Understanding The Credit Card Trap

Young couple uses credit card to pay for their stay at a pricey hotelDid you know the average American household carries $6,358 in credit card debt?

If that doesn’t sound too alarming, consider this: A debt of $5,000 with an interest rate of 24.99% (which is the current rate of a typical Capital One or Citibank card), where only the minimum payment is made each month and no additional charges are made to the card, accumulates $4,823 in interest over five years. That means the cardholder would be paying nearly double the amount that was originally spent!

Why do most Americans carry so much credit card debt and find themselves stuck in the debt trap? Let’s take a deeper look at credit card usage, debt and interest rates so we can understand this phenomenon and ensure credit cards are used responsibly.

The minimum payment mindset
According to the National Bureau of Economic Research website, a third of credit card holders make just the minimum payment each month.

Here’s how it usually happens: You use your card for a purchase you can’t really afford, or you want to defer paying for it from your savings. When your credit card bill arrives, you either choose to make just the minimum payment or it is all you can afford to pay at the time. You figure you’ll pay off the rest when your finances improve. Soon, you’re in the trap of pulling out your card whenever you want to purchase something beyond your budget. Since you’re only making the minimum payment, it seems like it doesn’t matter all that much if your credit card debt grows a little larger. From there, the cycle continues as debt climbs and you continue using your card for purchases you’d be better off not making.

This is a quick illustration to show how your “small balance” of just a few thousand dollars can really mean paying more than double that amount over the years because of interest.

Also, when you’re trapped in this mindset, your balance barely budges. With a debt of $5,000 and a minimum monthly payment of $150 (at 3% of the total balance), you’ll only be paying $47.30 each month toward your principal. The rest goes toward your interest accrued.

Take a moment to think about this the next time you decide to use your credit card to pay for something you can’t afford. Is it worth paying $5,000 over the next five years for a $2,500 vacation?

Credit scores and prolonged debt
Another important aspect of prolonged credit card debt is the detrimental effect it can have on your credit score. Your credit score gives potential lenders and employers an idea of how financially responsible you are.

One of the crucial factors used in determining your credit score is your debt ratio, or the percentage of available credit that you’ve already spent. In most credit score formulas, the more credit you’ve used, the lower your score. If you’ve fallen into the habit of using your credit card whenever you’re short on cash, and are only making the minimum payment each month, you likely use a high percentage of your available credit.

Even worse is when your credit card company sees that you’re running low on available credit, and may offer to increase your line — or even do it automatically. If you agree to the upgrade, there’s nothing stopping you from racking up another huge bill, further decreasing your score.

Another important component of your credit score is the trajectory of your debt. If you’re barely making progress on your balance, you won’t score high in this area either.

A low credit score can prevent you from qualifying for a mortgage, auto loan or even an employment opportunity. If you do get approved for such loans with your less than stellar credit score, you’ll likely be saddled with a hefty interest rate, which significantly increases your monthly payments and the overall interest you’ll pay.

Is it really worth racking up that credit card bill?

Should I throw out all of my credit cards?
Hold onto your cards. You need to have some open and active cards for maintaining a healthy credit score; however, it’s important you use your cards responsibly.

First, be careful not to fall prey to the minimum payment mindset. Live within your means and learn to find happiness in what you have instead of chasing the elusive and transient thrill of material possessions. Before using your card for something you can’t afford, imagine this purchase haunting you for years to come. Is it worth paying double the amount it costs in interest payments? Is it worth harming your financial health?

Second, if you’re already carrying a large credit card balance, stop using that card and work on increasing the amount you pay off each month. Even a relatively small monthly increase can make a big difference in the total amount you ultimately pay toward your balance.

Third, to use your cards responsibly and keep your score high, it’s best to use your credit card for non-discretionary payments, like your monthly utility bills. This way, you’ll be keeping your accounts active without running the risk of overspending. Remember to pay your credit card bill on time to avoid paying interest.

