Avoid Becoming a Victim of Holiday Fraud

November 12, 2019

Tis the season for hackers, fraudsters, and identity thieves. Forty percent of each year’s online fraud occurs during the months of October, November, and December. While it is imperative to be cautious of fraud year round, now is the time to be extra vigilant about protecting your personal and financial information. Here are a few reasons why holiday fraud is so prevalent:

  • With more people turning to online shopping for gifts and holiday purchases, there are simply more opportunities for fraudsters to hack personal information.
  • Caught up in the rush of the season, shoppers are more likely to click links that promise great deals. Hackers create apps or set up fake deal websites and attract shoppers by promising a bargain (often through email). When you click the link or download the app, you end up downloading malicious software which compromises your computer or phone.
  • With the introduction of chip technology in 2015, it is more difficult to steal credit card information from in-store computers. This is driving criminals to conduct their fraud online where the chip technology doesn’t affect their ability to grab credit card information.

Risky Behaviors

There are a variety of behaviors that increase your risk of becoming a victim of fraud, particularly holiday fraud.

  • Donating to charities without confirming their credibility. Seventy percent of those donating to charities don’t even ask what percentage of their donation goes to the charity.
  • Reusing the same username and password on multiple sites.
  • Saving your credit card information on retailer sites when making purchases.
  • Purchasing gift cards from potentially risky locations. Gift cards purchased off the rack at the grocery store are more prone to fraud than gift cards purchased from an online retailer.
  • Shipping and receiving packages without requiring signatures.
  • Shopping when you are particularly vulnerable, such as during times of illness, loneliness, or financial difficulty.
  • Using debit cards rather than credit cards, particularly for online purchases.
  • Using unsecured public Wi-Fi when shopping or checking bank accounts.

Avoiding Holiday Fraud

Monitor your bank accounts. Don’t wait for your monthly account statements to arrive to monitor your accounts. Utilize online banking to check your bank accounts and credit cards several times a week for suspicious transactions. If you check your account every few days, you will have fewer transactions to review than if you wait until your monthly statement is available, and you will be able to deal with any fraudulent transactions immediately, rather than weeks after they occur. Take advantage of services available through your bank that alert you of transactions (text messages, emails). These services are often customizable so you can be alerted of transactions over a certain dollar amount.

Use credit rather than debit. If your credit card is compromised, the credit card company carries more of the risk. If your debit card is hacked, your hard-earned money is instantly at risk.

Use one card. Limit your holiday shopping to one credit card. This makes it easier to monitor because you only have one card to keep track of. Use one card for shopping and use another card/account for paying monthly bills (utilities, phone, etc.) This will save you from having to update your payment information on all of your accounts if the card you use for shopping is hacked.

Keep your bank up to date. Make sure your bank and credit card issuer have your most up-to-date contact information in case they need to reach you. If you receive a phone call from someone claiming to be your bank, it is best to call them back using the number on the back of your card or on the bank’s website.

Shop wisely online. Visit websites of established retailers. Type the web address directly into your browser, or use a trusted search engine when searching for the retailer’s website. Don’t click links in your email or social media posts to access retailer websites. Only make purchases from websites that you trust, and do not use debit cards for online purchases.

Avoid gift card stripping. Gift card stripping occurs when a fraudster takes gift cards off the rack at the store and uses a scanning device to capture the identifying information on the cards. The fraudster then puts the cards back for an unsuspecting shopper to purchase later. The fraudster can then monitor the card balances and use the card once money has been added to it. Since gift cards are generally purchased in advance of the holiday and people don’t always use them right away, the fraudster has plenty of time to use the balance. Ask for gift cards that haven’t been on the rack. Also, if the identifying numbers / codes are readily viewable, don’t purchase the card.

Protect your debit card. Debit card skimming can occur when a fraudster uses a special scanner to collect digital information on your debit card to make future purchases. The owner has no idea their card has been skimmed unless suspicious charges show up on their card. Often, these skimmers are installed on ATMs and gas pumps, and they are very difficult to spot. One of our Leavitt Group producers recently shared an experience where he and two fellow co-workers all had their debit cards skimmed. They used an ATM in a hotel, and their cards were all compromised with over $4,600 being taken from their checking accounts. After filing a report and working with their banks, they were able to recover their money, but it took some time to get it all worked out. Protect your debit card by only using ATMs that are owned by your bank or other credible banks. Trust your instincts – if something doesn’t look right on the ATM or card reader you are using, don’t use the machine.

