cannot have
removed.
(5O *# ORD&R )! *R&DIT R&PORT6
.here are limited circumstances under which a credit bureau may
furnish consumer credit reports. .hese permissible purposes are:
n connection with credit or collection transactions.
For employment purposes.
For the underwriting of insurance.
For the determination of a consumer/s eligibility for a license.
$ther legitimate business transactions initiated by you.
.o review an account to determine whether you continue to meet
the terms of the account.
'ourt orders meeting specific re)uirements.
At the your written instruction.
.he ndiana Department of Financial nstitutions* Division
of 'onsumer 'redit has many other credit related
brochures available* such as:
(nswers to @redit 0roblems
(pplying for @redit
(t Kome Shopping #ights
'ankruptcy "acts
'uried in 9ebt
@ar "inancing Scams
@harge @ard "raud
@hoosing ( @redit @ard
@o-Signing
@redit and 9ivorce
@redit and $lder @onsumers
9eep in 9ebt*
Hqual @redit $pportunity
"air 9ebt @ollection
/old @ards
Kang up on "raud
Kigh #ate .ortgages
Kome Hquity @redit ines
Kow to (void 'ankruptcy
+ndiana Bniform @onsumer @redit @ode
ook 'efore you ease
.ortgage oans
#epossession
#everse .ortgage oans
#ule of F>s O !hat is it*
Scoring for @redit
Shopping for @redit
Bsing @redit @ards
Gariable #ate @redit
!hat is a 'udget*
!hat is the 9"+*
'all our toll"free number or write to the address on the cover for
a copy of any of the brochures listed or for further consumer
credit information.
F#IR *R&DIT
R&PORTI%
D);&,'!)N' OF FIN&NCI&L
INS'I'.'IONS
'onsumer 'redit Division
:4 South .eridian Street, Suite :44
ndianapolis* ndiana 978<9
BAG"8B8"BE!!
A"#<<"B#8"9##<
2f you have a !om$lant a%out a %ank or other fnan!al
nsttuton, the Federal >eserve 8ystem m"ht %e a%le to
hel$ you. ,he Federal >eserve s res$ons%le for
!arryn" out many of the federal laws that $rote!t
!onsumers n ther dealn"s wth fnan!al nsttutons.
,he +oard of =overnors, lo!ated n :ashn"ton, 3. #. ,
works wth the twelve Federal >eserve +anks around the
!ountry to make !ertan the !ommer!al %anks that the
Federal >eserve su$ervses a%de %y these laws.
,hey !an hel$ ndvdual !onsumers %y<
)nswern" 0uestons a%out %ankn" $ra!t!es, and

nvestigating complaints about specific ban0s under their
supervisory 2urisdiction. 'omplaints about financial institutions
that are not supervised by the Federal %eserve +ystem are
referred to the appropriate federal agency.

