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Personal Finance From a Biblical Perspective

No More Checks For Social Security Benefits

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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!

Tips For Using Credit Cards Responsibly: Advice from Nora Dunn

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Nora Dunn is a former CFP who sold everything she owned, including her business, in 2006 to travel the world. While she’s never looked back and has been having a blast as a professional hobo ever since, Dunn still needs to travel in a financially sustainable manner.

A large part of her strategy? Using credit cards responsibly. I recently caught up with her during an internet-connected travel moment, and picked her brain about the practice of using credit cards in a way that makes good financial sense.

Tips For Using Credit Cards Responsibly: Advice from Nora Dunn

What Are Some Examples That Illustrate When Using Credit Cards Is A Good Idea?

First, using a credit card and paying it off in full each month helps you to build a great credit rating, which comes in handy when applying for loans and mortgages. The last time I took out a loan to buy a car, I received all sorts of special concessions and security deposit waivers by virtue of having an excellent credit rating.

Second, consistent credit card usage also can be handy for providing a good account of your spending habits. It’s considerably more traceable than paying with cash and wondering where all your money went at the end of the month.

However, my favorite reason for using credit cards (somewhat religiously) is for the accumulation of frequent flyer miles, which for me has been a way to reduce my full-time travel expenses drastically (and even experience a little business class treatment).

What Are Some Fees That People Should Watch Out For?

If you take out a cash advance with your credit card, interest accumulates from the day you withdraw the funds. This might come as a surprise if you’re expecting the same 20 plus day interest-free grace period that you receive on purchases.

Also, if you leave the country and buy things in foreign currencies, expect to pay a currency conversion commission of approximately two and a half percent. But if you know what to look for, you can find a credit card with no foreign transaction fee, and save a ton on travel.

What Should People Look For When Shopping For A New Credit Card?

What to look for in a new credit card depends on your needs. I like cards that have a rewards program of one sort or another, and my favorite type of reward is of the frequent flyer mile ilk (for obvious reasons). [Editor’s note: Take a look at our list of credit card benefits]

What Would You Say Are The Most Common Credit Card Mistakes People Make?

Carrying a balance on credit cards – especially high-interest department store cards – is one of the biggest mistakes you can make. I don’t consider my credit card a license to print money that I don’t have. Instead I use it in a similar manner to a debit card: only if there’s enough money in my bank account to cover the expense.

So There You Have It

Nora’s advice sounds an awful lot like the credit card gospel that I tend to preach, which makes me feel a lot better. At the end of the day, credit cards are tools to be used appropriately, and it always pays to respect their pitfalls.

Using credit cards as a convenience, to accumulate rewards, and to pay for travel expenses can save you a ton of money in the long run. But accumulating too much debt or not paying your bills on time can bring all those benefits crashing down around you.

This was a guest post written by Jake at Nerd Wallet. NerdWallet.com is a site dedicated to educating consumers about proper use of credit cards.

photo by Andres Rueda

4 Credit Card Benefits You Should Not Ignore

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We constantly hear and read about all the negative attributes of credit cards. But if we use them correctly, we can take advantage of the many credit card benefits that are available! Below are the four most prominent:

Credit Card Benefits On Items You Purchase

One of the most useful of these credit card benefits is a feature that is sometimes known as “purchase protection“. Most of the major types of credit cards will shield you from loss if you are not happy with your purchase within a certain period of time.

Imagine that you purchase a brand new HTC DROID INCREDIBLE . Then you go to set it up and realize that it’s used – the stored numbers of “mom”, “wifey”, and “Nicole” give it away! You bring it (or send it) back to the vendor and demand a refund, and they refuse to issue one (claiming that you just didn’t like the phone and you put the numbers in, just to try and return it 😮 )!

If you paid with cash, you would have to fight with the vendor in order to get your money back. However, if you made your purchase with a credit card, all you have to do is call the issuer and tell them to withhold payment to that vendor. Once you display that you are not satisfied with the item and have returned it, they will credit the charge back to your card!

Credit Card Benefits That Protect You From Identity Theft

Most credit cards also offer fraud protection. If you report your card lost or stolen and then charges are made against your account, you will only be liable for the first $50. So if someone steals your credit card and then goes out and buys a new Apple MacBook Pro , you will only have to pay $50 for the charge. Actually, many banks will even waive the $50 fee for you!

Did Somebody Say Rewards?

Many cards will offer a rewards program, that will convert your purchases into airline miles, points that are redeemable for various merchandise and gift cards, and even cash! The more that you spend, the more rewards that you can earn.

Some finance “experts” don’t like credit card rewards because they believe that these programs promote irresponsible spending. If people are buying things that they wouldn’t normally buy, just to get a few more points, then these experts are correct. However, these benefits are worth it to those who are able to manage their spending in a disciplined fashion.

Easier to Track Spending

Most banks will offer a breakdown of your monthly and annual spending online. This can be very useful when you want to get an overview of your spending. If you make all of your purchases with one card, then all of your spending will be presented to you in a nice table or graph – and you will also rack up a fair amount of rewards!

A Quick Warning

We touched on this already, but if you have had problems with making irresponsible purchases in the past, please make sure you have addressed your undisciplined financial lifestyle before considering these benefits. One or two bad purchase can easily offset these credit card benefits. If you are currently battling with debt, here are a few simple ways to cut your credit card expenses. Then be sure to check out this credit score guide to see where you stand.

photo by The.Comedian

This article was featured in the following carnivals:

Carnival: Best of Credit Cards and Money

Family Finance Carnival

Carnival of Wealth #27 – Feb 27 2011 Edition

Reader Questions:

  1. Do you use a credit card for any of the reasons listed here?
  2. Have you ever needed to call a card issuer to get a refund because the vendor refused to give you one?

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