While market-linked certificate of deposits have been around for a while, they're now being marketed more aggressively, according to a recent FDIC news article. The return on a market-linked CD is tied to an index such as a stock market like the S&P 500. If you are considering investing in a market-linked CD, be sure you understand ALL the details of the investment. Here are some questions you need to ask:

1) Is the amount you invest (the principal amount of the CD) insured by the FDIC?

The FDIC insures deposit accounts such as checking and saving accounts up to $250,000 per depositor, per insured bank for each account ownership category. But this is only for accounts where the principal amount is guaranteed by the bank. If you could lose some of your original investment (such as when you invest in a stock mutual fund), then it will not be insured by the FDIC. You might lose all of your investment if the bank failed.

2) When will the CD mature?

We often think of CDs of having maturities in 1, 2, or 5 years. But market-linked CDs are considered long-term commitments and may not mature for 20 years. If you pull your money early, there can be significant early-withdrawal penalty fees. Ask about these penalty fees too.

3) How will the return on the CD be calculated?

Be sure you understand how the return is calculated as it may be complex. It may not be as simple as your return goes up the same as the return on market index; instead, it may be percentage of the increase. And, your return may also go down if the market index goes down.

4) Is it possible that I might not earn any interest on a market-linked CD?

Yes, it is possible if the index performs poorly, depending on the terms set by the financial institution offering the market-linked CD. Be sure to ask!

A market-linked CD may or may not be a good investment choice for you. Do be aware that a market-linked CD is significantly different than a regular Certificate of Deposit. Be sure to ask questions so that you can decide if it is a good choice for you.

Last week I wrote about Go Direct, the US Treasury's effort to have all recipients of Federal payments such as Social Security, SSI, and veteran's benefits receive those payments electronically. If recipients don't sign up to have their payments automatically deposited to a bank or credit union account, they will receive a Direct Express debit card and their benefits will be loaded onto the card each month beginning in March 2013.

I recently researched other prepaid debit cards that we can buy, use, and re-load. The fees on some can add up quickly, and some have fees for something as basic as making a purchase. Not so for the Direct Express card: there are very few fees, and it would be easy to use the card without ever paying a fee.

But there is at least one thing that could trip up users and cost them: ATM withdrawals. As I said last week, card users can make one free ATM withdrawal for each benefit payment they receive on the card. After that, there are actually two kinds of fees that they could pay:

Direct Express will charge you $0.90 per withdrawal. That's not a lot, unless you're taking multiple withdrawals of just $10 or $20 at a time. Unfortunately, that's what we saw in Illinois a number of years ago when public recipients starting having benefits deposited on their LINK cards. They had no experience with ATMs. When they read or were told that they could take their money out in increments of $20, some thought they could only withdraw $20 at a time. The result? Lots of fees from both the LINK card and the owner of the ATM.

If you're not using an ATM that belongs to the Direct Express® card surcharge-free ATM network (see FAQ #4.5) you'll also be paying a surcharge to the bank that owns the ATM. According to Bankrate.com, ATM surcharges averaged $2.33 in 2010, and 99% of banks charge a fee when non-customers use the bank's ATM.

According to Direct Express FAQ # 4.7, the card issuer does not impose a limit on the amount you can withdraw at one time from an ATM - but the bank that owns the ATM can, and probably will, impose a limit. According to the FAQ, "ATM owner's daily ATM withdrawal limits typically range from $200 to $1,000."

Here's the moral of the story: individuals who are not accustomed to using banks and ATMs may not fully understand the consequences of multiple withdrawals from ATMs. They may also not understand the importance of looking for a bank that is part of the surcharge-free network. If you know someone who will be getting a Direct Express card, help them understand easy ways to use the card for free: make purchases, get cash back when you make a purchase, or see a bank teller to get your cash.

There was a time when you could get your Social Security check by mail and buy a savings bond at the bank or through payroll deduction. Those days are drawing to a close.

Savings Bonds

As of January 1, 2012, you will no longer be able to visit your local bank or credit union to buy a savings bond. The bonds will still be for sale, but you'll have to do it through Treasury Direct, where you set up an online account with the US Treasury. This is the same website and account where you purchase other Federal debt instruments such as Treasury Bills, Notes and Bonds, and TIPS. For now, it will be much less convenient to purchase Savings Bonds as a gift, but the Treasury hopes to make that less cumbersome in the future.

