5 Steps to Take Before Making a Large Purchase

Have you been bitten by the gotta-have-it bug? It could be a Peloton bike that’s caught your eye, or maybe you want to spring for a new entertainment system, no matter the cost. Before you go ahead with the purchase, though, it’s a good idea to take a step back and follow the steps outlined here to be sure you’re making a decision you won’t ultimately regret.

Step 1: Wait it out

Often, a want can seem like a must-have, but that urgency fades when you wait it out. Take a break for a few days before finalizing a large purchase to see if you really want it that badly. For an extra-large purchase, you can wait a full week, or even a month. After some time has passed, you may find that you don’t want the must-have item after all.

Step 2: Consider your emotions

A bit of retail therapy every now and then is fine for most people, but draining your wallet every month to feed negative emotions is not. Before going ahead with your purchase, take a moment to identify the emotions driving the desire. Is this purchase being used as a means to fix a troubled relationship? Or to help gain acceptance among a group of friends, neighbors or workmates? Or maybe you’re going through a hard time and you’re using this purchase to help numb the pain or to fill a void in your life. Be honest with yourself and take note of what’s really driving you to make this purchase. Is it really in your best interest?

Step 3: Review your upcoming expenses 

What large expenses are you anticipating in the near future? Even if you have the cash in your account to cover this purchase, you may soon need that money for an upcoming expense. Will you need to make a costly car repair? Do you have a major household appliance that will need to be replaced within the next few months? By taking your future financial needs into account, you’ll avoid spending money today that you’ll need tomorrow.

Step 4: Find the cheapest source 

If you’ve decided you do want to go ahead with the purchase, there are still ways to save money. In today’s online world of commerce, comparison shopping is as easy as a few clicks. You can use apps like ShopSavvy and BuyVia to help you find the retailer selling the item at the best price.

Step 5: Choose your payment method carefully

Once you’ve chosen your retailer and the item you’d like to purchase, you’re ready to go ahead and make it yours! Before taking this final step, though, you’ll need to decide on a method of payment.

If you’ve saved up for this item and you have the funds on-hand for it now, you can pay up in cash or by using a debit card. This payment method is generally the easiest, and if it’s pre-planned, it will have little effect on your overall budget.

If you can’t pay for the item in full right now, consider using a credit card with a low interest rate. Most credit card payments have the added benefit of purchase protection, which can be beneficial when buying large items that don’t turn out to be as expected. Before swiping your credit card, though, be sure you can meet your monthly payments or you’ll risk damaging your credit score.

Another option to consider is paying for your purchase through a buy now, pay later program. Apps, like Afterpay, allow you to pay 25% of your purchase today, and the rest in fixed installments over the next few months. This approach, too, should only be chosen if you are certain you can meet the future payments.

Large purchases are a part of life, but they’re not always necessary or in the buyer’s best interest. Follow these steps before you finalize an expensive purchase.

Your Turn: What steps do you take before finalizing a large purchase? Tell us about it in the comments.

Learn More:
thesimpledollar.com
thebalance.com
fool.com
moneywise.com

The Benefits of Using Mobile Payments

Why fumble for your wallet at checkout when you can just pay by using your phone?

With more than 81% of Americans owning smartphones, contactless payments by digital wallet and mobile payment apps are now more popular than ever. Contactless payment is also becoming increasingly available at checkout counters across the country, with six in every 10 retailers accepting digital payments, according to research by the National Retail Federation.

Switching over to paying for your daily purchases with a digital wallet is simple. You’ll need to choose between popular mobile payment apps, like Google Pay, Apple Pay and Samsung Pay. All of these apps are similar, but Google Pay is your app of choice for all Android phones, Apple Pay works with recent Apple devices, and Samsung Pay offers the widest acceptance of all digital wallet apps. Once you’ve downloaded the app, you’ll need to load your credit union credit and debit card information and then finish setting up the app with your personal authentication process. When this step is complete, your app is ready for use.

Here are some of the benefits of using mobile payments.

Convenience

The biggest and most obvious draw of mobile payments is their incredible convenience. No more pawing through cards at the checkout counter while the people standing in line behind you are growing impatient. No more hesitating over a stack of cash. Just pull out your phone, open your digital wallet app and tap or wave your phone near the payment-enabled terminal. It’s that easy.

Security

Using a mobile payment app to complete a purchase has several security advantages over traditional payment methods.

First, it eliminates the need to carry around cash or credit cards, which always has the risk of being stolen or lost. Misplaced credit cards in particular can be a nightmare for consumers, making them vulnerable to full-blown identity theft.

Second, mobile-payment apps use extra security measures to protect the user’s data, such as encrypting all personal information and utilizing bio-metric authentication features, like fingerprint scans and facial recognition.

Finally, each transaction that takes place over a mobile payment app is tokenized. This involves a one-time code generated by the payment terminal, or a “token.”  The token is used to complete the transaction in place of the buyer’s actual payment information. The token cannot be used for any other transaction and is effectively useless if hacked. The buyer is thus protected from fraud.

