Financial Education

My family and I just moved into a new house. With all the packing and unpacking, my kids and I found three gift cards we had forgotten about. Mine was from my birthday, almost a year ago. Theirs were from last Christmas. So while most consumers are shopping for this year’s holiday season, we’re putting the wraps on last year by spending these long-lost gift cards.

If you have old gift cards sitting around, you might want to consider doing the same. Federal rules say that gift cards cannot charge inactivity or service charges for 12 months, but after that first year, these fees could start to eat away at your card’s value.

If you find a gift card that has an expiration date, call the phone number on the card to see if the funds are still available. Under current federal law, a gift card cannot be sold that will expire in less than five years. If funds are still available to you, a new card must be issued at no cost to you. Your state may provide additional protections and rights.

Thinking about giving a gift card to someone for the holidays?

Here’s a quick rundown of the different kinds of cards:

• Store gift cards
  Branded by a single merchant or group of merchants, and can only be used at those stores.
• Network branded gift cards
  These will have a logo like American Express, Discover, MasterCard, or Visa and can be used wherever the network credit cards are used. They are reloadable, which means the recipient can add more money to them when they run out.
• Reloadable prepaid cards
  You can use these cards the same way you’d use reloadable gift cards, but the rules that cover these cards are not the same. If it isn’t sold as a gift card, then the federal rules that cover gift cards don’t apply. For example, for such cards, the card issuer might immediately start charging fees, like monthly service fees.

When you give the card, give the terms and conditions and the receipt, too. The terms and conditions are sometimes included in the original packaging. Also, consider the financial condition of the business offering the card. For example, if you give a store gift card and the retailer goes under, the card may not be redeemable. Also, if locations near your recipient close, the card may be harder to use.

If you get a card as a gift

Here’s how to make sure you’re getting the most out of it.

• Gift cards should spell out what fees they charge, so read the fine print. For example, even though the federal rules are the same for all gift cards, additional policies may be set by the merchant or bank issuing the card. Be sure you understand these policies.
• What happens if you lose your card or if it’s stolen? Some issuers, like stores, might not replace them . Other issuers might replace the card, but only if you registered it before it was lost or stolen.Use the card sooner, rather than later. Take my word for it, these cards can be easily misplaced and forgotten.
• Write down the card number, security code, and customer service phone number and keep them in a safe place.
• Treat the card like cash, especially if the issuer will not replace it, and keep your card until you are sure you will not be making any returns. Some merchants require that refunds be added back to the card.

To learn more about pre-paid cards, Ask CFPB.

Many of the low-income and economically vulnerable consumers we serve through the Office of Financial Empowerment face barriers to accessing affordable financial services. And for the many social service and financial-product providers that want to reach them, barriers to scalability – making proven solutions available to a significant number of people — and a lack of data to inform policy and practice can get in the way of building new pathways to financial security.

On November 28-29, more than 100 representatives from banks, credit unions, state and local government, community organizations, researchers, and product developers gathered with our team to explore opportunities to address these barriers at a national convening entitled “Empowering Low-Income and Economically Vulnerable Consumers: Making the Case through Access, Data, and Scale.” We also were joined by our fellow financial regulators and representatives from the departments of Labor and Health and Human Services and the Community Development Financial Institutions (CDFI) Fund.

This was the first event of its kind for us, and it proved to be a great opportunity to gather information for the consumers we serve. The wide range of participants discussed strategies that are improving the financial lives of low-income consumers. Practitioners who work with consumers every day told us about the impact of giving people access to financial coaching and other services, as well as the challenges of taking innovative ideas to scale. Industry providers identified partnerships as key to serving both low-income consumers and offering financially sustainable products. Participants included representatives of organizations serving a variety of consumer groups, including people with disabilities, Native Americans, Asian-Americans, African-Americans, immigrants and others. They spoke of the need for data to inform policymakers as well as the organizations that provide services.

Our mission at the Bureau is to help make sure that the financial marketplace offers safe, affordable products and services to consumers, and that those consumers have access to information and tools that allow them to choose products and services that best fit their needs. In the Office of Financial Empowerment we take this mission seriously because we focus on consumers who are struggling financially and who may not easily be able to access the products and services they need.