Finally, take a long look at your current cards. What’s the interest rate on your cards? As mentioned above, the current interest rate on a typical Capital One card is 24.99%, which can nearly double a balance of a few thousand dollars over the course of five years. Look at alternatives, like an Advantage One Platinum Rewards Visa® credit card that may offer you a substantially lower rate. If the new card rate is substantially lower, you could literally save yourself thousands of dollars over the coming years.

Your Turn:
Have you gotten yourself out of the minimum payment trap? Tell us about it in the comments.

Learn More:
nytimes.com
creditkarma.com
genxfinance.com

5 Ways To Avoid Credit Fraud

Middle-aged red-haired woman in modern studying credit report witha look of concernkitchenHere are five ways that you can avoid credit fraud.

  • Keep your credit cards safe. Store your cards in a secure wallet or purse. After making a purchase, immediately return your card to that place.
  • Don’t allow websites to “remember” your card number. Only let secure payment portals, like GooglePay and PayPal, remember your card number. An even better practice is to never check the “remember card number” box for any site or portal.
  • Be wary when shopping online. Before using your credit card online, verify the site’s security and that the URL is authentic—there’s an “s” after the “http” in the web address, and a lock icon as well.
  • Report lost or stolen cards immediately. The sooner you report a missing card, the less liability you’ll have for fraudulent charges made with your card.
  • Review your monthly bill. Always look through your monthly statement to check for suspicious account activity.

Your Turn:
How do you avoid credit card fraud? Share your own tips with us in the comments.

Look Before You Pump! Be Careful When You Use Your Card At The Gas Station

Two young ladies filling up car at gas stationHow many times a month do you fill ‘er up? It’s a mindless chore, but did you know it can also be the beginning of a financial nightmare? Gas pump skimming is an old crime that’s made a comeback – and your debit card may be at risk.

Every day, 29 million Americans pay for fuel using a credit or debit card. However, compromised pumps with skimming devices installed by scammers have recently been found in several states.

Since these skimmer devices are almost invisible, they can be really difficult to spot, enabling them to easily capture the information of up to 100 cards a day! And, thanks to Bluetooth technology, the criminal doesn’t even need to return to the scene of the crime to collect the data their skimmer has obtained; it can all be done remotely from as far as 100 yards away.

Yes, EMV-enabled technology has become more commonplace, but gas stations were given until 2020 to update their payment systems. This makes them even more vulnerable to such hacks.

Protect yourself against this heinous hack by arming yourself with all you need to know about card skimmers.

How it works
Hackers choose their gas pumps wisely. They usually opt to outfit the one that is farthest from the on-site convenience shop. This way, their activity is out of the range of any security cameras at the shop’s entrance. The hacker will then place a skimming device on top of the pump’s card reader. It will usually be identical to the existing reader, with only a few and hard-to-spot differences.

Sometimes, hackers may place a skimmer inside the pump itself. This task can be done in less than a minute. The hacker can then leave the area and access all the data being collected by the skimmer, with no one being the wiser.

Choose your payment method wisely
You may consider giving yourself extra protection by using a credit card or cash to pay at the pump. A credit card may be compromised just like a debit card, but you can easily dispute fraudulent charges made on your card. Depending upon your financial institution, your debit card may offer minimal purchase protection.

If you want the safest payment method, cash is a good bet. However, remember that cash cannot be replaced if lost or stolen.

How to spot a skimmer
If you don’t like the idea of carrying around wads of cash, you can still protect yourself against skimmers. Use caution while at the pump, and learn how to spot a skimmer. If something looks suspicious, move on to the next pump and report your findings to the local police as well as the gas attendant on duty.