Speed

Mobile payments are super-fast. Instead of counting out cash or inserting a card into a payment terminal and waiting for the transaction to clear, it’s just a one-two-three tap to pay. With mobile payments, checking out in any store can take just seconds from start to finish.

Budgeting and expense-tracking

Digital wallets can be easily integrated with money-management apps, making budgeting easy. Every transaction will be instantly recorded for future reference and review. Additionally, retailers generally offer electronic receipts with mobile payments, as opposed to paper receipts which are easily misplaced.

Safety

Ever since the world entered the alternate reality of COVID-19, mobile-payment apps have enjoyed an enormous boost in popularity. In fact, retailers have seen a 69% rise in contactless payments since the beginning of 2020, according to a study done by the National Retail Federation. This is likely due to the fact that consumers are wary of shopping in brick-and-mortar locations and are hesitant to handle germ-infested cash. Inserting a debit card or credit card into a public payment terminal that processes payments for hundreds of cards a day is not much of a better option. All of this has made digital wallets the chosen method of payment now more than ever, with 67% of shoppers choosing self-checkout options from their own mobile devices over in-person payment.

Mobile payment apps enable consumers to complete a purchase without making physical contact at germ-laden terminals. There’s no need to use a wallet, cash or credit card at all. Just pull out your phone and your transaction is a quick wave or tap away. It’s the perfect way to pay for purchases without compromising your safety.

Mobile payments are the way of the future. There are so many reasons to love mobile payments. They’re convenient, secure, quick and safe.

Your Turn: Why do you use mobile payment apps? Share your favorite benefit of using digital wallets in the comments.

Learn More:
thefinancialbrand.com
mobilepaymentstoday.com
alacriti.com

When Does it Make Sense to Pay a Bill with a Credit Card?

Credit cards and debit cards both offer incredible convenience. With just a quick swipe or a linked account, a payment can be instantly processed. It seems like a no-brainer to use that convenience for taking the hassle out of paying bills. But, is it a smart idea to pay monthly bills with a credit card or debit card?

Choosing to pay a bill with a card can have a significant impact on your general financial wellness — for better or for worse. That’s why it’s important to consider the many variables of this decision before going ahead with it.

Let’s take a closer look at the pros and cons of paying monthly bills with a credit card or debit card.

The advantages of paying bills with a credit card or debit card

There are many reasons you may want to pay your monthly bills with a credit or debit card when possible. Here are just a few of the advantages of paying with plastic:

  • Automate monthly payments. Setting up automatic payments for monthly bills through a credit card or debit card will help ensure payments are always on time.
  • Build credit with a consistent monthly payment. Using a credit card for a monthly bill is a great way to amp up a credit score without running the risk of overspending. Just be sure to pay the bill in full and on time every time.
  • Earn rewards for money that needs to be spent anyway. Using a credit card that offers rewards for a bill that needs to be paid anyway will help to pile on those rewards points without overspending. Many debit and/or credit card issuers, [including Advantage One Credit Union’s [debit/credit] card], also offer attractive rewards for using the card to pay for specific expenses, including some monthly bills.
  • Enjoy consumer protection. Paying with plastic offers the consumer the advantages of purchase protection, zero or minimal liability in case of fraud, guaranteed returns and more.
  • Pay your bills quickly without the hassle of writing out checks and using snail mail. With a credit or debit card, paying a bill only takes a few clicks or phone prompts.
  • Budget easily. Paying with a credit or debit card makes for easy tracking of monthly spending.
  • Payments post promptly. Bill payments made via credit or debit card will generally post within one or two business days. Contrast that with a check that needs to be mailed out, delivered to the correct party and then deposited and cleared until the payment is finally processed.

The disadvantages of paying bills with credit or debit cards

Here’s the flip side of paying bills with plastic:

  • There may be fees for paying the bill with a credit card. Pay close attention to the payment options on every bill; some service providers charge a processing fee for paying with a debit or credit card.
  • It can make a difficult financial situation worse. For consumers who are already carrying a sizable amount of debt, it may not be the best idea to charge a monthly bill to a credit card. Similarly, it isn’t responsible to set up an automatic monthly payment through a debit card that is linked to an account that may not have enough money to cover the charge each month.
  • Credit utilization may cross the threshold to an undesirable rate. One of the key components of an excellent credit score is a low credit utilization rate. For consumers with a minimal amount of available credit, charging too many bills to a credit card can cause their score to plunge.
  • Interest may accrue. Consumers who cannot pay their entire credit card bill each month would be saddled with more accrued interest than they can afford if they choose to pay their monthly bills with a credit card.

Which of my bills can I pay with a credit or debit card?