Fulfilling this mission requires a range of expertise that that comes from all sectors of the financial marketplace. Attendees heard from Director Richard Cordray, as well as representatives from the CFPB offices that deal with enforcement, supervision, fair lending, and consumer complaints – all of which are vital to our shared mission of financial empowerment.

In the coming months, our team will be developing strategies related to the themes that guided our convening. We want to identify approaches that can serve the tens of millions of consumers who try to make ends meet with low or limited income.

To achieve this, the financial empowerment field needs data to show that financial coaching, counseling, and other methods are effective in helping consumers manage their financial lives. At the same time, we need to understand and expand the ways in which low-income people can access responsible financial services.

We want to hear your experience on ways to provide effective, safe and affordable access to the financial services and products people need, whether that’s persons with disabilities entering the workforce for the first time, foster youth moving to independence or any other vulnerable group that could use some help. You can share your experience with us by telling your story.

Hurricane Sandy reminded us that disasters – storms, fires, floods, earthquakes – can happen to anyone, and when they do you have little time to react.

If you had to leave your home in an emergency, you would only have minutes to choose what stays and what goes, and your financial records may be one of the last things on your mind. So, collecting and organizing your financial information now could help you avoid problems and recover faster.

Keep your account information and important documents in a water-tight container or fire safe, and keep copies somewhere else, like a safe deposit box, a secure place at work, or with a trusted relative or friend. Here is an outline of the items you should gather.

Account information

If your house is destroyed, missing a credit card payment may not seem like a big deal. However, ignoring credit card or loan payments could cause your interest rates to jump, costing you more money, and could damage your credit score when you’ll need access to credit most.

If you’re affected by disaster, you’ll need to contact your creditors as soon as possible and let them know about your situation. Most of them will have ways to help. Also, if you are unable to live in your home, check with your utility companies (e.g. electric, gas, cable) to see if you can suspend your utilities to add extra money to your budget. You may want to consider signing up for direct deposit with your employer and electronic bill payment with your utilities to make receiving income and paying bills easier.

Make a list of account and customer service numbers for:

• Checking and savings accounts
• Credit and charge cards
• Mortgage and home equity loans
• Auto loans
• Student loans
• Personal loans
• Cable, telephone, and utility companies

Personal records

Personal records documents can be replaced, but it can take time. Plus, you may need these documents to verify that you are the owner of the property that was damaged or destroyed in the disaster to receive insurance help or other assistance.

Gather and make copies of:

• Identification, including your driver’s license or passport
• Social security cards
• Birth certificates
• Marriage certificates and divorce decrees
• Titles, deeds, car registrations

Financial records

Again most financial records can be replaced, but you will need your insurance information if your property is damaged, or if you or a family member needs medical care. Keeping this information safe will also help you avoid trouble if questions arise later about your investments, taxes or workplace benefits.

Gather and make copies of:

• Insurance policies
• A room-by-room inventory of your belongings
• Investment records
• Income tax information
• Pay stubs and employer benefits records
• Wills, living wills, trusts, medical powers of attorney

Computer files

If you keep financial records, passwords, family photos and videos on your computer, consider backing the information up to a secure cloud storage service, or back up your data regularly and keep the backups somewhere safe.

After the disaster

Americans tend to come together in times of crisis. There will be a lot of people and organizations who will want to help you. And, unfortunately, there will be criminals who will want to exploit the trauma. Watch out for:

• Up-front fees to help you claim services, benefits, or get loans. No government official or agency will ever ask you for money to claim a benefit or service.
• Contractors offering door-to-door repairs, especially if they offer deep discounts or require payment before you have a contract in writing.
• Insurance agents who try to sell you coverage after the fact.
• Organizations with names similar to government agencies or charitable organizations.

