Category Archives: Credit

The Attention It Deserves

Shhhhhh!!  Leave me alone!  It’s exam time!  I’m trying to study!

It’s definitely that time of the semester.  Everyone is hunkered in their own preferred way…cramming in last minute knowledge (and coffee and chocolate) for the dreaded law school exams.  You give it that much attention because it’s simply that important.  It seems like your entire future rides on every single exam question.

Your money deserves that same level of attention.  Because your entire future really does ride on how you manage your finances.  If you are lazy and sloppy with your money, you will end up paying a price.  Late payments, overextended credit cards, overdrawn bank accounts, and bounced checks are more than just an embarrassment.  These things can hurt your credit score.  And a bad credit score comes with consequences.  If you have bad credit, you may have trouble getting a Grad PLUS Loan or a private educational loan to help you pay your living expenses while you are in school.  When it’s time to buy a car, you may not be able to secure a loan.  You may not be able to rent an apartment without getting someone to co-sign for you.  You may pay more for car insurance.  You may have to pay a deposit in order to have utilities connected.  You’ll pay much higher interest rates on credit cards, private educational loans, car loans, and home mortgages…if, in fact, you are able to get approved for them at all.  And worst of all, if your credit history is challenging enough, you may run into trouble with the character and fitness portion of the bar exam application.  That’s a lot of scary consequences for simply not giving your money the attention it deserves.

Think of managing your money as an extra class you are taking.  Give it a certain amount of time each week.  Use a spreadsheet or some other program to manage your budget.  Write down when your bills are due so you don’t miss any deadlines.  Read your mail and email—it could actually be something important.  Check your accounts online regularly so you aren’t facing any surprises.  Something as important as the funding that makes your life work deserves the same attention you would give an exam or a paper.

Shhhhhh!  Leave me alone!  I just got paid!  I have to work on my budget and my bills!

The Equifax Data Breach and You

The giant financial story in the news the last couple of weeks is one that should concern you.  Equifax, one of the major credit bureaus suffered a significant data hack.  Why is this a big deal?  In addition to having all of your credit account numbers, Equifax also has your personal information.  Your address.  Your driver’s license number.  Your Social Security number.  Basically, the hackers may have access to everything they need to apply for credit in your name.  And Equifax isn’t something you needed to opt into to potentially be victimized.  If you’ve ever applied for credit of any sort—including utility accounts and student loans—you likely have a credit record with Equifax.  And you should definitely check to see if you may have been included in the hacked data.

Equifax has set up a site here where you can enter your information and find out if your data was included in the breach.  If it was, you can get a year of free credit monitoring by signing up with Trusted ID Premiere through the Equifax-provided link.  But I’ll be honest with you…I signed up a week ago and haven’t received any confirmation that this went through.  The reality is that Equifax is overwhelmed and can’t keep up with the requests.  And I’m not sure that I want to depend on Equifax, the company that leaked my data, to turn around and protect that same data.  I’m actually considering signing up for a paid credit monitoring service for myself.  Somehow it seems worthwhile at this point to have the equivalent of an insurance policy on my credit.

There are some things you can do on your own to secure your data.  The free credit monitoring offered by Equifax is one option.  But you can also add a credit freeze to your credit reports.  The freeze would make it so no requests for credit for you can go through without your unlocking the freeze with that credit bureau.  And it’s also a good idea for you to check your credit reports at least once a year.  You can get a free copy from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year at http://www.annualcreditreport.com.

But please be aware that checking up on your credit is not a “once and done” kind of thing.  In data breach situations like this, the hackers are likely to sit on your data for a few years before actually using it to their benefit (and your detriment).  So now is the time for you to make a habit of looking at your credit with some regularity.  I’m sure this data breach will not be the last.  And it seems each one is more horrifying than the previous one.  Take care of your financial health.  Watch (or insure) your credit!

 

Credit Card Benefits: Beyond Rewards

It’s no secret that I’m a fan of chasing credit card rewards.  But there are other ways to get extra bang for your buck by using your credit card.  In addition to rewards, your card might also offer extra benefits.  It’s not cash back or travel points, but other little perks that your card offers as incentive to use their card.  Common benefits include rental car insurance, travel insurance, or extended warranties on purchases made with the card.  I’ve made good use of a benefit offered by both my Citibank MasterCard and my American Express Card:  pre-sale concert tickets.  (It’s always helpful to have one of each of these cards if you are an avid music fan!).  And another benefit that I had never even heard of until recently just made me change which card my cell phone is billed to.  There are a couple of credit cards (including the Wells Fargo Visa I already happened to have) that offer cell phone insurance if you auto-pay your cell phone bill with that card.

cell phone insurance

I’ve never purchased cell phone insurance.  I’m careful with my phone and keep it in a case, so I’ve never seen the need to protect it with insurance that will cost me a monthly fee to my cell phone provider each month.  But if the insurance is free?  I see no reason not to take advantage of that.  Simply by switching the card I auto-bill to, I was able to pick up $600 worth of protection against damage or theft (but not loss), subject to a $25 deductible.  Do I think I’ll ever need to take advantage of that?  Probably not.  But it doesn’t cost me anything and it does offer me a layer of protection I didn’t have before.

