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Cash – Your Best Defense Against Identity Theft

By //  by Kevin M

Amid all the internet clamor over the lowest rate credit cards, zero interest transfers, and of course, rewards points, it’s often easy to forget the fact that good, old fashioned cash is your best defense against identity theft. That alone is a compelling reason to use it as much as possible.

Sure credit and debit cards offer various forms of fraud protection, but cash keeps identity theft from happening in the first place.

Theft Of Money Is Nothing Compared To Identity Theft

Identity Theft Protection

We can agonize over the potential for the loss of cash in a bank account as a result of a lost or stolen debit card, or of the potential for a thief to tap out the remaining balance on a credit line. But neither of those potential losses comes close to the outright theft of our identity. And each carries a limit of loss anyway.

If all we could lose in an identity theft situation was a limited amount of money, it wouldn’t be nearly so terrifying. But if access to a single account is stolen, a thief could take over and plunder every account we’re connected with, and a whole lot more.

With sufficient information, a thief could become “you“ – for financial purposes – and do some or all of the following:

  • Empty your bank accounts and investment accounts
  • Max out your credit cards and credit lines
  • Get employment in your name
  • Obtain new credit in your name
  • Apply for government benefits in your name
  • File a fraudulent income tax return and obtain a huge refund in your name
  • Commit other illegal acts in your name
  • Sell your identity to a third party for immediate cash

Sure, eventually you will remedy that situation, but it may take months or years, and that is disruptive. And if the theft is severe enough, you may even need to get a new Social Security number, and transfer all of your financial information from what ever the source. In a financial sense, that’s like having to create a whole new you!

[Find out how to protect yourself from identity theft while using Facebook & other social media!]

Credit And Debit Card Paper Trails

A generation or so ago, no one worried about identity theft. There are various reasons for this, but one of the most significant is the widespread use of credit and debit cards. Every time you use plastic in a transaction, a paper trail is created! That paper trail is a rich target for identity thieves.

As a result of a single transaction, a thief will know your bank, your account number, your signature and other important information, which may be all that’s needed to gain access to your account, and ultimately to your entire identity.

Back when most transactions were conducted in cash, this threat was non-existent. After all, cash leaves no paper trail. There’s a lesson in there somewhere.

“Inside Jobs”

A large percentage of identity theft is “an inside job” – it isn’t initiated by some shady looking dude with a wide brim hat hanging out in a dark corner of the store, but by an employee of the establishment. In fact, it is estimated that as much as 65 to 75% of identity theft is committed by employees.

And why not – employees are the ones with access to the paper trails! When we do business with any company, we’re supplying them with personal information that could be used to perpetrate identity theft. We’re relying heavily on the integrity of the employees of that company and on the hope that they won’t use that information to steal our identity or commit some other form of fraud.

But not all employees have integrity. Access to personal financial information – in combination with an employee’s need (or greed) for cash or other benefits – could cause them to cross the line to the dark side.

Transactions completed with plastic increase the possibility of this outcome. But if you pay with cash, there is no personal information supplied on your part. Identity theft thwarted!

Using Cash To Minimize Identity Theft

By paying in cash – especially for small purchases – you lower the chance of being a victim of identity theft. The last thing that you want to have happen is to become a victim of identity theft as a result of a purchase of a bottle of soda at a dollar store! Paying cash for small purchases is a way to minimize that outcome.

Plan to carry a certain amount of cash with you at all times, and establish guidelines for payment methods based on the amount and type of the purchase.

For example, you could decide that you will pay cash for any purchases under $50 – that would probably eliminate most credit/debit card transactions. Any transactions of a higher amount could be paid by either credit or debit card.

If that strategy cuts your use of plastic by 75%, it will also lower your chance of being a victim of identity theft by 75%!

Paying cash is a way of disarming would-be identity thieves. Cash is virtually “invisible” – it leaves no record of it’s users. That’s your single best protection against identity theft.

How common is cash as a payment method in your life?

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photo credit: freedigitalphotos.net

Filed Under: Commentary Tagged With: A Victim Of Identity Theft, credit card, Credit Cards, debit card, Debits And Credits, electronic commerce, Identity, identity theft, Identity Thief, Protect Yourself From Identity Theft, Protection Against Identity Theft, theft, Victim Of Identity Theft, Your Identity

Dealing With Financial Stress Is Driving Us To Get Out Of Debt!

By //  by Khaleef Crumbley

I had a lot of crazy things happen to me this week financially with my business and my personal bank accounts and even credit cards.

My Poor Business Accounts

On the business side everything started off fine. I made a few purchases from Amazon.com and everything went through without a problem. Then all of a sudden I received an e-mail from Amazon telling me that the payment didn’t go through, and they needed me to adjust the payment information on the purchases.

