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The right shoes and common sense can help your preteen gain financial ground

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New students should look closely at college-sponsored bank accounts and shop around

When children are young, they can learn self-control and how to plan ahead, which are skills needed for a strong financial foundation. As your child grows older, he or she will probably be increasingly exposed to advertising and peer influences. This makes a parent’s role essential in developing financial habits.

According to research we commissioned, “during elementary and middle school, children … start to become aware of different brands and make judgments about people based on the particular things they consume, suggesting that the early elementary grades may be a developmentally appropriate time to teach children to resist consumer culture.”

We recently heard stories from parents that reinforce what our research shows: The preteen years are critical for developing an internal compass for what’s important and what’s not. Here are some examples of how children can learn important lessons from parents – even if they are just shopping for shoes.

The 9-year-old who wanted a $100 pair of brand-name shoes

The father of nine-year-old Jen shared this story : “Last year when we were shopping, Jen was adamant about getting a specific brand of shoes. I didn’t want to pay $100 for a pair of shoes that would be too small in a few months, so I asked her some questions. It turns out she just wanted a pair of high tops ($25) that her friends had, not specifically brand-name shoes. There’s that dynamic where they’re influenced by advertising or peers.”

More and more, preteens are exposed to advertising and peer pressure. Parents can help by instilling values like frugality, thinking twice, and staying away from temptations. By asking a few questions, Jen’s father was able to figure out that the brand name wasn’t important to his daughter, which helped his daughter absorb an important lesson about value. Instead of just buying on impulse, Jen learned to take a step back and ask herself what she really wanted.

The 11-year-old who got teased about her shoes

Another sneaker story comes from the parents of Tina , an eleven-year-old: “Tina got a pair of sneakers for the holidays. But when Tina wore them to school, her classmates teased her for not having the ‘latest’ brand, after she claimed she did. My daughter felt bad and didn’t want to wear the sneakers anymore. We sat down with Tina and did a little online scouting into sneaker fashions. It turns out that Tina’s sneakers weren’t the most expensive brand, but they were definitely one of the ‘latest’ versions of the sneaker.”

So Tina went back to school in her sneakers armed with the information they had found, and proud to tell her classmates that her sneakers were just fine. With a timely intervention from her parents, Tina learned a valuable lesson about peer influence.

Preteens pick up self-control and habits from parents and caregivers

During the preteen years, developmentally, it’s a little early for children to handle their own money decisions. Instead, it’s a great time for parents to intervene at key situations to talk about financial common sense. By encouraging preteens to ask themselves what they really want, or showing them how to do research to find facts, parents can help preteens create an internal yardstick to help them make their own decisions as they grow into adulthood. Being able to make decisions that make the most sense for them as individuals – and not just buying the trendiest thing even if it’s just about shoes, is a skill that will serve them well throughout their financial lives.

Check out more resources and research

For more ideas on teaching your kids about money, check out our resources for parents.

Read a more detailed report we commissioned about the stages of development for children’s financial knowledge, attitudes, and skills.

Have a young child? Review our blog for building nonfinancial skills to help your child’s financial development.

Stay tuned for our next blog about how teenagers can benefit from experience-based and practical education programs. As your child gets older, parents and other adults who are constant in a child’s life remain influential.

The names in this blog have been changed to protect the privacy of those involved.

When your child learns self-control, it helps their financial future too

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New students should look closely at college-sponsored bank accounts and shop around

The childhood years are an important time to learn about money. But money is an abstract concept. Even before young children’s brains are ready for the idea of money, they can start getting on track for a solid financial future.

Young children can develop abilities such as self-control, planning ahead, and creative problem-solving. These might not seem like financial skills, but they are helpful in building a financial foundation.

Good things come to those who wait

Cookie Monster, the Sesame Street Muppet with a constant hunger for cookies, is teaching kids about self-control. Watch this video of him resisting his favorite treat, and afterwards, try talking with your children about times they’ve had to wait for something they wanted. A study shows preschool children who viewed the Cookie Monster video were able to wait four minutes longer for a snack than children who did not.

