Identity Theft

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.

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.

FICO Has Something to Say About You

You have all heard me talk about FICO scores and how important they are to your financial health. I’m going to walk you through a scenario so you can see how FICO affects you.

Let’s say that you are going to apply for credit. You may be thinking of buying or leasing a new car, opening up another credit card, purchasing or refinancing a new home. Whatever it is that you’re thinking about doing, it will involve the potential creditor accessing your credit report and score. This will help them decide if you are creditworthy and what terms you will be offered.

When the creditor prints your credit report, they will be looking at your credit from a specific date. They’ll see who you have credit with, your credit limit, how much you owe, how long you have had your accounts, your history of paying back your debts, and whether or not there is derogatory / negative information with an account. All this information is put into a formula to determine your credit score.

The credit score that creditors use was developed by Fair Isaac and Company (FICO) to determine whether you are a good credit risk and what the likelihood is that you will pay the credit back on time. The higher your credit score, the less risky you appear to a potential creditor. FICO scores go from 300 to 850 – with 850 being the best.

This is one of the major factors in determining your creditworthiness. Creditors have guidelines that determine if you can be considered for a specific program. For mortgages, your credit score has to be at least in the mid-range to even be considered for a mortgage program. If your score is one point below the minimum score, I cannot offer you that mortgage program. Auto loans have similar guidelines. When you see car financing commercials that offer people 0% financing for “well qualified borrowers,” they mean that you have to have a particular minimum credit score to be seen as “well qualified.”

So what happens if you don’t qualify for the best mortgage program or that 0% car financing? You may still be approved, but you will be offered lesser terms. Those less than favorable terms will mean that you will be paying more money out of your pocket. A $250,000 mortgage at 8% instead of 6% will cost you an additional $335.00 per month.

Bottom line: keep your credit score as high as possible, by doing everything possible from your own. This includes making sure your payments reach your creditors before the due date and checking your credit report regularly for suspicious activity.