4 ways to spot a skimmer:

  • Use your eyes. Check out the card reader very carefully. Do the numbers on the PIN pad look raised? Do they look newer or bigger than the rest of the machine? Does anything look like it doesn’t belong? Is the fuel pump’s seal broken?
  • Check the tape. Many gas stations place serial-numbered security tape across the dispenser to protect their pumps from skimmers. If the tape has been broken, or there’s no tape on the dispenser at all, it may have been compromised.
  • Use your fingers. Feel the card reader before sliding your card into the slot. Do the keys feel raised? Is it difficult to insert your card? These are both red flags that the card reader may have been fitted with a skimming device.
  • Use your phone. There are several free anti-skimming apps you can install on your phone, such as Skimmer Scanner. Using these apps, you can scan a card reader for a skimming device and get an alert if one is detected. You can also check your phone’s Bluetooth to see if any strange letters or numbers appear under “other devices.”

General card safety
It’s always a good idea to practice general safety when using a card to pay at the pump.

Choose the pump that is closest to the store and always cover the number pad with your hand when inputting your PIN. If you haven’t yet updated to a chip card, now’s the time to do so. It’ll offer you an extra layer of protection. It’s also a good idea to periodically check your account statements for suspicious charges.

Your Turn:
How do you pay at the pump? Why do you choose this method? Share your thoughts with us in the comments!

SOURCES:
https://budgeting.thenest.com/problems-using-debit-cards-gas-pumps-23710.html

https://www.creditcards.com/credit-card-news/gas-pump-atm-skimmers.php

http://news4sanantonio.com/news/local/skimming-devices-found-on-pumps-at-northwest-side-gas-station

Debit Card Safety

Image of a finger over the keypad of an ATM machine“And how are you paying for your purchases today?”

It’s a question we have to answer almost every day. Will you be using cash, a credit card or a debit card?

It may be instinct for you to pull out any piece of plastic without thinking, but your random card of choice might not be the safest way to pay. Sometimes, you’ll want to use a credit card. And sometimes, its a better idea to pay with a debit card. Still other times, you’re best off using cash.

Let’s explore when and how to use your debit card.

Credit and debit: How are they different?
They’re both plastic, with a series of numbers, a security code and your name embedded on them. So, how are debit and credit cards different?

A better question might be: How are they the same? Appearances aside, your credit and debit cards have very little in common.

Credit cards allow you to choose your purchases now, and pay for them weeks, months or even years later. If you let your balance grow, you’ll be paying for a lot more than it really costs in the way of interest. But, if you make timely payments, you’ll have yourself a small loan that usually costs you1 little to nothing. Credit cards also offer rewards, purchase protection and the ability to back out of a purchase you’ve decided against. You can also contest fraudulent charges on your account, freeze your credit on a compromised card or even close the card completely.

Debit card transactions, on the other hand, take the money right out of your checking account as soon as you swipe. Some point of sale terminals put a freeze on the amount, removing it from your account a few days later. But, either way, you won’t be able to access that money and you won’t have to worry about paying for it later. There’s no interest here, but there also may be no purchase protection, depending upon your financial institution. Finally, in case of fraud you may need to resort to closing your checking account. However, usually a simple issuing of a new debit card is all that’s needed.

Which one’s better? It depends on the purpose. Debit cards are great for helping you stick to your budget and won’t send you into a cycle of debt. However, because they may offer very little recourse in cases of fraud, credit cards are usually the better choice in the most vulnerable situations.

5 purchases you should carefully consider before using your debit card
According to data from FICO, during the first 6 months of 2017, the number of compromised ATMs and point-of-sale devices was 21% higher than it was in the first 6 months of 2016. Don’t let your card be next!

Here’s where you may not want to use your debit card:

1.) At the pump
Card skimmers at gas stations are on the rise. By choosing to use your credit card instead of your debit card at the pump, you’ll have an added layer of protection against fraud. You can also choose to use cash. It’s the safest way to pay (so long as you watch out for pickpockets!).

2.) At an isolated ATM
The ATM at AOCU? Definitely safe to use.

The one at the crowded pharmacy? Probably OK.

The machine in a secluded corner of an empty convenience store? Very possibly tampered with.

Isolated ATMs in locations with very little security and sparse foot traffic are prime targets for hackers. It’s best to give these machines a wide berth and pick up your cash at AOCU.