What’s the connection between cookies and personal finance? In the first five years of life, children go through rapid neurological growth and can quickly expand key abilities such as self-regulation and planning for the future. As your children grow older, they’ll need these skills and abilities (known in child development as “executive function”) when they make more complicated decisions about making plans or budgets.

As a parent, you are the most powerful influence on your children’s financial lives. We spoke with Cathy, a young mother, and were inspired by her story that shows how young children can develop executive function skills.

The 3-year-old party planner

“My son was very excited about celebrating his third birthday with a special treat with all his friends at daycare. I asked him what kind of fruit he wanted to serve for his treat, and he enjoyed planning the menu of peaches and blackberries. We went to the grocery store together and got the fruit a couple of days in advance.

The next morning when I offered him a peach with his breakfast, he said, ‘No, Mama. We can’t eat that because it’s for my birthday party.’ He knew what the payoff of saving the peach would be, and how that fit into the plan for his party. And having the party just like he planned it was really motivating and important – that idea was more exciting than eating one of his favorite foods. I was really proud of him, and feel like this skill of planning for something he cares about, and sticking to the plan, will serve him well in life.”

Saving a treat for a special occasion might not seem like a money decision, in the traditional sense. But Cathy’s son had absorbed a meaningful lesson that can serve him well as an adult—about how patience can be rewarded. Parents can look for chances to present their children similar opportunities, so that they practice self-restraint and delaying gratification.

Ideas for enhancing skills to support good financial decision making

See a guide of activities you can engage in with your child, from infancy to adolescence, to enhance executive function skills that provide the groundwork for good financial decisions. When you read to your child, try keeping the story going, by playing the roles of different characters—staying “in character” helps children focus attention and practice holding multiple ideas in mind at once.

For more ideas on building your kids’ financial lives, check out our resources for parents.

Read a more detailed study we commissioned about the stages of development for children’s financial knowledge, attitudes, and skills.

Stay tuned for part two of our three-part blog series about the role of parents as their children grow older. As your child starts their preteen years, they’ll be exposed to more influences from peers and advertising. If you are a parent or caregiver, you can help steer your children through the next phase of their financial development.

The first name in this blog has been changed to protect the privacy of those involved.

Servicemembers: Protecting your credit when you’re away from home

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If you’re a servicemember you know you’re part of a special group – those who have answered the call to serve our country. You also know that being in the military may mean long periods of time away from home – and your finances. Being away and mission-focused means you won’t be able to regularly check your accounts or credit report, so you may be at increased risk for fraud or identity theft.

Today, we’re releasing our Fraud Alert Fact Sheet, which provides you with the information you need to know about getting protective alerts inserted into your credit reports when you’re away.

Few servicemembers sign up for protective alerts

Since October 2012, over 650 active-duty servicemembers have submitted complaints to the CFPB about their credit reports, and one in six of those complaints involved reports of identity theft or account misuse. However, out of those over 650 complaints, less than one percent reported putting an Active Duty Alert in place before leaving for active duty.

Sign up for a free Active Duty alert

Having an Active Duty alert on your credit file will notify companies of your military status and ensure that they take reasonable steps to verify the identity of a person who is requesting new credit in your name. The alert will also generally prohibit credit reporting agencies from providing your name for new prescreened credit offers for two years.

In addition to the Active Duty Alert, federal law also permits you to have notices added to your credit files if you believe you are (or might become) a victim of credit reporting fraud or identity theft. And setting up any of these alerts doesn’t cost you a cent!

Security Freeze option available too

Another choice is a Security Freeze, a protection that varies from state-to-state and tends to come with a small fee. But it completely blocks the release of your credit file to new lenders, giving you increased protection and increased peace of mind that no one can borrow in your name while the Security Freeze is active.

All of these are valuable tools and I encourage you to think about using one of them when duty takes you to distant places. Take a look at our Fraud Alert Fact Sheet so you can learn about all your options and choose the protection that will work best for you when you’re away from home.

