Ok, I totally feel you guys hitting the snooze button on me, but this is super important. Way too many people walk away with a shiny new bank account and no idea how it works, then they want to blame the bank for not telling them how things work. Well guess what? The average bank’s disclosure booklet has about 50 pages worth of information, so if we were to sit down and go over absolutely everything with you, it would take 1-2 hours. How many of you would actually sit in there and talk with a banker for that long without getting antsy?

Come on, show of hands.

Anyone?

Bueller…Bueller….

See my point? It wouldn’t happen. You’d be out of there and on to a bank that would open your account in 15 minutes or less. So, I thought I’d go ahead and give you a little taste of what these disclosures actually hold. Since there’s so much information, I’ll be breaking these down into smaller segments and I’ll try to make it as interesting as possible! ;) J. Money, I’m thinking of you here!

Privacy Policy

One of the first things in your disclosure booklet is likely to be the privacy policy. I’ve told you a little about the privacy policy before – financial institutions will not give information to individuals not on the account. However, the privacy policy covers much more then that.

The privacy policy discloses how the financial institution will handle your nonpublic personal information – that is, your name, address, social security number, assets, and income. Your financial institution should not be selling this information to third parties unaffiliated with the financial institution. However, the privacy policy does permit them to share that information with affiliates offering products and services they feel may benefit you. Examples of this are mortgage bankers, securities brokers/dealers, and insurance agents.

You have the right to opt-out of this information sharing if you would like. You must provide written confirmation of your desire to opt-out (or whatever method your financial institution requires – some may allow a verbal statement). You have the right to opt-out at any time, not just during account opening, so if you feel overwhelmed with offers of products and services from your bank, opt-out.

Your bank is required to give you notification if the policy changes and they’re required to provide it to you anytime you ask for it. It should also be posted in a conspicuous place within the financial institution’s lobby so that you can read it anytime you like. Although, I’ve been in banking for seven years now and I’ve never seen anyone look at the disclosures we have posted in the lobby. I don’t think I’ve ever been asked for a disclosure either, except when there’s a problem and someone wants to see it in writing…trust me when I tell you, we have it in writing and we gave it to you. You didn’t take the time to read it.

I digress.

The privacy policy also covers electronic information as well. I know many of you are pretty savvy and may not have any problems or concerns with using online banking. But, for those of you who may have some concerns, check with your financial institution to find out what their specific security protocol is. My credit union uses 128-bit encryption with a whole slew of other technical stuff I won’t bore you with. The federal government only requires 70-bit encryption to be considered “safe.” We take privacy very seriously and are constantly putting protocols in place that will further protect our members.

The one thing you can’t opt-out of with the privacy policy is the institution’s sharing with the credit bureaus. Each institution’s reporting policy is a little different, but it’s usually every 30 calendar days. And keep in mind, even though you’re not reported to the credit bureau until 30 days past due, if you’re 10 days late, that’s considered a “slow pay” internally which could jeopardize you getting a loan in the future.

Finally, your financial institution should be restricting access to your nonpublic information only to those who need access in order to assist you. That means if you bank at the credit union your neighbor works at, they shouldn’t be going into your account just to see how much money you have. It is a violation of financial ethics and the privacy policy, and institutions do monitor this. I’ve known employees to be questioned and let go for behavior such as this. In fact, I used to work for one of the banks that Sandra Bullock banks with here in Austin and I can tell you, her accounts were monitored big time for unauthorized access. So, be assured, people who shouldn’t be looking at your account will be reprimanded accordingly for doing so.

Alrighty, there’s the privacy policy. That usually covers 1-2 pages in the disclosure, so I’m going to stop there for this post. Next time we’ll get into the meat of the disclosure which is your account or membership agreement.

What questions do you have about your financial institution’s privacy policy? Are you one of the few who have actually read it?

Related posts:

1. Reading and Understanding Your Bank’s Disclosures: Part II
2. Don’t let the fine print screw you! Why you should read all Disclosures…
3. Banking 101: Deposit Account Holds
4. Bank Collapse Survival Guide
5. 6 Reasons Why Keeping Money In The Bank Isn’t As Safe As It Used To Be