| |
Buying with Cash Could be Good for You
This week, my debit card information got compromised, and a thief used it to buy nearly $800 worth of stuff at Walmart. The bank shut my card down, and I’m still waiting for the replacement to arrive. So I’ve been living on cash for the week. The good news: It’s been a miracle cure for my bad spending habits.
When I was on the phone with customer service, the rep remarked, "I can see you use your debit card a lot." Guilty as charged. I use it for nearly everything. Small purchases. Big ones. Automatic bill payments. When it dawned on me I’d be without it for five to seven business days, I first considered using my credit card for day-to-day shopping. But seeing $800 drained from my account by a stranger made me skittish — I decided to stop using plastic for awhile and keep an eye on my accounts.
So, four days ago, I went into my bank and withdrew $150 in cash to get me through the week. Since then, I’ve noticed changes in how I spend my money. When I went to the grocery store, for example, I bought the necessities and nothing else. Spending $30 on cookies, chips, chocolate and wine would mean my cash would run out sooner. And that would mean I’d have to stand in line at the bank again. I’ve also been turning down invitations for dinners out, so that I can finish the food in my fridge that I’d already paid cold, hard cash for.
So, it turns out, cash has been good for me. That’s not surprising, according to a recent study from Cornell University, which suggests that using cash is literally healthier. That’s because those who shop with cash are less likely to buy junk food. Paying with cash is painful, the researchers found. You have to stop, look into Abe Lincoln’s eyes and really think about plunking that $5 bill on the counter.
Paying with plastic, on the other hand, lets you load up the cart with junk you never planned to buy and swipe the card guilt-free.
That’s one habit I hope I’ve kicked for good.
With cultivating healthier habits in mind, here are some of the best personal finance blog posts of the week:
Bucksome Boomer proposes a way to retire sooner — get a part-time job.
Debt Free Adventure gives some advice on how to become a one-car family.
Consumers Might be Helping ID Thieves Help Themselves
Smartphone and social media users may be opening the doors to an increase in identity theft.
Identity thieves are gaining ground after a drop in fraud reports in 2010, according to Javelin Strategy & Research. In 2011, 7.7 million Americans — about one in 20 adults- – were hit with credit and debit card fraud. That’s 2.2 million more than in 2010.
Nearly all of this increase was due to credit card fraud, according to the survey of 5,000 U.S. adults, which was co-sponsored by identity theft risk management company Intersections Inc. Last year, 2.3 percent of all adults found unauthorized charges on their cards, compared to 1.4 percent in 2010.
“ID thieves have bounced back,” Javelin President James Van Dyke told MSNBC.
And there’s plenty of blame to go around.
Some high-profile data breaches, such as the attacks on 100 million Sony accounts last April, may have helped boost those numbers. The number of people whose information was accessed in a data breach increased by 67 percent in 2011. The survey also found that people whose information was exposed in a breach are 9.5 times as likely to be victims of ID theft.
Javelin also found that social media users — despite all the warnings — tend to be sloppy with what they share and are handing the thieves the same information banks use to authenticate transactions.
Some examples of what people are sharing in their profiles: birth date (68 percent — 45 percent share month, date and year), high school name (63 percent), phone number (18 percent) and pets’ names (12 percent).
The annual survey also looked at smartphone use. About 7 percent of all smartphone users were hit with identity fraud in 2011, a third more than non-users. Here again, the users are often helping the thieves. Javelin found 62 percent of smartphone users do not use password protection for their home screens. This means anyone who finds or takes their phones can get access to personal information.
“As more consumers turn to unconventional communication methods, such as social media and smartphones, doing so in a safe and responsible way must now become a priority,” said Steve Schwartz, executive vice president of consumer services for Intersections Inc., in a statement.
Although banks generally reimburse their customers for fraudulent charges, consumers should do what they can to prevent credit card fraud as well. A good start is taking advantage of the privacy settings on social media sites and not sharing information that could help thieves do their jobs. Password protection is a must for smartphones.
Also, monitor your bank accounts online regularly, and set up an alert system for suspicious activity to be sent to your cellphone or email. Keep an eye on your credit report as well to make sure no new accounts are being opened in your name.
Your Favorite Stores are Probably Spying on You
The New York Times recently ran a fascinating piece about all the information retailers are collecting about their customers. The article focused particularly on Target, which is doing some pretty sophisticated surveillance of shoppers. By analyzing your purchases over time, the retail giant is able to tell what life changes you’re going through and offer you deals and coupons for stuff you want — before you even know you want it.