If you believe you may be targeted by these practices, contact your local or state law enforcement officials, or submit a complaint to the CFPB online or at (855) 411-2372. See our rebuilding your finances checklist and other information on protecting and rebuilding your finances after a disaster. To find more information and answers to all kinds of commonly asked questions about consumer financial protection issues, Ask CFPB.

UPDATE: As Hurricane Sandy continues to make its way up the East Coast, we wanted to highlight this blog post from last year’s hurricane season. Frauds and scams are too common in the aftermath of a natural disaster. The warning signs and tips below can help you avoid getting caught up in one of these scams as you start cleaning up from the storm.   – The CFPB Web Team

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This year has seen quite a few notable natural disasters, including deadly tornados, wild fires, and floods. Most recently an unusually strong earthquake, hurricane, and floods have struck the eastern United States.

Of course, with any disaster comes the cleanup, which can be expensive. Unfortunately, many families do not have emergency funds and may need to borrow money in a hurry to make important repairs. This post-disaster stress can sometimes make us easier targets for deceptive lenders. (more…)

We all make mistakes. That’s part of what makes us human. When we can, we learn from our mistakes. That’s why we at the Consumer Financial Protection Bureau want to understand more about the most common errors consumers make about money. We want to find better ways to help others avoid these mistakes in the future.

For example, many consumers make credit card and loan decisions without shopping for the best rates and terms. Others set goals – like saving more for retirement or for the down payment on a home – but don’t follow through. Many people live paycheck-to-paycheck, but never take the steps necessary to plan their spending, reduce their debt, or save for sudden expenses.

We would like to give you a chance to tell us about common money mistakes. Tell us about:

• Errors you’ve made;
• Mistakes you’ve seen others make;
• Habits and practices that make good choices more difficult; and
• What you wish you had known sooner or would do differently next time.

Please e-mail your comments to FinancialEducation@CFPB.gov.

(Note: Do not discuss personally identifiable information or private issues in the comments area below. If you have a complaint about a specific product or company, please enter it here.)

There are certain occasions in everyone’s life when one decision can have long-lasting effects. How will you pay for college? Which mortgage should you choose? Where will you turn when you need credit? When will you start saving for retirement? How you answer these questions and others like them can profoundly impact your financial future.

Unfortunately, too many graduates are entering the workforce saddled with student loan debt, limited employment opportunities, and important financial decisions for which they are often unprepared. There is simply too wide a gap between complex financial products and the level of education that many consumers have about them.

The Consumer Financial Protection Bureau (CFPB) is dedicated to closing that gap by making financial products more transparent and helping to educate consumers so they can make better-informed choices when pursuing their own financial goals.

Today, Director Cordray outlined this vision during the White House Financial Capability and Empowerment Summit. The national gathering of more than 100 community leaders focused attention on improving the financial capability of all Americans. The summit also highlighted the work of several organizations making a difference for workers, youth, and families.

At the CFPB, the Office of Consumer Engagement and the Office of Financial Education are the twin engines that develop and implement initiatives to educate and empower consumers. Our job is to help you access and understand the information, tools, and rules that will help you make the best financial choices.

Through our Consumer Engagement work, we recently launched Ask CFPB, a tool to help you get answers to your basic financial questions. Ask CFPB features hundreds of answers to questions about credit cards, mortgages, and other financial products and services.

We’ve also been working to help you navigate the financial landscape as you navigate the student loan market. We launched the Student Debt Repayment Assistant and began testing a new tool to help students understand how much they’ll owe after graduation. We hope all of these efforts will help students and parents make smarter financial decisions.

Meanwhile, the Office of Financial Education is learning from – and strengthening – the work of financial education practitioners. We are building a comprehensive approach to financial education, a goal that includes developing a knowledge base and measuring the effectiveness of financial education programs. Going forward, we plan to:

• Share effective strategies,
• Increase federal coordination,
• Promote innovation, and
• Test new ideas in the area of financial education.

We look forward to engaging with you as we work together to help consumers live better financial lives.

For more information about these and other CFPB programs, I encourage you to take a look at our website, www.ConsumerFinance.gov. And if any members of the financial education community would like to contact us, please e-mail financialeducation@cfpb.gov.