Federal Benefit Payments

Go Direct is the US Treasury's campaign to have all benefit payments paid electronically by March 1, 2013. This includes SSI, Social Security, veteran's benefits, and other federal payments. If you have a checking account, you'll be asked to have your check automatically deposited. It's safe, secure, and reliable. You can set it up online or by calling (800) 333-1795. Be prepared by having the necessary information on hand.

Maybe you like the feel of getting that paper check and figure you'll just ignore this whole thing. The Feds are one step ahead of you. If you don't provide a bank account for auto deposit, you'll still be converted to electronic payments. Your money will be deposited each month onto a prepaid debit card known as Direct Express ®.

The Direct Express ® card is a type of prepaid debit card, like ones you may have seen advertised as a way to carry money for a trip or to give a child. It carries the MasterCard logo, and you can use it pretty much the same way you use any MasterCard-branded credit card or bank debit card.

The US Treasury negotiated an extremely low-cost fee structure for Direct Express ®. You can make purchases in-store or online, get cash back when you make a purchase, or get cash from a bank teller – all for free. You're allowed one free ATM withdrawal for each benefit payment deposited to the card. You can check your balance online or at an ATM for free. You'll pay a fee if you use the card outside the United States, take additional ATM withdrawals, request paper statements, or request a replacement card more than once per year. Pay attention to these exceptions, and you'll probably never see a fee for using the card.

Both of these changes are aimed at saving the federal government tens of millions of dollars. Paper checks and bonds are much more costly to issue, mail, and handle.

My dad's Social Security check has been automatically deposited to his checking account for years. But if he had to make the change now, it would be impossible for him to understand and do it on his own. If your parent, grandparent, or another elderly friend is still receiving paper checks from the federal government, talk with them about this change. Help them decide whether to have their benefits deposited into a checking account or onto the Direct Express card. If they're not comfortable going online to set up auto deposit, they can call (800) 333-1795. Help them prepare by identifying the information they will need about their benefit payment and their bank account.

There's a lot of buzz lately about fees at financial institutions such as banks, and it may be time for you to take a close look at your checking account statement and see how much you're paying for your account.

Why the recent buzz?  Did you know that every time you use your debit card, merchants are charged an average of 44 cents?  You may not have been aware of this cost, but this was a fee that was likely passed along to you in the cost of goods and services you used. Does that sound high to you?  Well, it does too many people. And now, due to a new federal regulation, starting October 1^st the fee for using a debit card will be limited to about 21 to 24 cents per swipe.

People are busy speculating what this will mean for you, the consumer. Of course, there are costs to have a financial account and financial institutions are looking for ways to pay for these costs. Thus, instead of hidden costs like high debit card use fees, we are now seeing more fees.

These fees could end up being expensive for you – especially if you don't pay attention to what you're paying for. But, the good news is that they are fees you can see (not hidden) and you can make choices to avoid the fees. What can you do?

1) Decide which services that financial institutions offer are important to you.

• For example, do you like to do business in a building or would you rather conduct business online?
• Which tools do you use daily? For example, are you a heavy user of debit cards?  Or, do you use your ATM frequently for cash?
• Do you depend on receiving a paper statement or would an electronic one be fine?

2) Once you know which services you want, shop around to find a financial institution that offers the best deal that fits your needs. Don't pay for services you don't use and try to find a place with no or low fees for the services you do use.

3) Ask your financial institution if there are ways that you can avoid fees.

• For example, direct depositing your paycheck to your account may reduce fees.
• Or, maintaining a minimum monthly balance may keep costs down.

4) Check out different types of financial institutions. Different institutions in different locations will offer different services – don't assume they're all the same. Ask about no-frill, free accounts and see what each institution has to offer you.

Checking accounts (like many financial products) come in lots of different configurations. It's up to us to find one that has the services we want to use at a reasonable cost. Take a look at your financial statement and see if you have any fees that you hadn't noticed before.  Let me know what you find -- I'm curious to learn more about the new fees that may or may not pop-up in the next few months!

Should I still be teaching people how to write checks , use a checkbook register, and to balance their checkbook?

I recently attended an excellent presentation by Brenda Cude, Ph.D.,Professor, Department of Housing and Consumer Economics, University of Georgia, about the concept of financial literacy: what is it and how do we measure it. It was a thought-provoking look at just what it means to be financially literate, such as whether having access to financial products and services is actually a required in order to be financially literate.

