Today we have a special post, from a blog reader who wanted to share her story of identity theft — and what she learned from the experience. We were excited to publish this because truly, it could happen to anyone and we should all be prepared. Here’s Clarissa Laskey…
Approximately one year ago, my husband and I were the victims of identity theft. It was a miserable experience to say the least, and one that I would not wish upon my worst enemy. To look on the bright side of the experience, I would have to say that at least I learned some things about how to protect myself and my identity.
As this was a new experience for me, at first I felt overwhelmed and violated. I didn’t know how to go about picking myself up and gaining back my identity.
Thank goodness for the instant information that the digital age is able to provide, as I was able to immediately find some helpful resources right online.
One of the most important things that I learned throughout this process was that although we may never be able to fully prevent identity theft, there are definitely some ways to decrease the chance of it happening:
Check your online bank accounts daily for activity. This is made much easier in today’s world with smartphones, as most banking institutions have available apps.
Shred anything that contains your personal information. Just because you have thrown something in the trash doesn’t mean that’s where it will stay.
Make sure to keep your technology secured. Ensure that the computer you are using has up-to-date anti-virus, anti-spyware, firewall, and any other available security software. I like to shop online and I used to take for granted that every website I entered was secure and could be trusted. Not anymore. Do not shop or make online transactions unless you are confident that you are on a secure website. Log off of a computer before shutting it down and don’t save your username and passwords on public or even private computers.
Although it has taken me a little while, I have learned to be very cautious with my debit card and especially my pin number. Some gas station pumps and ATM’s may have “skimming devices” on them that record credit or debit card information. Wometimes it is just best to conduct certain transactions with plain old cash! (Editors note: We ran a post on protecting yourself from these skimmers recently — it’s worth sharing here again, and worth another read.)
Please be a proactive party when it comes to protecting your identity. I think that a lot of people, like myself, have this notion that this will never happen to them, therefore they don’t take the necessary precautions. But believe me, it can!
About Clarissa: Clarissa Laskey is a sporadic blogger and a married mother of an nine-year-old boy, Reece, and a two-year-old girl, Tatum. She loves social media, photography and living life to the its fullest.
We’re excited to welcome Geoff Whitmore from NoobTraveler this week to talk about how to maximize travel rewards, a confusing and overwhelming topic, but one that can really help you save some money once you’ve wrapped your head around it. He’s here to help you do just that. Before I let him take the floor, though, I wanted to share a related travel resource I’ve found very helpful since it launched last week: airfarewatchdog complied this airport WiFi access chart, to help you figure out where and how you can connect for free.
And now, here’s Geoff!
Traveling often, and especially traveling abroad, seems out of reach for many Americans. But I’m here to tell you that it doesn’t have to be.
Whether you’re looking to travel to an exotic destination like Bora Bora, finally make that Europe sightseeing trip, or just visit family more often — whatever your travel goals, they are possible if you’re willing to dive into the world of rewards travel and rewards credit cards.
Here’s a basic guide to help get you on the right track for acquiring miles and points for virtually free travel.
1. Know your credit. First thing’s first. If you want to earn large amounts of miles and points, the best way to do so is by signing up for rewards credit cards that offer large sign-up bonuses. To get approved for these cards, you will need to have good to excellent credit. Good credit is anything over about 720. This doesn’t guarantee approval, but it definitely increases your chances. You can check your credit for free once a year at AnnualCreditReport.com.
2. Have a goal. I always encourage my readers to write down their goals. Hit the pen and paper, email it to yourself, put it on your refrigerator – whatever works for you. Having a goal will help you stay focused and execute a plan.
When my wife and I first got married, we had the goal of traveling to Tuscany. The idea of us roaming the Italian streets, drinking wine, and eating gelato gave me the drive to dive into rewards travel. That was three years ago. Once we achieved that goal, there was no turning back!
3. Join rewards programs. Every airline, hotel, and car rental chain has a loyalty group. There’s no cost to join these programs, so if there’s an airline you fly frequently or a hotel you stay at often, sign-up for their rewards program. It’s just silly not to. This will ensure that you never miss out on a great deal, since programs often offer exclusive deals to their members.
4. Know your rewards programs. I won’t lie – this takes work. But the value is incredible. Whenever you fly an airline or stay at a hotel, you will earn a “mile” or “point” in their specific loyalty program. But by now you know that you don’t have to be a frequent traveler to earn miles or points. You can also earn them through promotions, online shopping portals, and rewards credit cards.
