Are You Broadcasting Your Credit Information to the World?

I got an e-mail the other day from my friend Paul down in South Florida.  It seems that Paul had learned about a small chip that is being embedded in many new credit and debit cards that sends out a signal containing all of the cardholder’s account information for that card.

Known as an RFID (Radio Frequency IDentification), these new cards are marketed as a “convenience” for the card’s owner.  They allow you to simply hold your card close to a reader rather than having to go to all the effort and trouble of swiping the card through the card reader.

Unfortunately, that also means that a thief using a portable card reader that simply passes near to your card can capture your credit or debit card information, clone the card, and then use it to make purchases and steal your money.  If your card has the words “paypass”, “paywave”, or “blink” on it, it has an RFID chip in it.  You can also look for a symbol that looks something like this )))).  Regardless of which word appears on the card, thieves can obtain your account information and use your good name for their own bad purpose.

To protect your credit information, you can demand that your card issuer provide a card that does not have a chip in it.  You can also purchase a credit card sleeve or wallet that blocks the radio waves these chips send out; or, you can simply wrap your card in aluminum foil to shield it.

Want to learn more about RFID credit and debit cards and how to protect yourself?  Go to and watch the news report.

What Your Family Needs to Know When You Die (Part 3)

When you are gone, your family will need to know a great deal about your personal finances.  They’ll need to know about your assets and your liabilities.  Today, we’ll look at assets.

Assets are the things you own that have value; perhaps generate income that can be used to support your dependents.  Your family will be helped tremendously if you assemble an inventory of your assets.  Consider the following …

  • Bank and Credit Union Accounts – do you have a checking account; savings account; certificate(s) of deposit; safe deposit box?  If you have any of these assets, list the name of the financial institution along with its address; account number(s); and, the name of the individual with whom you most frequently do business.
  • Stocks, Bonds, and Mutual Funds – if you have investment accounts, your family will need to know what assets your accounts hold; i.e., the names of any individual stocks, bonds, or mutual funds you own along with the name of the Registered Representative and firm with which you do business.
  • 401(k) – if your company offers a 401k … other qualified retirement plans include 403(b) plans, tax-sheltered annuity plans, and 457 deferred compensation plans … be sure to include the name of the plan administrator with the administrator’s address and telephone number; the name of the person at work who is your primary contact regarding the plan; and, a recent statement showing how the funds are invested and current balances.
  • Real Estate – obviously, the first item on this list would be your house.  Be sure to include a current estimate of the property’s value.  You can obtain a current value from a Realtor; or, do an on-line search by typing in the question “what is the current value of my house”.  Your search should yield a number of websites that will help you estimate its current market value.

The list of assets above is certainly not all-inclusive.  You may own art, collectibles, firearms, jewelry, and many other things.  Be sure to include these items in your list of assets along with their current market value.  If these items have been professionally appraised, include the most recent appraisal.

The days, weeks, and months following your death will be trying times for your family.  They will be grateful for any help you provide for them that will help them put together the financial pieces of their lives.

Charge Cards vs Credit Cards

While working with a client recently, I noted that she was using the terms credit card and charge card interchangeably.  When I pointed this out to her, she asked if there was actually any difference between the two.  In fact, there is a significant difference.  To fully understand the difference, it is necessary to review a little bit of history.

Prior to the advent of either type of card, consumers generally could not buy merchandise until they had accumulated sufficient cash to pay the price in full.  There simply was no way to obtain the goods or services without the cash.

In the 1920’s, some merchants began offering “buy now and pay later” plans.  These plans allowed consumers to buy that specific merchant’s products or services and make payments over time.  This type of account is representative of charge cards.  They are only accepted by the specific merchant or firm that issued the line of credit.

In the very early 1950’s, a program was introduced that allowed people to purchase meals at any participating restaurant regardless of brand or affiliation.  At the end of the month, the balance on the account had to be paid in full.  Although it was not possible to carry a balance from month to month, this program was an early type of a credit card.