3.) In an unfamiliar location
When on vacation, it’s important to think before you swipe. You don’t know the area and you can’t be certain which clerks are to be trusted. You’re better off paying with a credit card or with cash so your purchases are protected against fraud.

Also, a large charge in an area you never frequent might cause your purchases to be flagged as fraudulent. Let your credit union know about your trip and be careful how you swipe!

4.) For large purchases
If you’re springing for a new entertainment center or another big-ticket item, you’re best off using your credit card. It’ll offer you dispute rights in case the product doesn’t turn out how you expected, and you might be granted an extended warranty just for using a credit card.

5.) Restaurants
Can you really trust the servers at your favorite restaurant with your personal financial information? When you hand them your debit card at the end of the meal, that’s exactly what you’re doing. The server has more than enough time to clone your card and then use it for any purchases they’d like to make. Unless your restaurant has a tableside payment system, you’re better off using a credit card or cash to pay for your meal.

Debit Card Safety
Always use caution when using your debit or credit card. Check the payment processor for anything that looks out of place, such as a newer keypad on an older machine, or a hard-to-use slot for your card. Don’t forget to cover the keypad with your hand when inputting your PIN.

Stay ahead of hackers by using your debit card with caution!
Your Turn: Was your debit card ever compromised? Share your experience with us in the comments!

SOURCES:

https://budgeting.thenest.com/problems-using-debit-cards-gas-pumps-23710.html

https://www.creditcards.com/credit-card-news/10-places-not-to-use-debit-card-1271.php

https://www.creditcards.com/credit-card-news/gas-pump-atm-skimmers.php

http://news4sanantonio.com/news/local/skimming-devices-found-on-pumps-at-northwest-side-gas-station

Protecting Yourself Against Card Cracking Scams

Person in front of screen selecting fraud  prevention iconIn a recent scam targeting cash-strapped millennials, fraudsters are once again cashing in on people’s naivety and goodwill. Only this time they’re using social media to make it happen.

What makes the scam especially cruel is that fraudsters specifically look for victims who are short on funds, such as students with large loans hanging over their heads, struggling single parents or young professionals searching for a job. People who are desperate for cash also prove to be desperate enough to believe almost anything that will help them earn them a quick buck. Unfortunately, this vulnerability, coupled with the broad reach and easy plundering that scammers are granted by using social media, has made card cracking more successful in luring victims than many other scams.

Card cracking scams start with an innocent-looking social media post that appears like the dozens you scroll through every day. The post may show up on the victim’s Twitter feed, Facebook page or on Instagram, and it will always showcase some form of quick cash. It might be an easy-to-win contest with a huge reward for the winner. It can be a dream job that will instantly be yours – as soon as you follow the instructions. It may even be a complete giveaway, such as a cash bonus or a gift card that you’ll be granted just for sharing some information. If you click on the embedded link, you’ll be asked for your checking account information, your PIN or your online banking credentials.

Once the scammers have this information, they can do any number of things with their prize, from withdrawing large sums of cash from your account to using your debit card number for a massive shopping spree. They may even help themselves to funds you have in your account, such as a paycheck or student loan.

In another iteration of card cracking, scammers will tug on victims’ heartstrings, claiming their personal accounts are frozen and they have no access to money. They’ll ask the victim to allow them to access the victim’s account for simple transactions such as depositing checks. Once the checks are in, the scammer will cash in on the amount, and a few days later, when the check bounces, the scammer will be long gone. This variation is sometimes played out in person, on college campuses.

In yet a third scheme, card crackers promise victims a cut of fraudulent funds if the victim allows them to use their account. Victims often rationalize this crime by assuring themselves that they’re not actually playing a part in the fraud. Of course, they will still be held accountable when the scammers are busted.

Sadly, falling victim to a scam can be especially harmful for a millennial who is just beginning to build their credit history.

Don’t be the next victim. Here’s how to protect yourself from card cracking:

1.) Never share personal information with a stranger
You’ve heard it a thousand times, but this rule cannot be overstated. Never share sensitive information with a correspondent whose identity you can not verify with absolute certainty. You wouldn’t think of giving your checking account number to a solicitor you met on the street; why would you share it with a stranger online?