Don’t fall prey to charity scams. There is an increase in charity scams during the holiday season with fraudsters playing on the heartstrings and taking advantage of the giving holiday spirit. Make sure your donations are going to a credible organization. Contact charities of your choice rather than responding to unsolicited requests. Consider volunteering or donating to local organizations to directly help your own community.

By taking a few extra precautions and following the tips in this article, you can protect your personal and financial information and avoid becoming a victim of holiday fraud.

Source: Leavitt Group

It’s Time to Winterize Your Home

November 4, 2019

Not surprisingly, energy costs will rise again this winter as consumers try to keep their homes warm and toasty. Residential electricity rates have risen on average about 15% nationwide over the last 10 years, an increase of about $0.02 per year. Consumers who use oil heat are expected to pay about 20% more this year than last year.

Before you get your first heating bill, take these steps to conserve heat and make your home more energy efficient:

  • Adjust your thermostat. Throw an extra blanket on the bed and turn down the temperature in your home by 5 to 10 degrees at night to save energy and money. Buy a programmable thermostat and let it adjust the temperature for you.
  • Fill the cracks, gaps and leaks. Pick up some spray foam insulation and look for gaps around your windows and pipes. If you have a gap under your door, install weather stripping or just make a “door snake.” This can save up to 40% on your annual energy bill–for both heating and air conditioning seasons.
  • Take advantage of free sunlight. During the day, open the blinds on windows that face south and turn down your thermostat. At night, close the blinds so the heat doesn’t escape through the window. Remove any objects that might block sunlight from shining on heat-absorbing walls.
  • Add extra insulation. Start with the larger gaps around the chimney, furnace flues, plumbing pipes, and ductwork. Then check your roof insulation to make sure it’s about 10 to 16 inches deep. If it isn’t, have more installed. If your home is more than 50 years old and still has the original insulation, consider replacing it with newer insulation.
  • Use a space heater in moderation. Use it if you keep the central temperature in your house very low and you want to heat one or two rooms. Turn it off when the room reaches a comfortable temperature. Place your space heater at least three feet from any flammable objects such as bedding, drapery and furniture, and never leave a space heater unattended.

All Bills and No Fun Makes a Very Dull Budget. Here’s How to Do Better

October 28, 2019

The term “fun money” means different things to different people.

You might think of it as money for entertainment or eating out. It could be your growing vacation fund or the cash you hide from your spouse to support your shoe shopping addiction. The money you spend on a painting class or round of golf could fall into this category.

Essentially, fun money is what you spend to enjoy yourself.

Working just to pay bills — and budgeting only to stay on top of financial obligations — gets old fast. Instead of depriving yourself of what brings you joy, including some fun money in your budget will give you a more balanced financial life. (And a totally reasonable number of cute shoes.)

The Importance of Adding Fun Money to Your Budget

“Restrictive budgets can work for a very short term but aren’t sustainable in the long-run,” said Natasha Knox, a certified financial planner and founder of Pax Planning. “When there is a lot of pent-up spending desire, the flood gates can burst, and rebound spending often happens.”

To avoid binge shopping, allocate some of your monthly earnings to spending that brings you joy.

Preston Cherry, a certified financial planner and founder of Concurrent Financial Planning, said having fun money to spend however you like will motivate you to stick to your financial plan.

“Who wants to stay involved with a plan that is all work and no play?” he asked.

Cherry recommends pairing serious financial goals with rewards that are fun. Perhaps you treat yourself to the movies whenever you add another $500 to your emergency fund or celebrate with a spa visit when you max out your Roth IRA.

How to Budget for Fun

While you want to make sure to pay all your monthly obligations — like rent, utilities and your car note — you don’t have to treat your fun money as an afterthought.