The first credit cards that permitted account holders to carry balances from one month to the next were introduced in the late 1950’s; and, the marketing and use of these accounts became very widespread in the 1970’s.  Today, consumers in the United States are carrying in excess of $790 billion in balances on revolving credit cards!  1

As we consumers move forward in our economic lives, debating how to pay for the goods and services that we want or need, it will be important to keep these differences in mind as they will impact how (and how much) we pay for our purchases.

1 Federal Reserve Statistical Release dated October 7, 2011; data is through August 2011.

Will That Be Debit or Credit?

The news that several major banks are planning to charge consumers a monthly fee for using debit cards appears to be an attempt to drive consumers to a greater use of credit cards.  Why?

  • First, new regulations have taken effect that limit the fees that these banks can collect from merchants whenever a consumer uses a debit card.  It does not appear that these same limitations will apply to the use of credit cards.
  • Second, consumers have been making a conscious effort to pay down credit card balances and to voluntarily limit their use of credit.  Lower balances mean less interest can be collected by the banks, further cutting into their profits.  If the banks can drive credit card balances up again, interest receipts should increase and profits should rise.
  • Third, many banks are already charging consumers fees for the privilege of carrying one or more of the bank’s credit cards in their wallets.  The fee may be called a monthly or annual service fee; a membership fee (one must wonder what the consumer is a member of); or any one of a number of other euphemisms for a cardholder fee.  Increased use of credit cards is likely to lead to new accounts being opened and an increase in fees that can be collected by the banks.

If you are one of the many consumers who has resolved to reduce your debt and live within your means, stay firm in your commitment to living in a personal cash economy.  It may be hard to break the credit habit; but, your family’s financial well-being hangs in the balance.

Major Banks Plan to Charge Fees for Using Your Debit Card

News reports on Friday, September 30th, indicated that several major banks were planning to begin charging customers a monthly fee for using debit cards.  These fees could be as high (at least for NOW) as $5 each month.  That’s $60 each year!

After spending years and millions of dollars convincing customers that using a debit card was THE way … fast … convenient … easy … to pay for purchases at the grocery store, gas station, dry cleaners, and every other merchant with a swipe machine at the register, now the banks want to charge you, the consumer, for the privilege of spending your own money.  The bankers have decided that they aren’t making enough money by charging the merchants for this service.  Now, they want to dig into your wallet, too!

I’m confident that the bankers will tell you that you really have no alternatives … you can’t slow down or stop the wheels of commerce from turning.  However, I’m going to suggest that you DO have options.  They are …

  • Pay Cash – the commercials will try to convince you that the use of real money (rather than plastic) will cause the wheels of commerce to come to a screeching halt if you don’t swipe your card.  That’s OK!  It’s YOUR money and you have the right to spend it in whatever manner is best for you.  If you aren’t in the habit of carrying cash, the good news is that, at least for now, the bankers aren’t planning to charge you for withdrawing your money from your own bank’s ATM’s.  Rather than getting charged for swiping your card through the merchant’s machine, get your cash from you own bank’s ATM and pay cash.  This saves both you and the merchants money … and lower merchant expenses could lead to lower prices.  Don’t believe me?  Look at the gas stations that charge one price for their gasoline if you pay with cash and a higher price if you pay with a credit card … and, in some cases, with a debit card!
  • Change banks – yes, it is inconvenient; but, as a consumer, you have a right to demonstrate your genuine displeasure with your bank’s new policy.  Vote with your feet, and with your money, by taking your business to a bank that values your business and doesn’t feel compelled to squeeze every last penny out of your pocket in order to enrich its stockholders.
  • Join a Credit Union – credit unions are not-for-profit financial institutions that are owned by their members and operated for the benefit of those members.  Traditionally, credit unions have avoided many of the fees that traditional banks have charged and kept costs low for their members.  Many credit unions offer the same services as their traditional banking counterparts but charge lower, more reasonable, fees … in some cases, services are provided without the imposition of (yet another) fee.

Yes, you do have choices … but only if you are willing to make the changes that are necessary in order to send a message to your banker