5. Apply for rewards credit cards. If your credit score is in good condition, you’re able to pay off your bills on time, and you’re comfortable with meeting minimum spending requirements, there are some great rewards credit card offers out there. [Note from Jean: One thing that's important to keep in mind with any rewards card is that interest rates tend to be higher here, which is why paying off your bills on time and in full is so important. Rewards credit cards aren't for people who carry a balance.]
Many of these offers will award you a huge sign-up bonus just for signing up for the card and spending a certain amount in a 3-6 month period. My wife and I travel all the time with miles and points earned from rewards credit cards. There’s nothing special about us, I promise.
6. Use your rewards credit cards. Even after collecting the sign-up bonus, you should continue using your rewards cards for your everyday purchases (if you can handle the temptation of not overspending). There’s really no reason to not be earning a mile or point for every dollar you spend.
Also, many of the cards out there offer bonus miles or points when you use your card to make purchases in certain categories (called “category bonuses”). Some examples are: dining, groceries, gas, and travel. This can really help you maximize how many points you’re earning.
In closing, it’s what you can do with miles and points that makes them so valuable. For example, it’s only 40,000 American Airlines AAdvantage miles to fly to Europe in non-peak season. That’s well within reach for many individuals.
There are many blogs and forums out there that will help educate you on rewards programs and how to best redeem your miles and points for travel, so join the community. Happy Traveling!
About Geoff: Geoff Whitmore is founding editor of NoobTraveler, a blog dedicated to educating its readers on rewards travel, and Card Watchdog, a site that helps consumers manage their multiple credit cards.
Who among us, when presented with a pages-long “Terms and Conditions” agreement for something as simple as a $0.99 song on iTunes or a $10 ticket on Greyhound, hasn’t clicked “accept and continue” without reading all (or any) of the agreement? After all, it’s just a cheap purchase, nothing as serious as a mortgage or college tuition. However, according to a new study, skipping or misunderstanding the fine print could be costing us a lot more money than we think.
Research conducted by the Aite Group on behalf of Billguard.com found that Americans lost $14.3 billion last year due to grey charges — fees disclosed in the confusing and deceptive Terms of Service agreements we so often ignore. Grey charges are not illegal, but instead the result of unclear contracts and sneaky billing practices.
“Many of us buy airline tickets online and check in [online] to get boarding pass. In process of doing that, this language might be presented to the customer: ‘do you wish to decline travel insurance?’” explained Ron Shevlin, a senior analyst at the Aite Group. “Someone might say no. But technically, they said, ‘no, I don’t want to decline travel insurance.’ So then they get hit with a bill for travel insurance.”
This is just one form of a grey charge; the Aite research noted that everything from unintended subscriptions to “zombie charges” (a fee for a subscription that you have tried to cancel) counts as a grey charge. According to the research, one out of ever three debit and credit card holders are affected by grey charges and lose an average of $215 per person per year to these fees. This, Shevlin said, is happening more than ever before.
Why the uptick? “[It] has a lot to do with how payment behavior has shifted away from payments in cash to credit and debit card,” he said. “It is impossible to hit someone with a grey charge when consumers are paying with cash or check. But when you have somebody’s card number on file, you can then go back and incur charges on that card.”
Mary Ann Keegan, chief marketing officer for Billguard, which charges $45 per year for a service that helps track charges on up to ten of your family’s credit and debit cards (or free if you only want to track two cards), said that the key to preventing grey charges is to track your spending and frequently check your bank account. She says to keep an especially close eye on services you’ve subscribed to because they’re free for a promotional period but carry a cost later on — what Billguard has dubbed “free to paid” charges.
“If you are subscribing to any of these free to paid services, keep it on your calendar and make sure you’re monitoring it,” Keegan said.
Finally, Keegan acknowledged that very few people have time to read the full Terms of Service attached to a purchase, but said that if you can, pay attention to one particular section of the contract.
“Open up the Terms of Service and scan to area where it talks about how to cancel the product you’re subscribing to,” she said, “and read it carefully.”
My wife’s parents just earned their Resident Alien status, and plan to spend half the year in the United States. They would like to lease a car, but have no Social Security number, established credit or pay stubs to show. They do own a condo (no mortgage) and have savings. Could the condo be used as collateral in leasing a car, as I would prefer not to be a co-signer.