Of course, victims of card cracking and similar schemes believe the scammers are legitimate. That’s why it’s important to authenticate a web address, company or offer by asking for a street address or phone number. Additionally, by educating yourself about these scams, you’ll be able to spot one immediately.

2.) When it’s too good to be true, it usually is
Remembering this rule of thumb will go a long way toward helping you recognize scammers. Free or easy money exists only in fairy tales. Don’t believe the Facebook post that promises you’ll land that dream job you’ve been searching for if you only hand over your account passwords. Ignore the offer for a free gift card and don’t believe the sob story about frozen accounts leaving people penniless.

3.) Never cash a check for someone else
You are not a credit union or a check-cashing business. If someone approaches you in person or online and asks you to cash a check for them, politely refuse. Unless you would trust this person with your life, there is no reason to believe their tale is legitimate or that their check will be honored.

4.) Report suspicious activity
If you notice any suspicious activity on your account, report it immediately. You may have fallen prey to a card cracking scam and you don’t even know it!

Scammers may be smart, but you can be smarter. When you’re educated, alert and aware, you’ll be able to spot most scams before it’s too late.

Your Turn:
Have you recently spotted any card cracking scams on your social media platforms? Share what tipped you off in the comments!

SOURCES:

http://info.rippleshot.com/blog/what-you-need-to-know-about-card-cracking
https://www.google.com/search?q=card+cracking+scam&rlz=1CDGOYI_enUS753US753&oq=card+cracking&aqs=chrome.1.69i57j0l3.10532j0j7&hl=en-US&sourceid=chrome-mobile&ie=UTF-8
https://www.nextadvisor.com/blog/2016/07/18/know-about-card-cracking-scams/

Should You Save Your Credit Card Information Online?

How to protect your information when shopping on the internet
Woman using a tablet to make an online purchase using a credit card
It seems all too common these days to hear about major breaches at retailers that leave consumers’ credit card numbers and personal information vulnerable to identity thieves. In perilous times, it feels tenuous enough using a credit card to complete purchases in-store, let alone online. If you shop online frequently, the question of whether it is safe to store credit card information online for the purposes of faster and easier check outs is a valid one that can be approached a number of ways.

Assume the worst
In an April 2014 article on NerdWallet entitled “Should I Save My Credit Card Payment Information on Retail Websites?”, website contributor Lindsay Konsko states the obvious in a blunt fashion: “[Y]ou must understand that anything you put on the internet should be considered completely unsafe and available to the public. No matter how much a website boasts about its security, it may still be vulnerable.”

You can save your credit card information with retailers if you shop there frequently enough that it might warrant it, but you should only do so fully understanding the level of risk involved. Some retail outlets like Amazon.com provide two-step authentication to protect your information and help you spot when someone might be attempting to access your account, but even then, it is not entirely protected from the possibility of data breaches.

Consider the alternatives
CNET Senior Editor Lexy Savvides recommends protecting yourself from the possibility of having your credit card information stolen from an online retailer by considering instead the option of shopping online with a prepaid card. According to Savvides, prepaid credit cards are advantageous in that they can help curb impulse shopping and can easily be reloaded (for a small fee), but arguably the biggest advantage that they provide online shoppers is that “even if the card’s details are compromised somewhere along the chain, there is a limit to the amount of money that can be taken.”

Be proactive
The reality, as unfortunate as it may be, is that there can be no guarantee of the complete safety of your credit card information. Having said that, it is within your power to determine how much risk you face. Savvides notes that you should only enter credit card information when checking out online if the website has an https connection and “a padlock or another digital security certificate to ensure that you are only entering your details on a site that encrypts the transaction end-to-end.”