You will likely not be able to pay the following monthly bills with a credit or debit card:

  • Mortgage
  • Rent
  • Car payments

These monthly bills can usually be paid with a credit card, but you may need to pay a fee to do so:

  • Car insurance
  • Home insurance
  • Health insurance
  • Taxes

The following monthly bills usually allow you to pay with a credit card or debit card, and without a fee:

  • Subscription services
  • Phone bills
  • Utility bills
  • Internet providers
  • Cable providers

Before deciding whether to pay a specific bill with a credit or debit card, it’s best to check with your provider to find out if this is a viable option and if there will be a fee attached for paying with plastic.

The bottom line

Sometimes, paying bills with a credit card or debit card makes perfect financial sense, but it sometimes does not. Before deciding which way to go on any particular bill, consider all the relevant factors detailed above to be sure you’re making the responsible choice.

Your Turn: Do you pay any of your monthly bills with a credit card or debit card? Tell us about it in the comments.

Learn More:
thesimpledollar.com
thebalance.com
creditkarma.com

How Can I Protect Myself from Payment App Scams?

Q: I love the convenience of payment apps, like Cash App and Venmo, but I’ve heard there’s been an increase in scams being pulled off within these apps. How can I continue to use my payment apps without compromising my safety?

A: Payment apps offer users the ability to effortlessly send payments to friends, making it easy to split the tab at a shared meal, buy a present for a mutual friend and quickly pay back a small loan. Unfortunately, though, scammers are using these apps to cheat people out of their money.

Here’s all you need to know about payment app scams and how to protect yourself from being the next victim.

How the scam plays out

There are several variations of the mobile payment app scam, most of which involve the scammer hijacking the victim’s linked checking account or credit card and using it to pay for their own purchases. Now, though, with the COVID-19 pandemic changing people’s attitudes toward money, there is another, more nefarious scam being played out through mobile payment apps.

In this trending scam, a payment app user is invited to participate in a contest on Twitter or another social media platform. The host of the contest is giving away a bundle of cash to one lucky winner as a way of helping them through the economic downturn caused by COVID-19.

After entering the contest, the victim receives a message informing them that they’ve won the giveaway — but they need to pay a small fee to verify their account and, later, receive their cash prize. Thrilled to be the winner and suspecting nothing unusual, the victim will gladly pay the fee and wait for their big payday. Unfortunately, though, the money never lands in their account, and they won’t see the funds they used to pay the “fee” ever again.

In the above scenario, the contest the victim entered may actually be authentic, but the follow-up post they’ve received is the work of a scammer.

Sometimes, the victim has not entered any contests but receives a message appearing to be sent directly from the payment app informing them they’ve been randomly chosen to win a cash prize — with a small processing fee attached.

Other times, scammers take the ruse one step further. After asking the victim to send the fee via mobile payment app, the scammer hacks the victim’s linked account or credit card and uses it to make their own expensive purchases.

Scammers use keywords like #coronavirus and #emergencyfunds to make their social media posts appear authentic; their efforts often pay off.

“My goal is to help those in need,” one scammer in Florida wrote. “Your deposit allows us to immediately send you your payment.”

The scam can be pulled off through any payment app, but is especially popular with Cash App users who are familiar with the app’s “Cash App Fridays.”  To the unsuspecting victim, the new freebies seem like an extension of the app’s existing giveaways.

Likewise, the scam can be executed through several social media platforms, but is most commonly found on Twitter. The social media giant is a popular host for contests of this sort, and another cash giveaway hardly stands out. The “Retweet” culture on Twitter also makes it easy for scammers to pick up on a legitimate contest and choose a participant to target.

“This behavior is absolutely against our rules and outlined as such here,” Twitter spokesperson Lauren Alexander wrote in an email. “Users who see such scams should go to the ‘Suspicious and Spam’ category to report the scam.”

Protect yourself

Luckily, you don’t need to give up on the convenience of mobile payment apps just yet. Protect yourself from this scam by learning about the medium used to pull it off and how to recognize the scam’s red flags.

Here’s what you need to know about Cash App and other mobile payment apps:

  • Cash App will never ask customers to send it money as a “processing fee” or for “verification.”
  • Cash App will not ask users to share their PIN or sign-in code outside the app.
  • Cash App currently has only two official Twitter accounts, @cashapp and @cashsupport, both of which have blue, verified check marks. If you receive a tweet from another account appearing to be from the app, it is likely bogus.

If a post or tweet looks suspicious, don’t take any chances; ignore it and move on.

If you believe you have fallen victim to a mobile payment app scam, contact the app’s support through the app or website. If the scam is reported early enough, they may be able to reverse the transaction. You can also report the scam to the FTC at ftc.gov  and let your friends know about the circulating scam so they don’t fall victim to it themselves.

Mobile payment apps make transferring money easy, but they also make it easy for scammers to con victims out of their money. Stay alert and practice caution to keep your money safe.

Your Turn: Have you been targeted by a payment app scam? Tell us about it in the comments.

Learn More:
www.freep.com
www.cash.app
www.qz.com
www.consumer.ftc.gov
www.idtheftcenter.org