Problems With My Business Credit Card

When I logged into my credit card account, it showed that I was late by two or three business days in making this most recent payment. Apparently the electronic notification got lost in a bunch of other e-mails in my inbox. Things have been so hectic lately and when I went to check on things, the payment was already late.

I guess it’s their policy that if you miss a payment by a couple of days they automatically shut down the credit card; Which on one hand I can understand – I think it’s a good thing (because if you’re having trouble making your payments you probably shouldn’t be extended any further credit), but on the other hand, it is definitely is a pain if it was an oversight (and not due to financial struggles), as was the case this.

So I immediately log into my business checking account to send over a payment so that I can clear this up immediately. Even though I use the same bank for my checking account (like this one from http://www.bbt.com) and the credit card, it still takes a couple days in order for them to process a payment.

Computer Problems

Did It Really Spread To My Business Checking?

Once I logged in to the checking account I noticed that the account was in overdraft. As I looked further to figure out what was going on, I noticed that there was a huge charge that hit my checking account through PayPal. Well, I had my PayPal purchases set to all go through my credit card, because I don’t like surprises popping up in my checking account. I had no idea why PayPal chose to my bank account rather than my credit card, since the credit card was still active at the time of the PayPal withdraw.

Unfortunately, there was nothing that I can do about that payment coming out of my bank account instead of the credit card, so all that was left for me to do was to try to put money in my bank account so that I wouldn’t be in the negative and so that I can pay my credit card.

Since the time of the PayPal debit (which was just a day or two) I had received money into my business PayPal account. I transfered that money over immediately, but of course, like all other electronic transfers it would take a couple of days to hit the checking account.

Slow Transfers Within The Same Bank…Ugh

Initially, I didn’t remember that I had set up another online account a while ago and connected it to a system that was set up for me to earn money for my business. Once I remembered, I had to go into that account and make a transfer; but before I could do that I had to connect the two accounts. This meant that this online bank account had to make two small deposits into my business checking account and then I had to log in and verify those payments, so that they would know that I had access to the business account.

What makes this crazy is that all of this is with the same bank; the credit cards, my business checking account, and also this online banking account (which was recently taken over by my business bank).

Unfortunately they don’t have their systems set up to where they recognize different segments of their company as being one in the same, so that I can have my money transferred immediately – if that was the case this whole problem would’ve been solved on the same day.

I love the bank and have had no problems with them and ultimately this was my fault, however if the sites were a little more up to date, this problem would have been taken care of immediately.

Riding In The Rain

I’m actually sitting in my car on a rainy Saturday morning dictating this into my voice recorder. I just came from another bank where we have an account set up for emergency purposes. I took money out of that account and then drove over to my business bank and made a deposit with them. Of course, since this is a Saturday I won’t see that deposit hit the account until Monday.

Once that happens I will be able to make the payment on my business credit card and free up that account.

Safeguards That I Will Put In Place

What I plan to do to avoid this is to set up reminders on my calendar that will prompt me to go check my credit card statement. I don’t like to have a balance at the end of the month on my business credit card, however over the last month or two I’ve had to make several large purchases, which I hope to have paid off over the next couple months.

I also plan to set up a business savings account so that I don’t have to keep relying on these online transfers that take two or three days or waking up driving out in the rain to take out cash and make deposits.

Problems With Our Personal Accounts, Too?

Stress Over Debt

As all that was going on, we also had a very tight month financially with our personal finances. Now, this was to be expected because the prior month we had to go over our budget in several categories because of different things that came up in life.

At the beginning of the month I projected our finances for the next couple of weeks (which I do with every paycheck), and I knew that we would be extremely tight for this entire month. However, we had a couple small things, that we had to take care of which were somewhat unexpected.

The other day I woke up to a low balance threshold alert from my bank. I’m glad that I set this up at some point in the past, so any time our checking account balance goes below $100 my wife and I are both sent an e-mail just to give us warning.

Fortunately I was able to log into our savings account and move some money over, because I know we have one annual payment that is due at some point this month.

Unfortunately, as I was doing our finances, I did notice that one of our credit card companies said that we had a late payment. This is quite odd, since I schedule all payments weeks in advance. When I looked at the e-mail that I  received from them when the statement was ready, I noticed something quite peculiar: the e-mail was sent on one particular day, and the payment was due 2 or 3 business days after they sent the e-mail!

Well, I go over our finances every Friday or Saturday, depending on my schedule, so if I received an e-mail on Monday saying there is a new statement I would just review it on that Friday or Saturday! Usually you are given about 20 or even 30 days in some cases before the payment is due, and I usually don’t worry about logging in on that same day.