You can follow these tips to keep an eye out for identity theft. If you have a problem with a consumer financial issue or know a servicemember, veteran or military spouse who does, a complaint can be submitted online. If you just want to share your experience, tell us your story. We’re here to help.

New students should look closely at college-sponsored bank accounts and shop around

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New students should look closely at college-sponsored bank accounts and shop around

If you’re a student starting college for the first time or transferring to a new college, you may be busy meeting new roommates and going through orientation. During these first few weeks, you may also need to get a checking or prepaid debit account.

On campus, a bank account may be marketed to you that is co-branded with your college’s logo and may be attached to your campus ID through a debit card. But remember, just because an account has been sponsored by your college, it doesn’t always mean that it’s a good deal for you.

Since we launched our Safe Student Account Scorecard project earlier this year, we’ve been talking with students, colleges, and financial institutions to better understand what students need to know before they pick an account. Many colleges partner with financial institutions to sponsor banking products. In some cases, companies pay colleges millions of dollars in exchange for exclusive marketing arrangements. Colleges may also negotiate with companies to offer products that have lower fees or better terms than what students could get if they asked for the same deal on their own. However, a report by the Government Accountability Office revealed that many college-sponsored accounts were no better than what students could find themselves after shopping around, and in fact, were sometimes worse. To spur greater transparency, we have called on companies to publish their arrangements.

We know that it can be time-consuming for you to understand all of the details in the student account offered through your college. Keep these three things in mind so you can set yourself up to make a smarter choice:

  • 1. Just because an offer looks like official mail from your college, you don’t have to accept it. Some colleges take steps to promote products through official email and mailings, and sometimes are compensated by banks for their efforts. For example, a college might use its official email communications with incoming freshmen to promote a sponsored account by encouraging students to use the “hot new” campus ID from its bank partner. A college may also choose to use printed materials at orientation or other official communications in order to highlight a banking partner, or may offer an official session at orientation to be presented by the financial institution.

  • 2. Some staff on campus may work for your college’s banking partner. It’s always okay to ask questions when you’re deciding whether to open an account. Officials at your college can help you understand product terms and features in order to make an informed choice, but you should also ask questions about who you’re talking to. For example, a bank might provide in its contract that it will lend bank employees to staff the student ID card office. Your college may also rely on bank employees to promote an official campus student ID that can be linked to a checking or prepaid debit account during new student and parent orientation, allowing bank employees to market their financial product in a role traditionally filled by college administrators.
  • 3. Your college may get paid when you open an account. We’ve heard that some companies may pay colleges a fixed amount for each student that opens and uses the college-sponsored account. You should ask questions about how your college gets paid and keep in mind that if you feel rushed or pressured into opening a college-sponsored account, it might be because your college wants to sign you up to maximize its revenue under the deal.

How could this impact the fees you pay while in college?

As we have warned students in the past, the financial products you use can contain high fees. In fact, other banking regulators have fined and required that restitution be paid by providers of college-sponsored accounts for alleged unfair and deceptive practices over fees charged to students, including an over $11 million settlement between the Federal Deposit Insurance Corporation and the largest provider of college-sponsored accounts.

Ultimately, the account you select can support your saving goals and help you avoid fees. Many banks offer programs to help you manage your spending and saving. Taking advantage of free account alerts through email or text message can help you avoid overspending, as can simply keeping track of your purchases and withdrawals and monitoring your account balance regularly.

If you have a problem with your student checking account, you can submit a complaint. If you just want to share your experience with student checking accounts and debit cards, tell us your story and select “campus debit card” under the “Tag your issue” field.

Check out our checklist for opening a bank or credit union account. If you have more questions about student checking accounts, check out Ask CFPB, our online, database of frequently asked financial questions and answers.

Help other students by sharing this post on Facebook and Twitter.

This Month’s Complaint Report: Credit Reporting Issues

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When you make student loan payments on an income-driven plan, you might be in for a (payment) shock.