Those ideas may help me wrestle with a question I have as a financial educator: what are the basic management skills that a person needs to function in today's world? In the past, critical skills included knowing how to write a check, how to keep an accurate checkbook register, and how to endorse a check. Now, I'm questioning whether those topics have any place in my basic financial management classes.

How do you keep track of the balance in your checking account? I'm betting the majority of you said "I check online." Or maybe you call your bank. But if you carry a smart phone, you may have said "There's an app for that." Maybe you use software or an online service to download all your transactions and keep track.

So, is the checkbook register out-dated? Most transactions are electronic and are processed within hours. Checks are converted into electronic transactions, reducing or eliminating the "float" – the lag of time between when you mail or give the check to the payee and when the amount is deducted from your account.

And what about writing checks? Do I still need to be teaching that? I remember how hard it was for many of us to learn to write numbers out, to translate "$14.25" into "fourteen dollars and twenty-five cents." It's a lot easier to swipe a debit card.

Then there's reconciling your account. (Did you read that sentence and say to yourself, What's she talking about?" If so, that just proves my point.) University of Illinois Extension's award-winning curriculum, All My Money, has always included a final activity about bank accounts that requires you have to do all these things: write checks to pay bills, endorse a check for deposit, use the ATM to deposit the check, keep a checkbook register, and reconcile the register with the bank statement at the end of the month. How many of you even look at your bank statement, much less have a checkbook register to balance it against? I'm a firm believer that we all need to verify all the transactions on the statement by checking it against debit card receipts, ATM deposit receipts, etc. But I'm ready to admit that you can do that without following these more rigid procedures.

We're in the process of revising All My Money, including the lesson on bank accounts. I'd be very interested in your thoughts on the skills that are needed in today's world to successfully manage a checking account. So weigh in by clicking below and submitting a comment.

Do you use your debit card daily? Do you check your bank balance online? Do you bank using a smart phone app? The pace of change in the financial world is dizzying. New isn't always better, but I do like learning new ways to simplify my financial life.

It can take awhile to adopt new habits, but often new technology can save time and help you manage your finances more easily. I'm comfortable using new technology to do the following tasks with money, Have you tried these?

• Withdraw cash from an ATM versus from a bank or credit union teller.
• Pay bills using an online payment system rather than mailing a check.
• Compare prices for purchases on the Internet instead of driving to a variety of shops.
• Pay for purchases with a debit or credit card rather than writing a check or carrying cash.
• Sign-up to have regular bills (such as mortgage and insurance payments) automatically debited from your checking account.

The place I do most of my banking is a local institution. However, my college-age sons use an online bank that does not have a brick-and-mortar location; this works well for them. An online account can be very helpful to people who live in different locations during the year whether they are college students or snowbirds. Plus, it's available 24/7.

Recently I've added these new financial practices to my life. You might like to try these too.

• Transfer money from one financial account to another using an electronic transfer.
• Receive bills online rather than through the postal mail.
• Deposit a check to an account with a smart phone app that takes a picture of the check.
• E-file federal tax return.

Do you use the self-serve checkout at the grocery store? One of our local grocers has this option, but I still feel very uncomfortable using it. Every once in awhile, when I have just a few grocery items, I practice using the self-check system again. Financial habits, like most habits, take time to become accustomed to and require practice. Can you identify a financial habit or two that you'd like to add to your life? Here are a few more to consider.

• Check financial account balances using a smart phone app or with a phone call.
• Use an online budget website to track and budget expenses.
• Use chat services online to resolve a problem with a purchase.

Not all new ways of handling finances fit each person's needs. It's wise to evaluate both the pros and cons before adopting new practices. But you may find that newer ways of doings things pay dividends. For example, when you manage your financial accounts online, you're free to shop for better interest rates even if the bank is in another state. Having bills automatically debited from your checking account can assure that you never pay another late fee. In our complex daily lives, finding ways to simplify our financial "life" is a plus.

Use the Comment link below to share new financial habits you've developed and to suggest ones I might like to use too!

Do you know how much money is in your bank account? America Saves urges you to avoid overdraft fees by keeping track of your spending. The $20-40 you could save each month by not bouncing checks or overdrawing could put nearly $500 in your emergency savings account. For more savings tips, visit: http://bit.ly/fLuD29.

I'm continuing to evaluate the basic financial products that I use. Last week, I invited you to look over my shoulder as I investigated whether my current checking account was still the best one for my needs. This week, I'm applying the same thinking to one of my major credit cards. We'll call it Card A.