Savvides also recommends being attentive when it comes to monitoring transactions. Konsko notes that most credit card companies offer fraud protection and low or zero liability for fraudulent charges, but it is not always guaranteed that a credit card company will notify you when a charge goes through even if it is unusual. As such, frequent or even daily monitoring of your balances and transactions can be key to shutting down identity thieves before they have an opportunity to do any major damage.

Savvides notes that credit card companies like MasterCard and Visa offer secondary levels of security to protect your credit card information by requiring a private code or password before completing a purchase. Before deciding whether you feel comfortable storing your credit card information with a retailer online, make sure that your credit provider will protect you in the event of having that information compromised. When it comes to credit, it is always better to be safe than sorry.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

When to Use Credit (and When to Avoid It)

person holding credit card and using a laptopIf used carefully, credit can be a helpful financial tool. For example, using credit to purchase a home now, rather than trying to save up the whole purchase price, makes financial sense. The home provides a place to live that will perhaps increase in value and the mortgage interest offers a tax deduction. Credit may also help you deal promptly with costly emergencies.

Many consumers turn to credit when faced with unexpected home or auto repairs, as well as medical emergencies. And credit offers convenience, enabling you to rent a car or hotel room or buy airline tickets over the phone or online. In many situations, credit offers peace of mind; there is no need to carry large amounts of cash when shopping or traveling.

Despite all the advantages and conveniences credit can provide, there are some pitfalls associated with credit use. Credit can be expensive. Interest rates (often ranging from 14% to 22%), finance charges, annual fees, and penalties can dramatically increase the cost of any purchase made on credit. Then, there is a tendency to overspend on credit. It is much easier to spend more than you can afford when all you have to do is pull out the plastic. Over-extension gets thousands of consumers into financial trouble every year.

It is possible to have the best of both worlds, though. Designing a realistic spending and savings plan so you are aware of how much credit you can afford, as well as comparing the cost of credit and shopping around for the best deals, will help you avoid credit trouble.

Here are a few more tips:
Keep your charge receipts in an envelope with a running total on the outside. If the total exceeds an amount you consider appropriate, you know it’s time to curtail your spending.
Save monthly for expenses such as auto maintenance, holiday gifts, and the kids’ school clothes. That way you don’t need to use credit to cover these expenses, or, if you do charge them, you can pay the balance in full when the bill arrives.
Monitor interest rates. Choose lower-rate financing options whenever possible.
Limit the number of open credit card accounts you have. You don’t need more than one or two credit cards, and it’s much easier to keep track of your total outstanding debt with just a couple of accounts.

How Much Debt Is OK?
As a rule, no more than 15% of your net (take home) income should be committed to consumer debt payments each month. Another way to determine how much debt is appropriate for you to carry is to first complete a family budget. The amount remaining after you deduct your monthly savings and living expenses from your net income is the most you should have going to debt repayment. If you’re sending more than that to your creditors each month, you may want to consider credit coaching to help you reduce your debt load.

Shopping for Credit
When shopping for a credit card, you should first decide how you plan to use it so you can compare the features that are important for you. It is important to understand the difference between a charge card and a credit card. The balance on a charge card must be paid in full every month. Paying only a portion of the bill will cause your account to be delinquent. A credit card allows you to carry a balance for as long as you want, provided you make at least the minimum monthly payment due.

If you will pay your credit card bill off every month, a low annual fee is important. If you usually carry a balance, look for the lowest interest rate. Shop for a grace period, the amount of time after your purchase during which finance charges are not assessed. Some banks and finance companies give you up to 30 “free” days, but it has to be at least 21 days. However, interest starts accruing immediately on cash advances; there is no grace period and the interest rate is higher than that applied to regular purchases.

Depending on your payment and credit use habits, you may also be affected by late and, possibly, over-limit fees.

If you have no credit or a bad credit history, you may be able to obtain a secured credit card. A secured card works just like a regular credit card except that you must leave a deposit—usually between $250 and $500—with the issuing bank as collateral. If you default on your payments, the bank takes the money owed out of your deposit.