Matt Dworetsky, founder of Dworetsky Financial, suggests setting up automatic deposits to save up for fun expenses. How much you put aside will depend on your individual financial situation. If you follow the 50/30/20 budgeting method, you’d earmark 30% of your income for discretionary spending, which includes what you spend for your enjoyment.

Separating your fun money from your main checking account and other savings allows you to spend from that stash guilt free.

Another smart budgeting approach is to think of your fun money in terms of what you value most and want to prioritize.

“Realistically, you will not be able to fully accomplish all of your want-based goals,” Cherry said.

However, he said, knowing what you value and prioritize over other things will allow you to shift your mindset from what you can’t do to what you can do.

Sometimes this will include making trade-offs or sacrifices. Knox said eating soup all week and sticking to a low grocery budget frees up funds to go out with friends on the weekends if that’s a big priority.

Dworetsky advises his clients to consider the trade-off of now versus later.

“If you could go on a small vacation now, or wait a year and go on the vacation of a lifetime, what would you choose?” he asked. “Our current society revolves around instant gratification, and in some areas this can be detrimental.”

Fun Money Doesn’t Have to Break the Bank

When you’re spending money for enjoyment, identifying the reason why you’re making that particular choice could lead you to discover that you can spend less to fulfill the same need.

Going out with friends may be linked to a need for connecting with others, belonging or adventure, Knox said. But you don’t have to run up an expensive bar tab.

Maybe you and your friends take turns hosting a weekly potluck dinner. Or perhaps you join a book club or running group.

After identifying what you value, look into cheaper ways to pursue it. If you enjoy switching up your wardrobe, participate in a clothing swap or visit thrift stores. If you love traveling, consider a road trip instead of flying, or implement some budget travel tips to save money.

Source: Nicole Dow at The Penny Hoarder

This Survey Says 1 in 3 Americans Can’t Define These Basic Finance Terms

October 22, 2019

Surprise! It’s time for a pop quiz.

Do you know what a 401(k) is?

What does HELOC stand for?

Can you name the three major credit bureaus?

If you’re feeling a bit stumped, you’re not alone — a recent survey by GoBankingRates revealed one in three Americans don’t understand “simple finance terms and concepts.”

The survey included 529 responders from all 50 states, who were asked the following questions:

  1. Which of the below describes a 401(k)?
  2. What does a CD offered by a bank stand for?
  3. What is net worth?
  4. What does HELOC stand for?
  5. What are the 3 major credit bureaus?
  6. Which of the following does not impact your credit score?

Around one-third of respondents answered questions incorrectly, according to the survey, meaning financial literacy isn’t as common as you may think.

Here are some notable financial literacy wins and losses revealed in the survey:

Win: We Know 401(k)s Have To Do With Retirement

The good news is, 63% of respondents knew what a 401(k) is. Those ages 25 and older had the highest correct answer rate, whereas the 18- to 24-year-old group answered incorrectly. However, they did still associate it with retirement.

For the young’uns out there who aren’t exactly sure what a 401(k) is, don’t worry — I didn’t either until I was offered one.

The basics of a 401(k) are simple: it’s a company-sponsored retirement plan that commonly offers matched contributions from your employer.

Basically, you have a percentage of your salary taken out of your paycheck before taxes and it’s put into an investment account. Then your employer contributes the same amount to your account.

Ta da! Free money.

Loss: We Aren’t Sure What “Net Worth” Means

Middle-aged respondents (aged 45-54) and young millennials had the most incorrect answers as to what the definition of net worth is.

These groups thought it was “income after taxes.”

I wish it were that simple.

Your net worth is defined by GoBankingRates as “what you own minus what you owe.” The difference between the two can reveal how healthy your asset-to-debt ratio is; the lower your net worth, the worse your personal wealth will be.

Loss: Millennials Don’t Know the Three Major Credit Bureaus

OK, young millennials — this isn’t good. Only 29% of you could identify the three major credit bureaus. Ouch.

The worst part? A whopping 46% of the 18-24 year-old group selected “Visa, Mastercard, American Express” as their answer.

No. Just no.

GoBankingRates suggests this group lacks knowledge on the three major credit bureaus because “they have had fewer situations that require pulling their credit scores.”