I’m not saying that you should go out and apply for a bunch of different credit cards in order to get these benefits (as a matter of fact…please don’t!).  But if you already have some credit cards (and most people do), it’s a good idea to do a little research into what benefits those cards may offer.  You may find that you have options you didn’t even know about.

The Ongoing IRS Phone Scam

IRS-Phone-Scam

We’re in the heart of income tax season, and the scam artists are all over it.  It happens every year.  Scammers contact taxpayers by telephone, posing as the IRS, telling the tale that the taxpayer owes a back income tax debt of several thousand dollars.  They will threaten things like arrest, deportation, or driver’s license revocation if the tax bill is not paid immediately.  And they will insist that this bill be paid by credit card.

You can see where this is going.  The victim gives the credit card number to the phony IRS agent on the phone and then the fraudulent charges happen.  This leaves the victim with a huge mess to clean up.

So here’s what you need to know.  If you are surprised that the IRS is contacting you, then it’s more than likely NOT the IRS contacting you.  The IRS will never call you to collect a tax debt without having first sent a paper bill by US Mail.  The IRS will never ask for a credit card number over the phone.  If you think you may owe a tax debt, you should contact the IRS directly at their phone number, 1-800-829-1040.  If you happen to hear from one of these scammers…hang up.  Do not return their calls.  And if you feel ambitious….report them to the authorities.  You can learn more here.

Chip and PIN Credit Cards

Credit cards (and the way we use them) are undergoing a transformation.  By now, any cards you have should have been replaced by a new card with “chip and PIN” technology.  You’ll notice a little square chip on the front side of the card:

chip and pin card

In the future, that chip will always be used instead of the magnetic strip on the back to transfer your card information to the merchant. You insert the card into the bottom of the card reader and hold it there, and the card reader takes your info from the chip.  This is significantly more secure than the old swipe the magnetic strip method.  And eventually, the old procedure of signing for purchase will be replaced by the entering of a PIN number.

And while the card providers have done a good job of issuing the new cards to move toward this technology, the merchants are slow to catch up.  Most places I shop are still using the old swipe and sign method.  And those merchants who do have the new “dip the chip” technology in place (so far I’ve only found it at Wal-Mart and Target) are still using signature rather than PIN….and that isn’t expected to change any time soon.  If you happen to travel to Europe, however, make sure you know the PIN for your credit card.  They’ve been using chip and PIN for years.

The U.S. is a bit slow to catch on to this technology, but in the future it should be helpful in reducing fraudulent card use.  And this ultimately protects you.  Change is hard.  But most times it is worth it.

Leveraging Credit Card Rewards

Credit cards

One of my new years’ resolutions this year was to maximize my credit card rewards.  Not by buying more stuff.  But by being careful about what card I use for what purpose.  For a long time I’ve been using one card that offers me 5% rewards on certain categories that revolve each quarter, and 1% rewards on all other purchases.  But I also have another card that offers me 2% rewards on all purchases, regardless of the category.  And I have an Amazon Visa card that gives me 3% rewards on all of my Amazon purchases, 2% on certain categories, and 1% on everything else.  Plus every time I fill my gas tank at Sheetz I toy with the idea of getting their credit card that would give me an extra 5 cents off every gallon of gas I buy and 5% rewards on the things I buy in their store.  Who knew that the world of credit card rewards–just the cards hanging out in my wallet–could be so complicated?!?

My biggest rewards on my existing cards come from the 5% categories on my old tried and true card.  This quarter those categories include groceries (which I buy all the time), movie theaters (which I do rarely) and Starbucks (which I do almost never).  So I’m using that card for groceries exclusively (next quarter when it flips over from groceries to restaurants, I’ll readjust).  My next biggest reward comes from the Amazon card used at Amazon.com.  I admit that I buy a lot of stuff from Amazon.  So I have that card set up as my go-to card on that web site.  And I don’t use it for anything else.  For absolutely everything else I’ve been using the card that gives me 2% back on every purchase.