Step 1: Look at how I use the card and figure out what card terms and features would be best for me.

• I'm a convenience card user, meaning that I charge items and then pay the balance in full by the due date. I don't pay any interest, and I'm not terribly concerned about the interest rate.
• I want a rewards card, so that I get some benefit for charges I make. I prefer getting cash awards, so that I can use it however I want.
• I don't charge a great deal on this card, since I have another card (Card Z) whose rewards I receive automatically, and they are as good or better than the standard rewards on Card A. Unless I find a new card whose rewards are even better than Card Z, I still won't charge much on Replacement Card A and won't earn a lot of rewards. Therefore, I'm not willing to jump through lots of hoops to get them.
• The current card requires me to register every few months in order to get a higher rate of reward on certain expense categories. I often fail to register or even know what the categories are, so I'm getting no benefit from these bonus rewards.
• I don't want an annual fee, especially on a card I don't use that much.
• Currently, my three major credit cards each carry a different logo. Once in a while, I find myself somewhere that only takes one of them (usually outside the US), so I'd like to replace this card with the same type, just a different bank or credit union.
• I travel some in foreign countries, and it would be nice to have a card that doesn't charge a foreign transaction fee. But this is less important than my other criteria.

Step 2: Identify the choices. I visited a couple of different card-comparison websites where I could sort card offers based on various criteria.

* On sites that allow you to compare credit cards, you may be asked about your spending patterns or the kinds of terms you're looking for, but you should not be asked for any personally identifiable information just to compare cards. And don't agree to download anything from a site you're not familiar with.

I particularly looked at a couple of cards I read about in financial magazines that sounded like good candidates. I was disappointed that, in some instances, the terms had either changed since the articles were published or the descriptions were somewhat inaccurate.

Some of the best rewards offers were on cards that required opening an account with a particular broker or credit union. In the end, I just didn't think I wanted the extra complication of another account to manage.

Other generous offers were on cards that have annual fees. Many waive their fees for the first year, but I'm looking for a more permanent choice; I don't want to go through this search again next year, and I don't want to end up with an annual fee because of my procrastination.

There are several other cards that offer rewards and terms comparable to my current card, but none that offered me much additional benefit.

In the end, I decided to stick with Card A. I could increase the rewards somewhat with another card, if I were willing to go through some hassles. But I'd rather simplify my life rather than add complications. And if I am willing to do additional work to get additional rewards, maybe I should just make a point of registering every quarter for the bonus offers on my current card.

I will check this task off my To-Do list, since I did the evaluation and made an active decision to keep this card, rather than keeping it because of inertia. The terms and benefits offered by credit cards change over time, so I'll re-evaluate in another couple of years – especially if my current card revises its rewards structure.

Like most people, my basic money management tools include a checking account, an atm/debit card, and a few credit cards. Lately, I've been wondering whether my current tools are still the best ones for me. Maybe you'd like to look over my shoulder as I evaluate whether changes are needed.

Let's start with the checking account. How I use this account has changed quite a bit over the years. The terms and features of the account also changed about a year ago when my bank failed and was taken over by another institution.

How I use the account

• My paycheck is automatically deposited.
• I make almost all my other deposits at the ATM.
• Many of my bills are automatically deducted from the account.
• I never pay with a debit card; I make most of my purchases with a credit card that I pay off each month.
• I download my checking account transactions into money management software that I use to balance my account and track expenses.
• When I need cash, I make a withdrawal at the ATM.
• I get lazy about moving any excess cash into a savings account. It would be easier if I could just keep it all in one account.
• I rarely go to a teller.
• I write maybe 2 checks a month.
• I keep the required minimum deposit.

What does this tell me?

• The physical location of my bank isn't very important, as long as I can use a convenient ATM to deposit a check or take out cash.
• A minimum balance requirement isn't a problem.
• Paper statements or returned checks aren't needed.
• I would benefit from a higher interest rate, since I'd like to keep my "cushion" in this account.
• The ability to download transactions into my money management software is important.

My current checking account isn't a bad match for my needs, but it pays a typically low interest rate. So I investigated some of the high interest checking accounts I've seen advertised.