The interest rate and annual fee on a secured card are often a bit higher than on a regular card. But a secured card can offer you the convenience of a regular credit card and the opportunity to improve your credit record. When comparing cards, try to find one that does not charge an application or processing fee and confirm with the issuing bank that they will report your payment performance to at least one of the three major credit reporting bureaus, Experian, Trans Union, and Equifax. Make the most of this chance to build an unblemished credit report!

Used with Permission. Published by BALANCE Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Tips for Making Safe Credit Card Purchases Online

In today’s digital age, you need to be especially careful when making online purchases

With online shopping becoming the norm, people have also become more susceptible to identity theft. It’s imperative that you be careful and mindful of how you shop online.

A November 2016 article in The Balance by contributor LaToya Irby outlines seven tips for safe online shopping:

Conduct your online shopping only on websites you trust
It may sound obvious, but using your credit card to make online purchases only on those websites you know and trust could save you from becoming a victim of fraud. Never click on links provided via email; instead, type the entire URL of the website into your browser to open the site.

Never shop from a public place
Public computers are susceptible to hacker technology, such as software that captures your keystrokes and retains your personal and credit card information. Additionally, public Wi-Fi is unsecured and, as such, could redirect your device to a fake internet connection that an identity thief can monitor and use to intercept your personal information.

Keep your devices protected from viruses
Always stay up to date with virus and spyware protection software, and make sure you are using antivirus software that is reputable, not the type for which you receive an ad via email or in a pop-up window.

Check with the BBB first
The Better Business Bureau marks websites with poor customer service records, so make sure to check out the credibility of the site in question using the BBB before making a purchase.

Use credit cards, not debit cards
Credit cards have better protection services against fraud than debit cards, so you’re liable for fewer fraudulent charges if they occur. Additionally, you could lose access to your account and your funds while the financial institution sorts out a debit card that has been compromised, whereas with a credit card the only access that’s affected is that line of credit.

Make sure the website you use is secured
Always look for the green lock symbol at the start of your URL browser, and make sure you type in the website using “https” to ensure the site is secured to encrypt your information when making online purchases.

Keep track of your purchases with receipts
Just as with in-store purchases, printing a copy of the receipt of your online transaction will help you track your credit card activity. Use the printed copy to compare against your monthly credit card statement and watch for fraud.

In a November 2016 article in the Better Business Bureau by APR, CFEE Janet C. Hart recommends checking both your credit card activity and your bank account activity once a week, rather than waiting for the monthly statement. This ensures you catch fraudulent activity shortly after it’s occurred instead of finding out weeks later.

Hart also advises that we be wary of phishing scams—emails seemingly from a business claiming an error with your order or your account and asking you to confirm personal and identifying information. Legitimate businesses do not send these types of emails.

“Beware of ‘GREAT’ deals — if you find a website offering deals that seem too good to be true, they probably are. You may get a knock-off product, a product that is not the brand you ordered, or you may get nothing at all,” adds Hart.

Lastly, Hart recommends always checking the website’s privacy policy before making purchases online, so you know exactly how your personal information will be used.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Personal Loans Versus Credit Cards

Advantages and drawbacks of each type of lending

Personal loans andCardsVsLoans_Featured credit cards, should they be used intelligently, can be great ways to finance your wants and needs. As personal finance author Greg McFarlane writes on Investopedia.com, credit in general grants us temporary access to other people’s money, and for a time, it is a win-win for all parties.

“The lenders get interest, the borrowers get leverage and the economy grows. What’s not to love?” he said. “Without credit, capitalism would stagnate.”

But which lending method is better: personal loans or credit cards? Let’s look at some of the high points and low points of each.

Personal loans
This type of credit is unsecured, meaning there is no collateral involved. Because this is a higher risk for the lender, as there is nothing of which they can take possession in the event of default, interest rates are fairly high. And because you will have a balance to be paid from day one, you are paying that interest starting the moment you sign on the dotted line. Still, these interest rates are typically lower than those of most consumer credit cards, giving personal loans an advantage there.