It is kind of a lot to keep track of.  Where am I?  What card do I need to use?  But I’m hoping it will pay off for me.  Last year I earned about $600 in cash back rewards…just by buying things I would normally buy and using a rewards credit card to do so.  I’m hoping to exceed that this year…and to spend less money doing so.  We’ll see how well I do with that.

Of course this whole thing would be a moot point if I were not paying my bill in full every month.  Accruing interest would wipe out any savings I would get from rewards.  But I use my credit cards not for credit, but for convenience.

Do you use credit cards for regular expenses but pay them off in full every month?  If so, is your credit card giving you rewards?  If not, you should possibly consider getting a card that does.  If your card is giving you rewards, are they as much as you could be getting?

My Free Credit Score!

Excellent Credit Score

For years it’s been possible to access a free copy of your credit report each year.  And that’s wonderful.  You can see all of the different inquiries, all of the different accounts, and anything that may be good or bad about your credit.  All by visiting http://www.annualcreditreport.com.  But the missing piece of the puzzle has been the credit score—the number that most credit providers use to determine how much you have to pay to use their money…if they’ll let you use their money at all.  That score we’ve always had to pay for.  Until recently.

It all started with Discover.  It was about a year ago that Discover started providing their customers with a free credit score.  I was very hopeful at that point that other credit providers would follow suit.  And it has happened.  This week I got an email from Citibank telling me that I now have access to my credit score for free if I log into my account there (I am a customer there…this isn’t something they’re offering to everyone).  I logged in and was pleased to find a score that made me happy.  And Citibank isn’t alone.  Others are following suit.  Chase and Bank of America have announced that they too will be offering free credit scores to some of their customers.  Even student loan lender Sallie Mae has jumped on board, offering free scores to their private student loan customers.

Is a free credit score a good enough reason to choose one bank, credit card, or student loan over another?  Absolutely not!  But it sure is a nice perk if a money lender you work with is offering this to you for free.

Why is it important to know your credit score?  Because others are looking at your credit score.  If you apply for a credit card, they look at your credit score.  If you apply for a private student loan, they look at your credit score.  If you put in an application on a new apartment, they look at your credit score.  If you have car insurance, they look at your credit score.  If you sign up for a utility (for example, connecting the electric in your apartment), they look at your credit score.   It seems like everyone is looking at your credit score.  And if everyone else knows what your score is, shouldn’t you?  Luckily it’s now a lot easier to find out what it is!

Help! My credit card has been compromised!

Credit card fraud

It seems like just yesterday that I had to have a new credit card issued because of the Home Depot data breach.  And now my new replacement card has been compromised as well.  Only a month after I finished changing all of my auto-billed payments to the new card, I have to do it all over again.  In the greater scheme of things, I really can’t complain.  I’m still a little stunned by the number of things that went right in my recent credit card fiasco.

The first thing that went right is that I was using a credit card rather than a debit card.  Credit cards offer greater protection against fraud than debit cards.  If this had been a debit card, the money in my checking account could have been tied up while the issue is being resolved.  Because it was a credit card, I can’t be held liable for more than $50 in fraudulent charges.  And I’m extra fortunate because my credit card provider is refunding all of the fraudulent charges.

The second thing that went right is that my credit card provider recognized that an unusual charge had been made and contacted me right away.  Wednesday night I received a text message from Chase asking if I had made a charge for $50 at a grocery store in New Jersey.  I had not.  I called Chase and we went through all of the recent charges, and found (thankfully) a total of only two charges, $108 combined, that were fraudulent.  Chase then shut down that card immediately so no further charges could be made on that account.

The third thing that went right is that I’m very aware of my credit card activity and I monitor it online almost daily.  I had looked through my charges the morning before the fraud occurred, which saved a lot of time on the phone with Chase.  I was able to just say, “Everything through yesterday was my activity,” and we only had to review one day’s charges.

The fourth thing that went right is that I have other credit cards.  I use my Chase card instead of cash most of the time in favor of reaping the reward points.  I like the convenience of using plastic instead of cash.  And when my card was shut down, that could have left me at a loss for a couple of days until my new card arrived.  Luckily, I have another rewards card that I generally only use at stores that don’t accept Visa.  I was able to just use that until my new Chase Visa was delivered.  A backup plan is a very good thing.  I also have another card that I do not keep in my wallet…just in case my wallet is ever stolen.  I always want to be prepared.

