1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair
2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% -
3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.
What is the FDIC?
The FDIC is the Federal Deposit Insurance Corporation. It was
organized in the wake of the Great Depression, when bank
failures left many depositors destitute when their accounts were
wiped out. The executive and legislative branches saw the
devastation this caused for ordinary Americans, and set out to
insure that it would not happen again. They therefore created an
insurance institution back by the faith and credit of the United States
to insure depositors’ accounts up to a limit specified by law.
That limit has been raised over time to keep pace with
inflation. Such increases are often termed “temporary,” but they
apply to the deposits in these institutions at this time, so the
“temporary” term should not be a matter of concern.
Video: The FDIC - Federal Deposit Insurance
What types of deposits are covered?
All actual deposits in the bank or savings association are
covered, whether they are Savings, checking, NOW, money market
Certificates of Deposit. The principal and the interest accrued on such accounts is
insured, up to the legal limit. Securities such as stocks,
bonds, debentures, and annuities, life insurance policies, and
municipal securities, even though purchased through the bank,
are not covered. Federal instruments are backed by the
government’s faith and credit, and are not covered by the FDIC.
Individual Retirement Accounts (IRAs) are also covered by the
What institutions are covered?
Insured banks and savings associations are covered. To
determine whether an institution is insured, you can call toll
free to 1-877-275-3342.
What about credit unions. Are they covered?
Credit Unions are not covered by the FDIC. They are covered
National Credit Union Administration, a federal agency also backed by the faith and credit of the
United States. The terms used are slightly different. The NCUA
refers to “shares,” but the effect is the same. The basic
coverage is $250,000.00 per depositor per insured institution.
Different branches of the same bank or savings association are
not different institutions, so only one limit is available to
you in that institution. The NCUA limit is also (temporarily)
currently $250,000.00. Note that the limitation is per depositor
per institution. People concerned about the safety of their
deposits tend to place amounts in several different institutions
(not just different branches) so that their funds are all
protected by the FDIC.
What about debts I owe to a bank that fails?
If you owe money to a failed bank or S&L, the successor in
interest (i.e., Washington Mutual failed, but its assets were
sold to Chase) still owns your note, and you will be responsible
to make payments to the successor.
What banks have failed this year?
Video: Washington Mutual - The largest bank
failure in U.S. History
The FDIC lists 23 banks that have failed in 2008. Most years
there are three or four, and back in 2002 there were 11, but the
closures this year are truly unprecedented in recent times. That
fact is driven home by the fact that the failure of Washington
Mutual Bank in September of 2008 was the largest
bank failure in the history of the United States.