Brett, this is tough to work around. In a lease, the car itself is the collateral. If the lease or loan is not paid, the vehicle is repossessed. Unfortunately, putting a lien on a condo in order to lease out a vehicle wouldn’t be appealing to a bank.
But your in-laws do have a few options. You say they have savings. They could put a larger down payment, which can help the lender feel better about bad or no credit. A large down payment generally isn’t advised when leasing — it lowers the monthly payments, sure, but if you were to get in an accident within the first few months of the lease, you’d risk losing your entire down payment. But in the case of your in-laws, this may be their only leasing option. Unfortunately, it may mean paying the entire lease term upfront.
A better option? They could forget about leasing, and use some of that savings to purchase a good used car. That’s what I would recommend — if they purchase the car outright, they avoid the credit issue altogether. And if that money is just sitting in a low-interest savings account, and they have emergency savings as well, it may make sense to put it to use here.
But if they’re dead set on the lease, it’s going to take some leg work. They should shop around by calling several dealers and explaining their situation. Some dealers may be willing to negotiate with their lender to work it out – they want to lease the car, after all. Your in-laws need to be able to prove residency and provide a valid address.
Welcome this week to Tarra Jackson, a financial coach, author and former VP of lending for a financial institution in Delaware. We thought she could offer a unique perspective inside the credit approval process. Particularly if you have a few blemishes on your credit history, this post is for you!
Have you or someone you know ever wondered what lenders are actually looking for to approve someone with less than perfect credit for a loan? I have…
The reality is … not everyone has A+ credit (usually a credit score of 700 or higher). Actually, 47% of the US population has a credit score less than 700 and 20% of the US population has a credit score less than 600*. Does this mean that those with “colorful” or less than perfect credit will not be approved for a loan? Or that they have to go to alternative lenders (Buy Here Pay Here, Title Loans, Payday Loans, etc.)? Absolutely not!
Over my 10 years of financial services experience and career has been as a lender. Most people have heard about the 5 C’s of Credit (Character, Capacity, Collateral, Creditworthiness, & Conditions). Well, here are the top five things that I and other lenders really look at to approve a loan for applicants with less than perfect credit.
- Relationship. Most financial institutions/lenders look at the financial relationship the applicant has with them. Does the applicant have deposit accounts (checking or saving accounts, CDs) with the financial institution? What services does the applicant utilize with the financial institution (online banking, debit card)? Has the applicant ever caused the financial institution a loss (unpaid overdrawn checking account, past loans unpaid, etc.)? The more the applicant is committed to the financial institution by having deposits, using other services, or paying past loans on time, the better.
- Stability. Lenders look for how stable the applicant is with their residence and especially their employment. The longer the applicant has lived at their residence and job, the better. Stability is a sign of consistency and responsibility. Lack of stability, which is identified by frequent changes in residence and employment, may be a red flag.
- Low debt-to-income ratio. Debt-to-income ratio tells the lender how much of a payment the applicant can afford to pay monthly. The debts that are taken into consideration are mainly reported on the applicant’s credit report. The debt that may not report on the credit report that is used to calculate the debt-to-income ratio is the applicant’s rent. The debt-to-income ratio is calculated by dividing the total income into the total amount of monthly payment expenses in the credit report, plus rent/mortgage (if not reported in the credit report). Some lenders use the applicant’s gross income (before taxes and other deductions are taken out) when calculating this ratio. However, applicants use their net income (after taxes and other deductions are taken out) to pay their bills. It is recommended that the applicant knows how much they can afford based on their net income and all current expenses, including expenses that are not reported in the credit report (such as utilities, childcare, etc.) are taken into consideration. A debt-to-income ratio of 40% or less may help the applicant with less than perfect credit.
- Collateral. The type of loan (auto, unsecured, credit card) the applicant is applying for may determine what type of collateral needed. The value of collateral may play a significant role in the lender’s decision. Even if the applicant is applying for an unsecured loan or credit card, the lender may recommend or require collateral, such as a vehicle free and clear of any loan or lien or cash, to reduce the “credit risk.” Credit risk is the loss of principal or loss of income from a borrower’s failure to repay a loan. The collateral reduces the credit risk for lender.
- Payment history. Of course the obvious is credit history. But, some financial institutions look beyond the score and read the credit report to see the full picture. They look at the applicant’s credit report to see how they paid other creditors. This is important because the payment history with others may be indicative of how they will pay future lenders. Paying existing creditors on time, even if there were some credit mishaps in the past, may show the lender that the applicant now has the ability to pay their bills.