• Some of them would not allow me to download transactions into my software, so I crossed them off the list.
• They all limit the balance on which they will pay the advertised interest rate, but the limits are at least $10,000 and some are $25,000.
• They all require at least 10 debit card transactions a month, which would require a major behavior change for me. I typically make several small purchases each month using cash. If I use a debit card for those, I should have 10 transactions per month. But I'll have to monitor each month to be sure, until I get a pattern established where I can be confident of meeting that minimum.
• One bank also required that my debit card transactions add up to at least a certain dollar amount. I'm not willing to track my debit card transactions that closely, so that one's out.
• In any month I don't meet the requirements, I will get an interest rate comparable to my current account, but there won't be any fees.

What are the risks? These accounts are all FDIC or NCUA insured, so my money won't be at risk. I might fail to meet the requirements for the higher interest rate in some months, which would cost me interest. But I would still be ahead financially compared to my current account. There's always a possibility that the bank will lower the rate in the future, in which case I might need to move my excess cash into a CD. (One bank guaranteed its rate until sometime in 2012, but its requirements would be more difficult for me to meet.) But I think this switch makes sense for me, and I think I'll take the plunge.

I still need to assess whether the credit cards in my wallet need adjusting, but I think I'll save that for another day.

I've recently been intrigued by a couple of discussions about high interest checking accounts. My interest was further piqued when a good friend regaled me with his high-interest account story. It included last minute trips to buy tiny items using their debit card, to meet the account's requirements. But the payoff was substantial, and he was very pleased with the arrangement.

The Backstory

Years ago, I became disenchanted with my checking account, but I didn't see any other great alternatives. The accounts I saw were Frogs: they offered a minimal interest rate and no monthly fee if I kept a minimum balance. So I stayed put, until one day I saw an advertisement in the mail. A small local bank was offering to pay half the prime rate on the full balance of your checking account. Bingo! That's what I'd been waiting for - a Handsome Prince! Good interest, no hassles, and a local bank. I don't remember for sure, but maybe I had to have one automatic deposit per month. The only downside was a limited number of ATM locations where I could conduct transactions without a fee. The balance in the account ballooned as I began to use the account to hold our emergency fund and other short-term savings, as well as money for monthly expenses.

It was a fairy tale marriage – until the economy hit the skids. A notice in the mail welcomed me to a new bank. Mine had failed and was taken over by another bank. My account was insured, thanks to the FDIC, and the transition was virtually seamless.

But then came the bad news: my Handsome Prince of a checking account was being converted into an ordinary Frog checking account paying virtually no interest.

Understanding and Choosing an Account

I began to look into other banks that offered high interest checking. Compared to Handsome Prince, these are just semi-handsome because of their more restrictive terms. But Handsome is no longer available, so I reconciled myself to looking for the best thing that was available.

Many of the banks and credit unions offering these accounts are smaller, local institutions with few branches. If the accounts are available to people living outside their state or immediate area, they may reimburse you for fees you pay to use other ATMs.

Typical requirements for earning the high interest rate with the current breed of high-interest checking account are 1) making 10 or more signature transactions with your debit card each month, 2) receiving only electronic statements, and 3) having at least one automatic transaction each month, such as direct deposit of a paycheck or Social Security check, or an automatic debit for a monthly bill. Another fairly common requirement is using online bill pay. Accounts may have other requirements. Check the details.

And you may not earn that high rate on your entire balance. One account I read about only paid the advertised rate on the first $500 in the account, but another paid it on the first $30,000. Say you keep $20,000 in the account year-round, and earn 3.5% interest on the entire balance. That's $700 in interest. That's bigger than the raises most people got last year! But if you keep an average balance of $5,000 and only qualify for the higher rate 4 months out of the year because you keep forgetting to use your debit card, you'll only earn $58. You must predict whether you will consistently qualify for the higher interest, and decide whether the interest you might earn is worth the effort.

So how does a person choose the right checking account? Think about how you use the account, and choose an account that fits your needs. Below are some examples.

Jack often has less than $200 in his account, and he frequently takes cash out using the ATM. He doesn't have Internet access.

Jack will probably do best with a "basic" checking account with no minimum balance requirement from a bank that has lots of branches that are conveniently located for Jack to use their ATMs.

Melinda pays for everything using her debit card, because she's sworn off credit cards. Using credit, she didn't control her spending, and she is trying to pay down her balances. She likes the idea of managing her account online, and her employer offers direct deposit.

Melinda probably meets the criteria for a high-interest checking account. But she won't get much financial benefit from it unless she keeps a substantial balance in the account. For now, she should focus on paying down her credit cards and keeping just a reasonable emergency fund in a checking or savings account.