When I shop at Target (which is often), I’ve always found the coupons included with my receipt at the register to be uncannily appropriate. I buy a giant pack of power bars and, when I visit the store again a few weeks later, the register spits out a coupon — which makes me realize that I only have a few bars left. That coupon draws me back to Target again a week later, and voila! When I buy the new power bars, I get a coupon for the cleaning supplies that are just about gone. If — or when — Target starts honing in on my clothes-shopping habits, I’m in big trouble.
Yet Target’s predictive powers go even deeper. Take, for example, the "pregnancy prediction score." Apparently, Target can tell, based on what a woman buys, whether she’s pregnant — and when her due date is.
The clues? A woman who buys a lot of unscented hand lotion, cotton balls, wash clothes and hand sanitizer is close to her delivery date — and a prime target for baby supply advertisements and coupons. The article even includes an anecdote about how Target predicted a that a teen girl was pregnant — before her father (who was enraged at all the baby supply coupons arriving at his home) found out.
With stores becoming better at tempting us, it’s even more important to create a budget or a shopping list and stick to it. With that in mind, here are some of the best personal finance blog posts of the week:
The Centsible Life reveals how she turned her 10-year-old daughter in to an expert budgeter.
Punch Debt in the Face shares how making LESS money can actually make you happier.
Miss Money Bee warns that your friends may be causing you to spend more.
New United-Continental Program Lets You Turn Unused Gift Cards into Miles
United-Continental Airlines is offering a new way to get rid of unwanted gift cards — cashing them in for extra air miles.
It’s called the Mileage Plus Gift Card Exchange, and it accepts more than 60 kinds of used or partially used gift cards from frequent-flier members from brands including Wal-Mart, Best Buy, Sears, Target, Pottery Barn and Starbucks. The cards must have at least a $25 value (you can’t combine several cards to reach $25) and have no expiration date. Check the program’s website to see if your card qualifies.
You can cash in as many qualifying cards as you like, and it’s all done electronically so you don’t have to mail them in.
According to United’s website, the gift-card-value-to-miles exchange rate is based on “market pricing and other factors." To find out how many miles you’ll get for your card, enter your gift card information online. If you don’t like United’s offer, you don’t have to sell the card, and the airline says it doesn’t keep the information if you decide to bail out. You can try again on different days — the mileage offered may change periodically.
If you agree to the amount, United deposits the miles into your frequent flier account. Keep in mind that getting the miles isn’t immediate. It takes up to five business days for the cards to be verified and for the miles to show up in your account.
Unlike other exchange sites, such as Cardool, Plastic Jungle, GiftCardBin and GiftCardRescue (which give you cash for most of the value on the card), United says it will offer miles for the full value of the cards. But beware: The amount of miles United offers in exchange includes a 7.5 percent federal excise tax.
Whether the Mileage Plus Gift Card Exchange is a good deal for you depends largely on whether you would eventually use the gift card before it expires. Gift cards are less likely to expire now than they were in the past, thanks in part to the Credit CARD Act of 2009, which tightly regulates gift card expiration dates. So it might be worth hanging onto a card until it comes in handy for a needed purchase.
Yet if you’re sitting on a card that you’ll never use (or re-gift), what United is proposing is an attractive option — as long as you make sure you’re not simply trading unused gift cards for unused miles.
Should Indebted Grads be Able to Discharge Student Loans?
When I finished school, I was one of the lucky ones. A combination of scholarships, help from my generous family and a full-time job offer soon after graduation made what debt I had manageable. Even so, I had to resort to some creative measures to stretch my paycheck — sharing a 500-square-foot apartment with another person, learning to love tomato soup and taking a part-time dog-walking gig.
Yet there are millions of recent grads who are getting crushed by student loan debt and who are trapped in tough job market. Unfortunately, these grads have no way out because, unlike credit card debt and even gambling debt, student loan debt can’t be discharged in bankruptcy.
The National Association of Consumer Bankruptcy Attorneys is calling on Congress to change that. Last week, the group released a report that highlights the need for changes in the bankruptcy code that would make student loans dischargeable. With student debt approaching $1 trillion, such changes are the best way to avert a crisis, according to the report.
Still, there would be plenty of complications if grads could wipe the slate clean when it comes to student loans. For one thing, college students might simply take out loans they never intend to repay. For another, 20-somethings trying to expunge student loan debt could be digging themselves into a deeper hole — because bankruptcy means a bad financial reputation in the eyes of future lenders, landlords and even employers.
In other words, young people could end up emerging from bankruptcy only to be locked out of the future opportunities they hoped their education would bring.
With avoiding bankruptcy in mind, here are some of the top personal finance blog posts of the week.
Frugal Zeitgeist provides some tips for downsizing — and getting the most out of a small living space.
Young and Thrifty offers some tips for saving money while living in an expensive city.
Wise Bread warns readers not to procrastinate when trying to get out of debt.