Clearly, not everyone with less than perfect credit will get approved, but this insight may help with understanding that there are some lenders out there that do not just judge all applicants solely by their credit score. So, before apply for a loan, ask the lender if they take any of these things into consideration with their credit approval process.
This morning on Today, we took your questions — and you had some good ones! What’s the best way to teach kids about money? How does closing a credit card affect a credit score? To get the answers to these questions and more, check out the video clip below.
This morning on Today, we had a little fun with money (and pop culture) trivia. Do you know how Downton Abbey illustrated one of the most essential investing mistakes? Test yourself with the video clip below!
This week we welcome Joan Otto, editor of Man Vs. Debt. She’s here to talk about UNautomating your finances, which is the opposite of Jean’s standard approach. (If you’re familiar with her advice, you know that she’s all about automating — your bill payments and your savings contributions. In fact, it’s a Money Rule: #62: Automate.) But we’re all about showcasing different perspectives, and what works for Jean may not work for you — as you’ll read below, Joan is knocking out a hefty amount of credit card debt with her method.
My husband and I are in the trenches of a war to pay off just under $90,000 in credit-card and loan debt. Since we started in early 2011, we’ve dropped that number by almost $33,000 – and we’ve done it running, in a way, contrary to most major financial advice.
We pay our bills online, but we receive hard copies of most of them, rather than email statements, and we sit down and pay them one at a time. We keep a calendar with what bills are due when. We make regular contributions to our savings account – but we do so manually. And we’re opposed to debt consolidation, because we want to be the people in control of where our money is going and when.
And the thing that surprises people the most – I keep a by-hand transaction register (a “checkbook,” though it goes well beyond checks) that I balance at least weekly if not more frequently.
When I explained all of this to the community at Man Vs. Debt, where I’ve been chronicling our debt-payoff journey for more than a year, a few people were critical. “You’re making things too hard,” they said.
When I started reading Man Vs. Debt in early 2010 – almost two years before I became editor and community manager – its founder, Adam Baker, had just released a guide called Unautomate Your Finances (which is now available for free).
At the time, I had most of our bills automatically deducted from our checking account. I had 401(k) and regular savings accounts with automated contributions. I was still keeping a transaction register – sort of – but I wasn’t worried about balancing my figures with the bank’s; when in doubt, I checked the online balance and estimated.
Baker’s guide suggested I quit all that. And if what I’d been doing had, you know, been getting me anywhere, I’d have fought him tooth and nail.
It wasn’t working, though. We were doing a lot of the “right” things, and we were tanking hard financially. All the systems in the world don’t fix a broken mathematical equation. When money out is greater than money in, you’ve got a problem, right?
Well, the problem was, we didn’t know we had this problem, because we’d automated the knowing right the heck out!
The act of writing down each bill I have to pay on our calendar is tangible. It helps me be conscious of what I’ll owe when, and it actively changes my behavior, because I’ve imprinted in my memory something like, “Oh, I know I have to pay Discover $50 by the 12th.”
The same goes with making our payments. I highlight each paid bill as I take care of it. And it feels wonderful! (I have said on Man Vs. Debt before – I hypothetically may be the kind of person who writes something already accomplished on a to-do list just to be able to cross it off. Don’t laugh.)
I love this tangible, physical, visual act of highlighting. To me, it serves a real purpose. Could I use an online calendar and mark things as “done?” Well, sure. But I like to physically take action.
Even more importantly, I love the feeling I get when I pay our most-hated debt, a credit card that at its worst had a balance of almost $40,000 and is now down under $17,000. Every time I pay bills, I pay this most emotionally charged debt last, and it leaves me with a great feeling. I’ve described it as ending the game with a grand slam, or a 90-yard touchdown pass. You might win either way, but when it’s the last moment, and when you are the person taking action, it feels amazing.
So does tracking our payoff progress (again, manually, in a spreadsheet I update monthly). I love the idea of money-management systems that keep track of your finances, making sure everything balances and showing you neat graphs of your remaining debts. But I don’t love them in practice. I need to be forced to really LOOK at where the money is going, and at the same time, to get the concrete positive feedback of typing in those new, lower numbers!
Maybe you’re already debt-free. Maybe you’ve automated your savings, and you’re having good success. That’s awesome! But whether you’re just starting the long road to debt freedom or already onto the savings and wealth-building path after it, if your motivation is ever waning, can I suggest giving unautomation a try?