This month’s report puts the spotlight on credit reporting. Credit reports play a big part in major consumer lending decisions, including mortgage loans, auto loans, credit cards and private student loans. The largest three nationwide credit reporting companies (Equifax, Experian and TransUnion) maintain credit files on nearly 210 million U.S. consumers.

In the past month, credit reporting complaints showed the greatest monthly percentage increase compared to other products the CFPB accepts complaints about (including debt collection, mortgages and credit cards – to name a few). Check out this month’s report to see trends across all consumer complaints.

Credit reporting highlights

  • Incorrect information: This is the number one complaint from consumers submitting credit reporting complaints. Incorrect information on your credit reports could cause a lender to offer you an interest rate that is less favorable than it otherwise could be. Watch this short video about Jorge, who tried unsuccessfully to remove an outdated bankruptcy from his credit report, before he got the help he needed from the CFPB.
  • Access to credit reports: Another common complaint is that rigorous identity authentication questions are preventing consumers from accessing their credit reports. See how to request a free credit report from each of the credit reporting companies.
  • Problems disputing errors with credit reporting companies: Consumers also report problems disputing errors directly with credit reporting companies. In particular, victims of identity theft often state they feel victimized a second time by their inability to correct inaccuracies in their reports with both credit reporting companies and lenders. See how you can spot identity theft and read how to dispute an error on your credit report with the credit reporting companies.
  • Here’s one complaint from our Consumer Complaint Database: “I had a credit report pulled with my financial institution and there was a social security number on it that does not belong to me…now his number is on my credit report from [credit reporting company]. I tried to call [credit reporting company] about this and only got a recording. I would like this person’s number off my credit report.”

If you have a complaint about credit reporting or any other financial product or service, you can submit a complaint to us online. We’ll forward it to the company and work to get you a response.

Geographic spotlight: Los Angeles

This month, we put the spotlight on Los Angeles, California. As of August 1, 2015, about 94,000 complaints (14 percent) of the 677,200 complaints we have handled have been from consumers in California. More than a third of those are from the Los Angeles area!

Look out for our next monthly complaint report

Our Office of Consumer Response hears directly from consumers about the challenges they face in the marketplace, brings their concerns to the attention of companies and assists in addressing their complaints. Next month we’ll highlight another consumer product and U.S city. Stay tuned!

Managing Someone Else’s Money: Virginia

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Managing Someone Else’s Money: Virginia graphic

Have you ever been asked to manage money or property for a loved one who is unable to pay bills or make financial decisions? Millions of Americans are facing this responsibility, which can be very overwhelming. But it’s also a great opportunity to help someone you care about, and protect them from scams and fraud.

Virginia residents: There’s a guide for you!

To help financial caregivers all over the country, we released the Managing Someone Else’s Money guides in 2013.

But now we’re providing additional help: state-specific guides and resources for people managing money for older relatives and friends. Today we are releasing a set of several Managing Someone Else’s Money guides specific to the state of Virginia. These state guides will make it easier for caregivers to follow Virginia’s unique rules and to find help close to home.
The Virginia guides are easy-to-understand booklets for different kinds of caregivers.

See our guides for:

The guides help you to be a financial caregiver in three ways:

  • They walk you through your duties—and give you tips on Virginia laws and procedures.
  • They tell you how to watch out for scams and financial exploitation, and what to do if your loved one is a victim.
  • They tell you where you can go for help from agencies and service providers in Virginia and elsewhere.

You can also order free print copies (including bulk orders) online.

Following the release of the Virginia guides, the Bureau has plans to follow up with similar guides for five other states: Arizona, Florida, Georgia, Illinois, and Oregon.

Also, we’ll make it easy for legal and aging experts in other states to adapt the guides for their states, by providing tips and templates for doing so.

We’re working hard to empower older Americans to have a secure financial future. Sometimes family members, caregivers and others in the community must pitch in. We’re here to help you, too.

The CFPB blog aims to facilitate conversations about our work. We want your comments to drive this conversation. Please be courteous, constructive, and on-topic. To help make the conversation productive, we encourage you to read our comment policy before posting. Comments on any post remain open for seven days from the date it was posted.