Paying by Check Puts You at Risk

When you want to make a purchase with the money in your checking account, do you actually write a check or do you use a debit card.  I am not talking about paying bills, which is relatively safe. I’m talking about making a purchase at a store or a garage sale.

I recently read that some retailers no longer accept checks as a form of payment.  At first I thought this was strange, but then I realized that I couldn’t remember the last time I wrote a check at a store.  I haven’t carried my checkbook with me since I had my purse stolen years back. It was a bad experience. Did you know that your account number and bank routing number are clearly printed on each check? Not to mention your name and address. That’s too much information. Instead, I use cash and my debit card. It’s easy and more convenient.

When you use a debit card, you give away less personal information. No one can see your home address or your phone number.  Your driver’s license number isn’t written down for all to see.  You might think, “well it just goes in the register and then off to the bank.” But, that’s not the case. If you’ve ever worked retail, you know that closing can be chaotic, with open registers and multiple people accessing each register as they balance the sales for the day. Then, your personal information goes to the store office, to bank personnel, and then to the check clearing house. They all have access to your information. And, I’m not even getting into the computer systems that store this information and what can happen with that.  Who knows if one of them is taking your information for some fraudulent purpose?

The less people who see your information; the less chance of identity theft.  We all need to do our part to keep our personal information safe.

Is convenience hurting your wallet?

Is convenience hurting your wallet?

Yes, we all want convenience.  We all work, have families, a household , and we all want to do it all, but there is never enough time.  Convenience saves time and that’s of huge importance to us all.  But look at it from the wallet side – convenience can cost more money.

Can you have convenience cheaply? If you’re willing to plan, yes! Here are a few examples:

Pizza night: Who doesn’t like to have pizza delivered to the house. But, how about a store-bought cheese pizza at $5.00 that you bake at home versus a delivery pizza at $10 (plus the cost of delivery and a tip).

Fruit and Vegetables: Pre cut fruits and vegetables are more costly than the actual item. If you don’t like to cut them up yourself, choose fruits and vegetables that are easy to eat without cutting.

ATM machines: I know many people who take out $20 today to buy lunch and then another $20 tomorrow when they are at the store again.  If you are using an ATM that isn’t free this all adds up.  How about planning for the week and making one withdrawal at your bank’s machine. That way there are no ATM charges.

Books, music and DVD’s: Convenient to buy, rent and/or download for a small fee.  But, did you know that you can borrow these from your local library at no cost?

All these little amounts add up.  This could be the difference between having a savings account versus living paycheck to paycheck.

Trust me – you need to see where all the little money is going and start to make conscious choices about whether to spend your money or not.  Convenience saves you time but it might be costing you more in the long run.

If You Can’t See Your Money, You’ll Spend More

Don’t let your bank profit from overdraft fees!  In 2009, it’s estimated that banks earned $20 billion (yes, with a “b”) in overdraft fees. Transactions from ATM machines, debit cards and reoccurring bill payment transactions are mainly responsible for record overdrafts. These are  “invisible money” transactions because you can’t see how much you’re spending or how much you have left in your account.

With the new Credit Card Act of 2009, things are changing. You will not be able to automatically overdraw your bank account. Instead, your transaction will be declined. But, that information may come too late to save you from difficulties with creditors and merchants.

The only way to prevent overdrafts is to keep good financial records. You must know how much you have available at any given point.  Better yet – use cash.  According to studies, people who use actual cash spend 20% less than using other forms of payments.  That’s because they can see how much money they have left after making a purchase. If you choose to use cash, use larger bills. The larger the bill, the less likely you are to spend it.  It is so much easier to spend $5, $10 and $20. It doesn’t seem like much if you spend $20 in 5 different stores. But if you have to break a $100 bill, you will have a true understanding of how much you’ve spent.

If you still want to use invisible money, and you aren’t going to track your account, you will have to opt-in with your bank to have your transactions pre-approved.  Remember that you will still have the fees associated with overdrawing your account. Those fees are typically over $35 for each transaction.

Spend wisely by avoiding fees. Avoid fees by keeping good records or by using cash. Overdraft fees are a total waste of your hard earned money.

Credit Card Shaving is Cut and Paste Fraud

Credit Card Shaving – it sounds like what you would say if you were cutting back on your credit cards, but that’s not what it means. This is the latest credit card scam and there is nothing you can do to prevent it. Isn’t that scary?

Credit Card Shaving Q & A

How do they get your credit card number? They get it through guesswork, not by theft. The thief makes a random list of 16 digit numbers. Then he tries to make purchases online with different combinations. If one works, then he knows he has a legitimate account. 

Why is it called “Credit Card Shaving?” The thief literally shaves the raised numbers off of other credit cards (usually cheap gift cards) and glues them onto a new card in the correct order. The card looks legitimate. He can even use his own ID to prove the card is his.

How does he change the magnetic strip? The thief doesn’t need the magnetic strip, he just “scores” or scratches it so it can’t be used in the automated stripe reader. This forces the cashier to manually enter the numbers that are glued to the card.

What can you do about it?  Always monitor your accounts. Check statements for unusual purchases. If you can access your accounts online, you can check more often.

Is it time-consuming to monitor your accounts? We treat credit cards like pre-approved micro-loans, or feel they’re safer than carrying cash because they can be canceled if stolen. In reality, the more cards you have, the more work is required to watch over them.

Your Password is Easy to Guess

If you do any type of online financial transactions, whether you shop online, pay bills, or manage accounts, then you need good online passwords and you need to change them often. Here are some Do’s and Don’ts:

Don’t use passwords that are easy to guess like “welcome,” or “abc123.” And, don’t use passwords that are easy to research, like birthdays, phone numbers or addresses. It should be impossible for people to guess your password just by knowing you.

Do use a random combination of numbers and letters (both upper and lower case). Don’t use some personal association that’s easy to remember, because, no matter how clever you think you’re being, it will probably be easy to guess. You can learn to memorize a random number. After all, you know your phone number and social security number, and those are random.

Do change your passwords often. There are actually services out there that will steal your email password for a fee. They market themselves as private investigators, catching cheating spouses or business partners. If you use the same password for all your accounts, this puts you at great risk. Changing your password often won’t stop hackers, but it will make their work more difficult and expensive.

Why Waste Time Balancing

Reader Question: I never overspend – is there a benefit to balancing my checking account?  Do I have to balance it exactly?

Yes, to both questions. You balance your checkbook for two reasons: to prevent mistakes and to prevent theft. While you may have your budget memorized, your good spending habits won’t protect you if your account is being skimmed either intentionally or by accident.

A balanced checking account shows that you and the bank agree on your purchases and deposits. You keep track and they keep track, then you compare notes. How do you keep track? You could write everything in a check ledger, or use checks with carbon copies. If you use a debit card almost exclusively, get a portable receipt holder for your car or purse, or make sure your wallet has a spot just for debit card receipts, and please double check your receipts or keep a ledger for that as well.

Times are tough right now and skimming accounts or padding transactions has become more common. It happened to me. I recently found that a restaurant overcharged me several dollars more than what I had on my copy of the receipt. By entering a “tip” or “cash back” amount to the register, a cashier can take money for herself from your transaction. You should also assume that the bank will make mistakes. I recently deposited a check through the ATM, but it didn’t show up in my account. I had to file a dispute to reclaim my deposit amount. Take careful notes of online transactions as well. You may mistakenly sign up for a monthly subscription instead of a single purchase. Or maybe the online vendor is from Canada or Australia and you didn’t realize your bank would add an international transaction fee to your purchase. Keep track and balance. It’s the only way to protect your money.