Did Bank Transfer Day Actually Work?
Last November, the grassroots Bank Transfer Day movement encouraged consumers fed up with big banks to switch their accounts to smaller institutions with fewer fees. The movement garnered a sizeable following, more than 60,000 Facebook likes and about 3,400 Twitter followers. But did it work?
A recent survey from Javelin Strategy & Research puts some numbers behind the guesswork. It suggests that, while Bank Transfer Day may have convinced many to break up with their banks, it did not result in the mass exodus to small credit unions that organizers had hoped for — and that banks feared.
Moving the needle
The Bank Transfer Day promotion caught fire in social media last fall, and its message was to urge people to rebel against big banks, many of which at the time were floating proposals to charge monthly fees of up to $5 for debit card use. Banks ended up dropping the proposals in the week before Bank Transfer Day amid fierce consumer backlash.
Javelin’s research, which polled nearly 6,000 consumers in December 2011, estimates that 5.6 million U.S. adults changed financial institutions in the last quarter of 2011. Of those, an estimated 610,000 U.S. adults — or 11 percent of the 5.6 million — did so because of Bank Transfer Day. Meanwhile, 26 percent of the switchers stated that they transferred because their bank charged too many fees.
But was the number of disgruntled switchers much higher usual? No, says Javelin’s founder and president James Van Dyke, in a reply on the company’s blog. Yet bank switching likely got a slight lift from Bank Transfer Day. Had Bank Transfer Day not been so widely promoted, Van Dyke wrote, "we believe total bank-switching would actually have gone down." In other words, according to Van Dyke, "BTD did actually move the proverbial needle."
Some angry, but not willing to switch
Javelin’s research shows that consumers are extremely reluctant to change banks. So, despite the anger expressed by consumers last fall, it’s likely that many ended up staying with their current financial institution. It’s a huge hassle to change bank accounts, Van Dyke says, especially since the advent of online payments, which allow consumers to automatically pay bills online — but force them to set up new automatic payments when they switch banks.
Another surprising finding is that some of the most vocal proponents of Bank Transfer Day may not have made the switch. Even though much of the groundswell grew through young, disenfranchised social media users, it wasn’t predominantly the younger folks with smaller accounts who were changing banks, Javelin found. Instead, Van Dyke wrote on the company’s blog, the switchers trended toward the higher-income set.
The winner? Credit unions
One of the biggest beneficiaries of BTD anger toward big banks was credit unions, who saw their numbers go up after a slight decline in the first eight months of last year.
The Credit Union National Association (CUNA) reports that, between Sept. 29, 2011 (the day Bank of America announced its proposed debit card fee) and Nov. 2, 2011 (just days before Bank Transfer Day), at least 214,000 new people joined credit unions (CUNA originally announced that number was 650,000, but later revised it). That’s an improvement compared with the 0.2 percent decrease the trade group reported through August of 2011.
Valentine’s Day Costs the Average Consumer $200, Survey Says
At my neighborhood grocery store, there is a table trimmed with pink and red gauze. Hard at work are several employees, dipping strawberries in chocolate. There are also shelves loaded with various heart-shaped gifts, conveniently located near the entrance for the last-minute shoppers who will be ducking in on the 14th. I call this the "Oh shoot, it’s Valentine’s Day!" section.
I admit, I actually am a fan of Valentine’s Day. It’s fun, sweet and a little silly. But I imagine I’ll spend less than $20 to celebrate it. That’s a far cry from the average, according to a recent American Express survey. The average consumer is expected to spend $196 for Feb. 14 this year. That’s up 8 percent from 2011.
More than half of consumers will be buying gifts (mostly flowers, gift cards, jewelry and electronics, according to the survey). And nearly half will spend the evening at their favorite restaurants.
As for me, my wallet is still recovering from the holidays. And I’m too much of a procrastinator to snag a reservation at a restaurant. My significant other and I will be making it a takeout-and-Netflix night — although I don’t think I’ll be able to resist buying a box of those chocolate-covered strawberries.
With Valentine’s Day spending — and saving — in mind, here are some of the top personal finance blog posts and articles of the week.
Money Ning gives some advice about how to "take the bite" out of date night.
Bank of America Testing Out New Deals Program
Bank of America, still smarting from the public backlash that torpedoed its proposed $5 monthly fee for debit cards last year, is rolling out a new idea to boost card activity — a program called BankAmeriDeals.
While the program hasn’t started yet, the idea is that customers will be offered discounts on future purchases based on what they’re buying with their Bank of America cards.
If a customer makes a purchase at an electronics store, for instance, the next time he logs onto his BofA account online, he may see a discount he could use the next time he buys something from that store. Customers who click on the deal to accept it and later make the purchase will pay full price for the items at the checkout counter — but will get reimbursed for the amount of the discount by Bank of America. The bank will total up the discounts a customer has coming each month and issue a credit to his or her account.