For the record, the three major credit bureaus are Experian, TransUnion and Equifax.

Read them. Write them down. Memorize them.

Your credit score will determine interest rates on car loans and whether or not you have to put a deposit down when opening utility bills. It will even come into play when you’re looking to rent an apartment.

Win: It’s Not All Bad News

Aside from being shaky at best when it came to personal wealth and credit card bureaus, respondents were savvy in a few areas of financial literacy.

Older groups correctly identified what a HELOC is, which is good news considering they’re the ones still buying houses and millennials aren’t.

The biggest win of all? The question “What does a CD offered by a bank stand for?” had the most correct responses. Of those surveyed, 68% knew that a CD stands for “certificate of deposit.”

These high-interest savings accounts can stretch your money farther than most traditional savings accounts — hopefully we’re all taking advantage of those!

Knowing how to define basic financial terms can help you make responsible financial decisions. With more knowledge about the basics, your everyday money choices can be less of a challenge.

Time to hit the books!

Source: Kelly Anne Smith at The Penny Hoarder

The Difference Between Hard and Soft Credit Inquiries

October 8, 2019

If you’ve received credit offer after offer in which you’re “pre-approved” for a certain product, you may wonder how the lender made their decision.

The insurance/credit card/mortgage company likely made a “soft” credit inquiry into your report without your permission, allowing them a glimpse of your credit.

Soft credit inquiry

In addition to those pre-approval offers, a soft inquiry/pull can occur when you check your own report or when, for example, an employer checks it as part of a background check.

“Because soft inquiries aren’t linked to a specific application for new credit, they’re only visible on your credit report to you,” writes Experian, one of the three main U.S. credit bureaus. “Potential lenders won’t be able to see them … and soft inquiries are never considered as a factor in credit scoring models.” Meaning they won’t impact your score in any way.

That’s different from a hard inquiry.

Hard credit inquiry

“If you apply for credit, such as a mortgage, auto loan or credit card, the lender (with your permission) will check your credit report and credit score from one or more of the major credit bureaus,” writes Experian. This is known as a hard inquiry/pull.

Here are some common examples, per Credit Karma:

  • Mortgage applications
  • Auto loan applications
  • Credit card applications
  • Student loan applications
  • Personal loan applications
  • Apartment rental applications

This can affect your credit score, though one inquiry’s impact will likely be negligible. But if you apply to many of the products listed above in a short amount of time, this will affect your score negatively, but temporarily (it indicates to the credit companies that you’re “having trouble paying bills or are at risk of overspending,” writes Experian).

That said, if you apply to, say, multiple car loans or mortgage lenders in a short amount of time, most credit scoring models will count that as a single inquiry, because it assumes you’re shopping around for the best deal. How many days you have to apply for multiple products in one time period varies depending on the FICO model, though it’s usually 30 days, and “the VantageScore model gives you a rolling two-week window to shop for the best interest rates for certain loans,” writes Credit Karma. It’s still not good practice to apply to a bunch of credit cards, specifically, at one time, though.

“Experian lists each inquiry that is made into your file for two years, so that you have a complete record of who has reviewed your credit history, but they will only be counted as one inquiry when calculating the score,” the company notes. Their influence on your score will gradually decrease over the course of the two years.

Other credit score factors

As you likely know, credit inquiries are only one aspect of your credit score, and as Experian notes, hard inquiries aren’t likely to lead to denials of credit. Length of credit history, credit utilization and payment history are much more important factors.

That said, if you want to limit hard inquiries, you’ll want to be sure to do your loan shopping within a short window of time, so that they’re counted as one inquiry, and only apply for a credit card when you’re sure that you want it and will be approved.

Additionally, regularly check your report (which, again, won’t hurt your score) for hard inquiries, which will be listed, to check for fraud. If you find something suspect, here are the steps to take to get rid of the bad marks. And remember, inquiries only stay on your report for two years—so you shouldn’t be too worried about them, assuming they’re legit.

But more importantly, make your payments on time and try to use as little of your credit lines as possible. That will boost your score far more than minimizing inquiries.

Source: Alicia Adamczyk of LifeHacker