Monroe plans to retire in a few years. He's building up cash reserves to supplement his Social Security check for the first few years of retirement. He's thinking of putting that cash into a ladder of CDs that will mature in years 1, 2, and 3 of his retirement – making the money available as he needs it. But CD rates are so low now, he's open to other strategies for getting a better interest rate.

Monroe could be a perfect candidate for a high-interest checking account, if he meets the criteria (debit card transactions, one automatic deposit or debit per month, electronic statements, etc.) But he may exceed the balance on which the account will pay the high rate. If that is the case, he should keep the remainder of his cash in another account such as a CD or money market account. He should also be careful not to exceed the amounts insured by the FDIC (most bank accounts) or NCUA (credit union accounts) at a single institution.

Where to Find High Interest Checking Accounts

There are several online sources for tracking down high-interest checking accounts. CheckingFinder.com focuses on smaller, local banks offering similar accounts designed by BancVue.

You can find both banks and credit unions offering high interest accounts from Bankrate.com's 2010 High Yield Checking Study.

Yet another source is depositaccounts.com, which was referenced by Consumer Reports Money Adviser in January 2010 issue.

Each of these sites provides the interest rate, the requirements to qualify for the high interest rate, the balance on which it will be paid, and the geographic locations where the account is available. But be sure to verify all of that information directly with the bank or credit union before opening an account.

The lists on each site are different; the account that is most appealing to me was only listed on one of the three sites. My next step is to go to the bank's website (or call them) and make sure that the information is current, before I open an account. Then, I'll have to deal with changing my direct deposit and train myself to track how many times I use the debit card each month.

What's your take on these accounts? Click on my name below and send me your comments. I'll post the most interesting ones and reply to them in a future blog post.

Today we welcome two guest bloggers, Paige Luster and Jessica Sturdy, to share their insights on online banking. Jessica and Paige are Peer Educators through the University of Illinois Extension's Financial Wellness Program.

Online banking, commonly referred to as Internet banking, is defined as the opportunity for customers to conduct financial transactions via the Internet. Almost all large financial institutions offer online banking. The features offered include funds transfer (account to account transfer or wire transfer), bill payment, loan application, and statement reconciliation.

The benefits associated with online banking include convenience, efficiency, and effectiveness. Online banking is only a few mouse clicks away, 24 hours a day, 7 days a week, free of charge. This unlimited accessibility allows customers to conveniently and instantaneously transfer money or pay bills without a trip to the ATM (including fees) and the Post Office. Online banking is incredibly efficient in the sense that one has constant visibility of their current financial position. On one page you can access and manage checking, savings, CDs, securities, and investment accounts. In relation, online banking assists in effectively managing your money by offering tools such as stock quotes, portfolio management programs, and bill payment reminders to help in tracking various accounts.

Online banking can be tough to get used to, especially when you are starting out. The transition to online banking is one that needs to be evaluated to get an idea if banking on your computer is the right choice for you!

The biggest convenience of online banking is being able to check your account balances any day of the week, at any time of the day, but this can lead to errors. If you are not keeping track of transactions you make, and are solely relying on the numbers shown on the screen, it is very easy to spend money you do not have. Some transactions, depending on the vendor and your financial institution, take longer to post online. For example, you may see that you have $100, but you forgot you wrote a check to the utility company last week for $60. This check has not posted to your account yet, so you really only have $40 of spendable money in your account. Even though it says you have $100, if you spend more than $40, it can lead to an overdraft, fees, and a big headache while sorting it out.

The most common concern associated with online banking is safety. Phishing (email prompting user to enter personal information on a fraudulent website) and Pharming (hacker whom redirects website information to a fraudulent website) are two well-known attacks on computer security. However, the best way to avoid falling victim to a scam is to use your best judgment. Be aware that no legitimate financial institution will ask for personal information (i.e. Social Security number) via phone or email. Speak to your financial institution about their specific safety policies and other online banking service concerns prior to enrollment.

Always make sure a website is "secure" before entering in any personal information! You can easily do this by checking the URL. A secure website will show https:// rather than the usual http://. The "s" stands for secure.

Some banks or credit unions enroll your account(s) in online banking right from the start, but others may require a form to be physically filled out at a local branch. In this case, there may be an initial period where you will not be able to access your accounts online.

Websites vary widely from one bank to the next. Some sites are extremely difficult to navigate and will take time to learn. If your bank, or credit union, has a site that isn't easy to utilize, take some time to read the tutorials and familiarize yourself with the layout and procedures, or consider switching financial institutions.