Another advantage of a loan is that it comes with a set term during which you will be repaying it, and a set amount to pay, which helps with budgeting. At the same time, credit card terms are either longer or unspecified, allowing for lower, although inconsistent, payment amounts.

“Many personal loans have a payback period of no longer than 60 months, or five years. Credit cards tend to amortize your payment over eight to 10 years, resulting in a lower payment over a longer time,” said debt adviser Steve Bucci of Bankrate.com.

Credit cards
While credit cards do come with inherently high rates — so high, in fact, that the president and Congress had to artificially cap those rates from outside the free market — for the first month after you purchase something on the card, you are technically getting a zero percent interest rate, McFarlane says.

“Should you choose to take 30 days or longer to pay for an item you bought on a credit card? Well, that’s when you’re failing to take advantage of the inherent benefit of the method of payment,” he explains.

Furthermore, credit card companies often offer a grace period for payments. That means you have more than a month to come up with enough money to pay off your balance and avoid being charged interest — that’s at least two pay periods to gather your own money and use it to pay off the money you borrowed.

Also, not having to wait for paperwork approval when you need or want the money, as you do with loans, is yet another way your credit card acts just like cash (except in plastic form).

Exceptions to these details exist when you are talking about business loans or credit cards, or about personal loans obtained for use of credit card consolidation. Regardless of how you are using your means of credit, make sure you are looking carefully at the terms of the agreement. Let us help you choose the method that best suits your needs, and then take full advantage of its benefits.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Watch Out for This Chip Card Scam

Make sure you don’t fall victim to this chip card scam

The country isCreditScam_Featured progressing quickly on the path to replacing magnetic strip swipe cards with new, more secure chip cards. The switch to chip cards marks an effort to improve security and prevent fraud and identity theft.

The move to embrace this technology, which is already the standard in many other countries, was partially motivated by the highly publicized security breaches at several major retailers over the past few years. While the move to chip cards will improve security overall, there are some scammers who are trying to take advantage of the temporary confusion during the switch.

Last October marked the deadline for retailers to update their point-of-sale systems so that they could read the new chip cards. Any retailers that didn’t meet that deadline were at risk of being held liable for fraudulent transactions that may have been prevented with the new chip card systems.

“The new cards provide more security because the microchip creates a unique code for each use to help authenticate a transaction,” according to Kathryn Vasel of CNN Money. “Older cards store that payment data in the magnetic strip on the back, which is easy to steal, replicate and put on fake cards.”

As retailers across the country switched over, financial institutions began sending out new cards. During this time, a new identity theft scam arose. The scammers pose as financial institutions and send emails in an attempt to collect valuable personal information. They sometimes ask people to confirm or provide updated personal information so that a new card can be sent.

Other times, they provide a link that they claim will take people to their financial institution’s website so they can start the process of getting a new card. Unfortunately, these sites are used to gather information that can be used for identity theft. Even if you don’t input any information, just clicking the link can cause problems.

“If you click on the link, you may unknowingly install malware on your device,” according to Colleen Tressler, a consumer education specialist with the Federal Trade Commission. “Malware programs can cause your device to crash, monitor your online activity, send spam, steal personal information and commit fraud.”

You can avoid these scams by keeping in mind that your financial institution will never ask you for personal information over email or the phone. If you receive a call asking for information, hang up and call back yourself, using the number provided on the back of your card. You may have to give your account number over the phone when you call, but since you typed in the number yourself, you know the correct people are hearing it.

Likewise, do not respond to emails with any personal information. If you think you may have a legitimate email from your financial institution, it is important to close the email and navigate to the financial institution’s website from a new browser. That way, you know you are going to the correct URL — one that you type in yourself — and not risking a link that redirects to a scammer’s site. You should also check that the website you are on is secure before putting in any information. If you can’t find the page that the link referred to, you can call your financial institution to confirm the email was legitimate before you use the link.

If you keep this information in mind and remember that it is always better to play it safe and take the extra step to ensure that your communications are with your actual financial institution, then you can stay safe from this chip card scam.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.