Now that I think about it while I’m talking, I’m not sure if what they did was even legal. I think there was something in the credit card act  signed a few years ago that states that they have to give maybe 15 or 20 calendar days from the time that the statement comes out until your next payment is due (I just checked the article that I wrote back then…they have to give you 21 days). So I’m going to check that. And even if that isn’t a requirement, the fact that they gave me five calendar days of perhaps three business days is unacceptable my opinion and I definitely plan to fight any charges that may come.

More Reasons To Hate Debt!

This just furthers the biblical principle that debt is equivalent to slavery. It causes undue stress and it puts us under the rules and regulations of another person, financially. This is even more motivation for us to get out of debt and to have some freedom in our lives.

Filed Under: Personal Finance Tagged With: bank, banking, Business Account, capital one, Cause, credit card, Credit Card Account, Dealing, debt, electronic commerce, Financial Stress, Financial Struggle, online banking, Overdraft, Paypal, stress

No More Checks For Social Security Benefits

By //  by Khaleef Crumbley

I’ve been waiting for this day to come for a long time (actually, it came a few months ago)! Effective May 1, 2011, applicants filing for Social Security and Supplemental Security Income (SSI) benefit payments must choose either direct deposit or the Direct Express® debit card. There will be no option to receive your Social Security benefits by check.

This means that the Social Security Administration will not have to bear the cost of printing, mailing, and replacing checks for beneficiaries and recipients. Those that were already receiving their benefits by check before May 1, 2011, will have until March 1, 2013 to switch to direct deposit or the Direct Express® debit card.

How To Receive Your Social Security Benefits Through Direct Deposit

Since you no longer have an option to receive your Social Security benefits via a live check, there isn’t much for you to do. If you already have a bank account, you can set up direct deposit of your Supplemental Security Income or Social Security benefit payments through your bank.

You can also call the Social Security at 1-800-772-1213. Just have your bank information and Social Security number available when you call, and they can set things up for you. Since there are more stringent regulations on when a creditor can garnish Social Security benefits, those who avoided direct deposit as a means to ‘hide’ their benefits, should no longer have to do so.

Are There Any Exceptions To Receiving Your Social Security Benefits Electronically?

Those who are 90 years of age or older may still choose to receive paper checks. This also goes for those who are able to document a disability.

In my mind, these are the people who would benefit from electronic payments the most – they may have trouble getting to a bank to cash their checks, and then trying to buy things in person with cash.

What Is The Direct Express MasterCard?

If you are set to receive Social Security benefits, and you do not enter direct deposit information, your benefits will be paid through the Direct Express Debit MasterCard instead of by a paper check. The card is just what it sounds like, a debit card that you can use wherever MasterCard is accepted.

Your monthly benefits will be deposited onto your debit card, instead of deposited into your bank account. You will receive a personal identification number (PIN), that will allow you to withdraw cash from an ATM or merchant who provides cash back.

You are allowed one free cash withdrawal per deposit at ATMs in the Direct Express network. Also, you are able to make free withdrawals at the teller window at any MasterCard member bank (most banks).

You can even sign up for low balance alerts by phone, email, or text message. Unfortunately, if you wish to receive regular monthly statements, you will have to pay $0.75 per month. Although, you are able to view the last 90 days of activity online (which may be enough for most people).

There are other fees associated with the card, which you can find here.

The Bottom Line Regarding Electronic Social Security Benefits

According to the Social Security Administration, 85% of those receiving benefits do so electronically. Therefore, this new regulation will have no effect on the majority of beneficiaries.

I wasn’t able to find an estimate regarding the amount of money that will be saved by moving everyone to electronic payments, but with only 15% of recipients receiving paper checks, the numbers can’t be that great. This isn’t going to be the move that saves Social Security!

As with any of the social welfare programs, there is a real danger of it not being around in it’s current form in the not-to-distant future. Therefore, it is imperative that we take full advantage of the IRA contribution limits, 401k contribution limits, and a 401k employer match, while there is still time.

The decision on how to receive these payments is a major issue for those with no other forms of income. For others who still have time, we need to do everything we can to avoid depending on Social Security benefits to fully support us in retirement! For those who believe that they have run out of time, here are a few late retirement planning tips to help you catch up.

photo by DonkeyHotey

The Post Was Featured In The Following Carnival(s):

Carnival of Personal Finance #327 – The Pirate Edition!

Filed Under: Retirement Tagged With: banking, benefit payment, business, debit card, debit cards, direct deposit, Economics, electronic commerce, electronic payment, electronic payments, finance, guide, labor, payment, payment options, payment systems, social security, social security administration, social security benefits, social security number, supplemental security, supplemental security income, welfare economics

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