Overall, free and secure online banking can be used as a resource for money management. Successful management including prompt bill payment and reduction in ATM fees leads to saving money, and who doesn't like that? Online banking is offered as a convenience to you; if you run into any setbacks, make sure to contact your local branch!

The amount of money in your bank or credit union account that is insured will stay at $250,000 through Dec. 31, 2013 as a result of the Helping Families Save Their Homes Act of 2009. Even if you have nowhere near that amount of money, this reminds us that money in US banks and credit unions is safe. Just check that your financial institution is insured by FDIC or NCUA.

Before last October, most account were insured up to $100,000. Congress raised the limit to $250,000 to help reassure account holders as the stock market and real estate markets fell, and some banks failed. Thanks to insurance through the FDIC and NCUA, accountholders at insured institutions lost no money, as long as their account balances did not exceed the limits.

You may not normally have that much money in your bank or credit union. But you could easily have more than $100,000 in an account if you:

• panicked during the stock market roller coaster over the past year, and cashed out some of your investments.
• lost or quit your job and rolled your 401(k) or other retirement plan into an IRA at your bank or credit union.
• sold your house and deposited the proceeds into your bank or credit union account.

Only deposit accounts - CDs, saving, checking, money market accounts - are insured. Investments purchased through a broker who has a desk at your bank are not insured.

The insured amount would have reverted to $100,000 at the end of this 2009. But the new law extends the higher coverage until December 31, 2013. This is good news, especially for people who may have large amounts that they would like to put into longer term CDs. With the extension, you could put up to $250,000 into a 4 year CD before the end of 2009 and know that it would be insured until its maturity date.

Retirement accounts were already covered up to $250,000 before these two temporary pieces of legislation, and insurance on those accounts will remain at $250,000 even after the legislation expires.

You may have even more insurance, depending on how your account(s) are titled. Joint accounts and accounts with POD (Payable on Death) designations are two situations where you have 2 or more times the base amount of $250,000. You can use the FDIC insurance calculator to figure out how much coverage you have.

This is one of the benefits of having money in a bank or credit union, compared to holding cash or keeping it in investment accounts that are not insured. is that most are covered by insurance. If the bank or credit union should fail, account holders are insured up to certain amounts. The general limit has been $100,000 for quite a long time.

To find out if your bank is insured by the FDIC, call 1-877-275-3342, use "Bank Find" at www.fdic.gov/deposit, or look for the official FDIC sign where deposits are received. As of 2007, the FDIC says that insured banks should be displaying the new official FDIC sign:

For credit unions, find out if your credit union is insured and how much insurance you have onthe NCUA website.

The question you used to be asked at the grocery store was, Paper or plastic? Now it's, Debit or credit? And I'm convinced that most people don't know what the question really means. I almost got into an argument with one person when she claimed that she could use her debit card as a credit card. NOT!!! The problem is, the question is misleading. And the cards look almost identical, since most debit cards now have a VISA or MasterCard logo on them, just like credit cards.

When these store clerks asks "Debit or Credit," what they're really asking is whether you'd like your purchase processed as an online transaction, or offline. If it's online, you'll enter your PIN. If it's offline, you'll sign. Your choice does not change your debit card into a credit card. All it does is determine whether the purchase is deducted directly from your checking account (online and almost instantaneous) or if it takes a detour through the same processing system used by credit cards before reaching your bank (offline, which could take up to 2 days).

With a debit card, your choice could make lot of difference to the retailer, to your bank, and maybe to your own pocketbook. If you choose debit, the retailer probably pays somewhere between 25 and 50 cents to process the transaction. The retailer gets some small amount back (maybe 5 cents) and the bank makes a little money on it. But if you choose credit, the retailer typically pays a lot more to process the transaction (especially large purchases) and the bank makes a lot more on the deal.

So what have some banks done? They charge you for making "debit" or PIN-based purchases, thereby pushing you to make "credit" or signature-based purchases. Or, they might use the carrot approach instead of a stick, and offer you points for making "credit" transactions.

Remember this: Credit means you borrow money; that's a credit card. You'll get a statement of how much you've borrowed. Debit means it's a subtraction - in this case, from your checking account. That's a debit card. So when that store clerk asks you, Debit or credit?, smile sweetly and tell her either PIN or signature. Since it's the holiday season, be kind and don't confuse the poor soul by answering with either "Online transaction" or "Offline transaction."