The act of getting something back from a bank is a far cry from the proposed fees for just using the cards. This plan also has convenience going for it. Unlike with other deals sites such as Groupon or LivingSocial, there are no coupons, promotional codes or email registrations and no separate website to check.
A company called Cardlytics acts as a middleman between BofA and retailers. The strategy is offering rewards linked to places where customers have already shopped instead of floating incentives for places they may or may not be interested in trying. Because the consumer has already shopped at their store, retailers have more confidence that they will return. The bank, meanwhile, has more confidence it can accumulate more swipe fees because customers must use their Bank of America cards to get the discounts.
Bank of America has started testing the rewards program on its own employees in Nevada, North Carolina and South Carolina, and it plans to roll it out to all associates in the next month.
The move comes as banks are looking for ways to build revenue lost to new financial reform regulations that curb debit card swipe fees.
Reuters reports that, with BankAmeriDeals, customers can choose to receive alerts about offers and how much money they have saved. They also can opt out of the service. The bank won’t say which retailers are participating, but said they include large discount department stores, fast food chains and local restaurants.
Americans May be Slipping Back Into Money-Wasting Habits
I admit, I’ve been getting lazy when it comes to penny-pinching. Turns out, I’m not alone. Americans might be slipping back into old, expensive habits, according to a recent poll.
Since 2009, Harris Interactive has been asking Americans what they’ve done to save money in the past six months. This week, it released the results of its latest survey. For almost the first time since 2009, the number of Americans making small changes to save money has dropped. That could mean that saving money has become the norm (so fewer are reporting it as new behavior). Or, it could mean that Americans are upping their spending.
Surveyors asked more than 2,200 Americans about a variety of money-saving strategies, and I saw my own behaviors (and misbehaviors) in many of the results. For example, in June 2009, 48 percent of Americans said they were brown -bagging their lunches. Today, that percentage has fallen to 42 percent.
I am definitely one of those who fell off the brown-bag wagon. Just a year ago, it was my policy to eat lunch out once per week. I planned out my meals on weekends, cooked them on Sundays and brought leftovers to work. I was averaging about $2 to $3 per meal. Yet a busy schedule and weekends out of town have tripped me up, and I’m back at Panera and Wendy’s.
Buying coffee instead of brewing it? Falling for my hair stylist’s insistence that I must see her every eight weeks? Guilty. And so are many others, according to the poll. I am, however, proud to say that I am one of the 21 percent of Americans who has cut cable TV, and I don’t miss it (much).
With practicing good money habits in mind, here are some of the best personal finance blog posts of the week:
$5 Dinners shares a recipe that can be stretched out for multiple meals.
MasterCard Announces Rollout of “Chip and PIN” Cards
U.S. credit card holders just got one step closer to using cards with chips instead of magnetic stripes. MasterCard has announced a plan to transition to the "chip and PIN" technology that is already the norm in Europe.
By the end of April 2013, MasterCard plans to have replaced its existing magnetic stripe infrastructure with one ready for chip-based technology. That means every credit card will have a small silicon chip embedded in it, much like a cell phone’s SIM card.
Instead of swiping, customers can just wave the cards at the reader to make purchases.
Visa made a similar announcement in August and said, by April 1, 2013, it would require firms that handle credit card transactions for retailers to accept merchant chip transactions.
“We’re moving toward a world beyond plastic, where consumers will shop and pay in a way that best fits their needs and lifestyles with a simple tap, click or touch in-store, online or on a mobile device,” said Chris McWilton, president of U.S. markets for MasterCard, in a statement.
Europeans and consumers in other countries have been using the 12-year-old Europay, MasterCard and Visa (EMV) technology for years, but it has been slow to come to the U.S. Retailers haven’t wanted to spend the considerable cash on new payment systems until card companies adopt the new technology, and card companies haven’t wanted to use the chip cards until merchants agreed to accept them.
MasterCard’s plans include incentives for merchants, integrated customer loyalty programs and support for dynamic authentication technologies. The dynamic authorization is a huge step in eliminating fraud because each transaction is unique and uses encrypted information, whereas a signature can easily be faked repeatedly. The chips are also more difficult to clone than magnetic stripes.
Randy Vanderhoof, executive director of the Smart Card Alliance, said MasterCard’s announcement solidifies the path for next-generation payments that will be based on a global EMV standard – one that includes emerging technologies like mobile phones and more secure eCommerce payments.
“It is time for the four sides of the payments ecosystem — issuers, processors, merchants and consumers to collaborate on the opportunities for innovation that MasterCard’s announcement enables,” he says.
|
|