Take it from me: It feels amazing to see your success!
About Joan: Joan is the editor and community manager for Man Vs. Debt, where she’s documenting her family’s journey to pay off almost $90,000 in non-mortgage debt. You can follow the Man Vs. Debt crew on Facebook, Twitter and Pinterest, and check out more about the “big why” behind Joan’s debt-payoff – quitting her full-time job to begin working from home and homeschooling her 13-year-old daughter – on the family’s personal blog, Our School at Home.
My husband and I have booked a cruise for our wedding anniversary. We currently do not have a credit card. We want to have one specifically for this trip: cruise charges (drinks, excursions), bike/kayak rental, etc. We want to build credit and will consider making large purchases on it when we have the cash first and will pay off within the same month. What card or company should we consider?
Angela, credit cards have a bad reputation, and there’s a good reason for that. If you carry debt, the interest rates can be a killer. But they’re also an important tool to have in your wallet — used wisely, they can help you improve your credit score, as you noted, and even earn you money or other perks in the form of rewards.
This is a good, timely question, as many people are in the thick of planning their summer vacations. If you’re going to be paying off this card in full each month — as, of course, you should — you want to look for a card that will give you rewards by spending on things that you buy anyway. Card issuers often dole out rewards based on categories of spending — you might get more back when you shop at grocery stores, for instance, or fly a certain airline. Remember that this is a card you’ll use not only on your upcoming cruise, but also on other purchases when you return, so take a careful look at your spending and then look for a card that will reward you based on where you spend money anyway.
My favorite website to sort through the options is LowCards.com. You can search by gas cards, home improvement, retail, travel cards, and then narrow them down by the credit score requirements. If you’re not sure you’ll use something like miles, I’d look for the most generic card you can find – one that gives you cash back for spending across the board. LowCards.com picked the American Express Blue Cash Everyday card as the winner in that category – right now they’re offering $100 cash back if you spend $1,000 in the first three months of membership, and that cruise may get you there. The card also pays 3% back at US supermarkets (for up to $6,000 per year in purchases), 2% back at US gas stations and select department stores, and 1% on all other purchases. And there’s no annual fee, which is important because depending on how much you spend, a fee can really eat into your rewards.
Enjoy your cruise, and happy anniversary!
I talked to a credit counseling agency and they told me to find an attorney about bankruptcy. What should I look for in an attorney and what questions should I ask? I am self-employed, have my own at home business and have gotten in serious credit card debt. I have been paying my mortgage and all cards, except for one. I called them but they will not work with me. I had one card go to collection and just got a collection agency letter in the mail. I would be willing to sell my house and pay the debt, but prefer not to do that. The lawyer I called said he need $2,000 up front and I do not have that. I do I deal with talking to the collection agency?
Hi Kathy, I’m sorry you’re in this situation. What kind of credit counselor did you go to? Did they tell you that you were ineligible for a debt management plan? Typically a not-for-profit credit counselor will work with you and your creditors. They’ll put you on a plan — called a debt management plan — that will allow you to pay off your credit card debt in less than five years, and negotiate with your creditors to lower your interest rates. Is that a process you went through? Sometimes, if the counselor thinks that the debt is too high to pay off within that time frame or if you don’t have enough income to support the debt, they will suggest bankruptcy. But I want to make sure you went to a reputed counselor and considered all of your options before going this route. Be sure that the counselor you are working with is an accredited non-profit agency that is a member of the National Foundation for Credit Counseling. You can do a search on their website here.
Once you’ve done that, I’ll direct you to the American Bankruptcy Institute. That organization has a consumer information website that is really helpful. Whether or not you can keep your home and your car will depend on the type of bankruptcy you file, the value, and your state’s exemption rules. Chapter 13 bankruptcy allows you to keep your property and puts you on a repayment plan to pay off your debt.
ABI’s website also has a pro bono resource locator that can help you find pro bono legal help near you if you qualify – it’s certainly worth a look. If you don’t qualify, and you can’t afford an attorney, you may be able to pay off the attorney’s fees through your repayment plan if you file Chapter 13. Be sure to ask about that upfront. You’ll also want to ask the attorney how long the process will take, how much time he or she will devote to your case and how much access you will have to ask questions, and whether he or she will be handling your case exclusively or if it will be passed off to someone else in the office. He should also be able to clearly explain the bankruptcy process in a way you understand – if it sounds like another language, search out other attorneys until you find the right fit.