WHT "*%&S O) CO!'(*%TS
RE *%+EST*0TE&-
)s a federal re"ulatory a"en!y, the Federal >eserve
8ystem nvest"ates !onsumer !om$lants re!eved
a"anst state !hartered %anks that are mem%ers of the
8ystem. 2f you thnk a %ank has %een unfar or de!e$tve
n ts dealn"s wth you, or has volated a law or
re"ulaton, as a !onsumer you have the r"ht to fle a
!om$lant. ,he ma1or !onsumer $rote!ton laws
!overn" fnan!al serv!es are des!r%ed later.
,he Federal >eserve s $art!ularly !on!erned that state
mem%er %anks !om$ly wth federal laws and re"ulatons
that $roh%t ds!rmnaton n lendn". 2n su!h !ases,
addtonal ste$s are taken to ensure that your !om$lant
s $rom$tly and thorou"hly nvest-"ated. 2n addton,
!om$lants alle"n" ds!rmnaton n housn" that are
!overed %y the Far @ousn" )!t are referred to the 9. 8.
3e$artment of @ousn" and 9r%an 3evelo$ment.
HOW TO )*(E CO!'(*%T
+efore wrtn" or !alln" the Federal >eserve, we
en!oura"e !onsumers to try to settle the $ro%lem wth
the fnan!al nsttuton frst. ,hs may nvolve dre!tly
!onta!tn" senor %ank mana"ement or the %ankGs
!ustomer serv!e re$resentatve for assstan!e. 2f you
are stll una%le to resolve the $ro%lem, you may fle a
wrtten !om$lant wth the Federal >eserve n!ludn" the
follown" nformaton<
/our name, address, and daytme tele$hone
num%er, n!ludn" area !ode*
7ame and address of the %ank nvolved n your
!om$lant or n0ury*
/our %ank or !redt !ard a!!ount num%er*
,he name of the $erson you !onta!ted at the %ank,
alon" wth the date, f a$$l!a%le*
3es!r$ton of the !om$lant. 8tate what ha$$ened,
"vn" the dates nvolved and the names of those
you dealt wth at the %ank. 2n!lude !o$es of any
letters or other do!uments that may hel$ them to
nvest"ate your !om$lant. ?lease do not send
or"nal do!uments, !o$es are $referred* remem-
%er to s"n and date your letter.
2tGs m$ortant to "ve the Federal >eserve 8ystem as
mu!h nformaton a%out the $ro%lem as $oss%le* ths
wll assst them n $rovdn" a 0u!ker res$onse to you.
WHERE TO SE%& CO!'(*%TS
8end #om$lants to<
WHT W*(( THE )E&ER(
RESER+E &O-
#onsumer !om$lants fled a"anst state mem%er %anks
are nvest"ated %y the 12 re"onal Federal >eserve
+anks. 6n!e they re!eve your !om$lant, t wll %e
revewed %y ther !onsumer affars staff who wll
!onta!t the %ank a%out your !on!ern.
,he >eserve +ank wll nvest"ate ea!h ssue rased n
your letter and ask the %ank nvolved for nformaton
and re!ords n res$onse to your !om$lant. 2f addtonal
nformaton s needed, they wll !onta!t you %y
tele$hone or n wrtn".
,he >eserve +ank wll analy&e the %ankGs res$onse to
your !om$lant to ensure that your !on!erns have %een
addressed and wll send a letter to you a%out ther
fndn"s. 2f the nvest"aton reveals that a federal law
or re"ulaton has %een volated, they wll nform you of
the volaton and the !orre!tve a!ton the %ank has %een
dre!ted to take.
)lthou"h the Federal >eserve nvest"ates all !om$lants
nvolvn" the %anks t re"ulates, t does not have the
authorty to resolve all ty$es of $ro%lems. For e5am$le,
they are una%le to resolve !ontra!tual ds$utes,
undo!umented fa!tual ds$utes %etween a !ustomer and
a %ank, or dsa"reements a%out %ank $ol!es and
$ro!edures. ,hese matters are usually determned %y
%ank $ol!y and are not addressed %y federal law or
re"ulaton.
2n many nstan!es, however, fln" a !om$lant may
result n a %ank;s voluntarly workn" wth you to
resolve your stuaton. 2f, however, the matter s not
resolved, the Federal >eserve wll advse you whether a
volaton of law has o!!urred or whether you should
!onsder le"al !ounsel to resolve your !om$lant.

,he 2ndana 3e$artment of Fnan!al
2nsttutons, 3vson of #onsumer #redt has
many other !redt related %ro!hures avala%le,
su!h as<
)nswers to #redt ?ro%lems
)$$lyn" for #redt
)t @ome 8ho$$n" >"hts
+ankru$t!y Fa!ts
+ured n 3e%t
#ar Fnan!n" 8!ams
#har"e #ard Fraud
#hoosn" ) #redt #ard
#o-8"nn"
#redt and 3vor!e
#redt and 6lder #onsumers
3ee$ n 3e%t4
A0ual #redt 6$$ortunty
Far #redt >e$ortn"
Far 3e%t #olle!ton
=old #ards
@an" u$ on Fraud
@"h >ate Bort"a"es
@ome A0uty #redt Cnes
@ow to )vod +ankru$t!y
2ndana 9nform #onsumer #redt #ode
Cook +efore you Cease
Bort"a"e Coans
>e$ossesson
>everse Bort"a"e Coans
>ule of 78s D :hat s t4
8!orn" for #redt
8ho$$n" for #redt
9sn" #redt #ards
Eara%le >ate #redt
:hat s a +ud"et4
:hat s the 3F24
#all our toll-free num%er or wrte to the address
on the !over for a !o$y of any of the %ro!hures
lsted or for further !onsumer !redt nformaton.
HOW TO )*(E
CO%S$!ER
CO!'(*%T
0*%ST
.%"
&E'RT!E%T O) )*%%C*(
*%ST*T$T*O%S
#onsumer #redt 3vson
30 8outh Berdan 8treet, 8ute 300
2ndana$ols, 2ndana 46204
317-232-3955
1-800-382-4880