More in a later post about when it's best to use which card. But here's a hint: If you're already carrying a balance on your credit card, stick with the debit card. You'll probably spend less and you'll have a happier New Year without bigger, uglier credit card bills.

Update: This post is one of many listed in the Dec. 8 Carnival of Personal Finance, a compendium of current blog posts on many financial topics. The current edition is Don't Go Broke over the Holidays.

It was all over the news Monday and Tuesday. IndyMac Bank failed and depositors were panicked, lining up to take out their money. The media broadcast numerous stories like this: "I had $240,000 in IndyMac Bank and I lost $50,000 of it."

I'd like to tell the other side of the story, the story of the people who didn't lose money and whose stories therefore weren't "newsworthy." I actually wonder how many depositors the media had to go through to find those who had lost money, because most of the stories would have gone like this:

"I had $3000 in my checking account, and I didn't lose a penny. There was just one day where I couldn't access my account, but that was all."

Or maybe like this:

"I'm 73 years old, and I have my life savings in that bank - over $200,000. Now I realize that was stupid. But I was lucky. All of my accounts at this bank are payable on my death to my three kids. I didn't realize it, but I get $100,000 of insurance for each of my 'beneficiaries', so we were covered! We aren't going to lose anything."

"I just sold my house two weeks ago and had $198,000 in this bank. I was sure I'd lost most of it. But the account was titled jointly in the names of my husband and me. Since both names were on the account, we were insured up to $200,000. We didn't lose anything! I'm so relieved!"

(Please note that all of these stories are fictional; I created them just for illustrative purposes.)

What's quoted all the time is oversimplified but true, that you're insured up to $100,000 in covered accounts at any single insured bank or savings association. (NCUA provides similar insurance for most credit unions.) But there are many instances, like in the "stories" I made up here, in which people had more insurance. How much insurance do you have? The FDIC's Electronic Deposit Insurance Estimator (EDIE) is a cool little tool that will let you figure that out. It will help if you have your statements right there in front of you, so you can see exactly how your accounts are titled. The FDIC also has a clearly written booklet with lots of examples that will help you understand all the ins and outs of account insurance.

But here's the deal: we as consumers have both rights and responsibilities. Here are what I believe are your responsibilities when you have an account at any financial institution, be it a bank, savings & loan, or credit union:

• Know who you're dealing with.
  • Is the bank legitimate? The neighborhood bank that's been there for 20 years is a no-brainer, but a storefront or internet bank you've never head of could be a fraud.
  • Is it insured? Seeing the FDIC sign, like the one at the beginning of this post, at the bank or on its website is a good sign. (For credit unions, look for the NCUA sign.) But even better, use the Bankfind tool on the FDIC website or call 1-877-275-3342 to verify that it is an insured institution. That will also verify that an unfamiliar bank is legit.
• Understand what type of account you have.
  • Depost accounts (checking, savings, money market accounts, CDs) are insured.
  • Investment accounts (mutual funds, annuities, stocks, and bonds) are not.
  • Contents of safe deposit boxes are not insured by the FDIC. They may be covered by your homeowner' policy; check with your insurer about what your policy covers.
• Pay attention to how each account is titled, including Payable on Death (POD) or other informal trust designations. These designations override any bequests made in your will for those accounts, so you should also review your overall estate plan.
• Don't keep more than $100,000 in one bank, unless you're certain that the titling of the accounts gives you additional insurance that covers all of your money. Move some money to an account at a different bank (NOT another branch of the same bank). Also, evaluate whether you are keeping too much of your portfolio in cash. Perhaps you should be diversifying and putting some of that money into investments such as stock mutual funds.
• Know the terms of your accounts:
  • minimum balance, how it is determined, and fees for dropping below that amount.
  • whether checks for which there are insufficient funds will be paid. If they are, what fees you'll owe for that service and whether you need to take specific steps to pay back that "loan."
  • other fees, including those for debit card usage.
  • any benefits to which the account entitles you, such as free money orders, travelers checks, etc.
• Make your accounts work for you. Check the interest rate and what balances earn that rate. Investigate whether a different type of account at that bank, or a similar account at another bank would pay you a higher rate.
• Read all correspondence from your bank, including announcements printed on your monthly statements. Fees and other terms of your account can change.
• Periodically check to see whether there are new accounts at this bank, or at other banks, that would meet your needs better.

What would you add to this list? What do you think about the news coverage of the IndyMac bank failure? Click on my name below and let me know what you think.