I don’t know exactly how my card info was stolen.  My card itself is still in my possession.  I figure it must have been either a skimmer that I didn’t notice when I swiped my card (though I always try to look for those), or it may have been a less than honest employee at a restaurant or convenience store who skimmed the card when it was out of my sight.  Regardless, the result is the same.  I feel somewhat violated because someone stole my credit card information.  But I have experienced no financial loss…only a minor inconvenience.  A lot of things went right for me in a situation that could have been much, much worse.

Good news and bad news from my credit card company

I received two different notifications from my credit card providers this week.  One made me happy.  The other made me a bit frustrated.

The one that made me happy indicated that my Visa card provider was sending me a new card because my existing card was a part of the Home Depot data breach.  So why does this make me happy?  Because I knew I had used my Visa at Home Depot during the affected time period.  I wasn’t exactly sure what my next step should be.  And lo and behold….my card provider was proactive and took care of it for me.  That’s a sign that my credit card company is a good one.  And that makes me happy.

The notification that frustrated me was in regard to my Subaru Rewards Mastercard.  I rarely use this card.  I have it for exactly one reason:  Sam’s Club doesn’t accept Visa.  So most of the time I use the Visa card I talked about earlier.  But at Sam’s Club I needed to have either a Discover or a Mastercard.  I did a little research about what card would give me the best rewards deal, and decided on the Subaru Mastercard.  3% of all of my purchases goes into a rewards account, and when that account reaches $100, I get a $100 gift certificate good for sales or service at any Subaru dealership.  Since I own an aging Subaru Forester, this seemed like a good choice.  But the frustrating communication I received recently said that my card provider is ending their partnership with Subaru and I should expect this card to be replaced by a cash back rewards Visa.  The exact same Visa that I use already.  And that won’t be accepted by the one store where I use the Mastercard.  Frustrating.  And to top it off, I was at $82 on my rewards total, leaving me a small window of time in which to either charge $600 worth of stuff or just give up and lose the rewards I’ve been accumulating.  Frustrating!

As fate would have it, I needed to buy new tires for my car, which turned out to be a $500 expense at Sam’s Club.  So I think I’ll use the Mastercard for groceries this week and meet my required spending to actually receive my gift certificate.  But I still needed to address the issue of future shopping.  I need a new Mastercard.

MasterCard_Icon__500px__Copyright___2007_Titan_Icons

I use credit cards for convenience, not for credit.  I pay these cards off in full at the end of every month.  But to get the most “bang” for my card usage, I like to make sure I’m earning some kind of rewards with my credit cards.  Luckily there are websites designed exactly for the purpose of finding your best rewards fit.  NerdWallet, CreditCards.com, and CardHub are all decent sites to help you find the best card for you, and they helped me find the new card that I needed.

Now I’m not saying that everyone should go out and apply for a credit card.  But it is nice knowing that there are resources available to help you find the one that’s the best fit for you.

My Credit Score on My Credit Card Statement? Wahoo!

credit score

Lately I’ve been seeing TV commercials for the Discover card, boasting that they now provide the card-holder’s credit score right on the monthly statement.  What a great idea!!!  And apparently Richard Cordray, Director of the U.S. Consumer Financial Protection Bureau, agrees.

Most people don’t seem to worry about their credit report/credit score until they are trying to borrow money…when it may be too late to do anything about it.  But it’s something that can affect you all the time.  Did you know that car insurance companies may factor in your credit history when determining the rate you pay?  Seems they’ve made the connection that risky behavior in your finances may be indicative of risky behavior on the roads.  Not to mention all the bad things you could be missing on your credit in the case of identity theft.  You just really need to keep an eye on things.

Several years ago it became a lot easier for Americans to check in on their credit.  A free copy of your credit report from each of the three major credit bureaus (Experian, Equifax, TransUnion) is available to you each year through the website http://www.annualcreditreport.com.  But these reports do not include the elusive credit score.  That will cost you a fee of about $8 per bureau.

The credit score is a method of translating a whole credit report, which includes listings of every credit account you have and what your payment history is like on those accounts, into one easy number that is indicative of your financial behavior.  It’s kind of like translating your whole college transcript into a simple grade point average number.  It gives a quick and dirty picture of what is typical financial behavior for you.

So if it’s the best quick measure of your financial performance, why can’t you get the credit score for free?  I wish I knew.  But Discover has taken a step toward rectifying that situation, and I’m hopeful that other credit card providers will follow suit in the near future.  In the meantime, you can get a reasonable credit score estimate (as well as a lot of really good information) through http://www.creditkarma.com.  It’s worth checking out.