Twila Van Leer

To Own Or Rent? Proceed Wisely

March 28, 2014 by Twila Van Leer

Home ownership is the American ideal. But there are good and valid instances in which renting is a better alternative. Look at them carefully before taking the leap into a mortgage.

If You Make Frequent Moves

If you know that your job is going to require that you relocate every few years, or if a bit of “wanderlust” is part of your makeup, you’d be foolish to be burdened with home ownership everywhere you went. Home purchases and sales involve costs, with fees on both sides. Even in a positive market where property values intend to increase, you aren’t likely to break even.

When A House Payment Would Break You

It isn’t just the monthly payment. There tends to be more out-of-pocket expenses with home ownership. Maintenance and repairs, for instance. When debating the factors, add about a thousand dollars a year to the mortgage money for such costs. Best to leave those to another owner while you pay a set rent if things are looking tight.

If you are looking at homes, notice that some of them are in serious disrepair, probably from just this circumstance. The owners can afford the payment, but not the upkeep. Assume that this could happen to you too, if the margins are too skimpy. Maybe, like some home purchasers, you believe you can take care of upkeep and repairs yourself, but if the demands get beyond your capacities, you’ll end up paying a contractor. Being house poor is hardly a desirable offset for the perceived blessings of owning.

What Your Area Offers

If in your neighborhood a home typically sells for $300,000, with a monthly payment of $1,800, but rentals can be had for $1,000 a month, the math isn’t hard to do.

Unless you can easily manage the $1,800, the rental seems the better option. What you lose in such a scenario is the tax advantage that a mortgage offers. But the $800-per-month savings in rental payments goes a long way toward offsetting that advantage. And you needn’t look at the additional costs of maintenance and repairs, which amounts to even more savings.

Making Major Life Changes

A personal financial crunch, divorce, being widowed, relocation, starting a new job — these and many other unexpected life events are all good reasons that you may need to rethink ownership vs. renting, at least temporarily. Any situation that creates a new reality for you should demand such a rethink. In any major life upheaval, renting could provide the flexibility you need before things settle into that new reality. Not being tied to a mortgage could help you safely bridge gaps when things don’t go as you had thought they would.

If owning a home is your dream, go for it. But remember that renting is a good option until the dream comes true.

Which Should You Use – Credit Or Debit Cards?

March 21, 2014 by Twila Van Leer

In today’s world, where plastic is the most popular mode of making financial transactions, it’s important to know the difference between credit and debit cards. Both are designed to facilitate purchases and payments, and it’s a rare American who doesn’t have at least one of each in his or her wallet. But there are some intrinsic differences that should guide which one you reach for in a particular instance.

Credit Card Purchases

A credit card allows you to temporarily borrow money. Generally that’s the bank or institution that issued the card and you may have to pay interest for the privilege. If you pay your bill off every month you may not have interest charges. You will have some type of fraud protection and if you don’t have cash in the bank, you may have to use credit.

Prompt payment of credit card debt can have beneficial side-effects. Paying on time, staying within credit limits and paying more than the minimum payment can improve your credit rating. That could translate to low interest rates on loans and credit cards. That’s helpful when the big-ticket purchases such as a mortgage or auto loan are on the line.

Some credit card issuers offer grace periods so you can sidestep interest as long as you pay in full each month. Reward points that can be applied to such things as airline miles and hotel stays are awarded by others to their best customers. Some cards have a cash-back offer for on-time payers. Other “perks” may include travel insurance or purchase protection. If you’ve used your card fora large purchase and find the product is defective, having the backing of the card’s issuer may save some of the hassle in resolving the problem. Because the options are so varied from one institution to the next, it pays to know what is offered by the one with which you are doing business. Check.

The downside of credit card use is the sense of security that having such a resource engenders. In a word, it’s too easy. If you don’t keep track and act judiciously, you may find yourself in trouble. Credit card companies charge big fees for those who overstep their card boundaries. They also may apply late fees, which seem to be a common symptom of credit card over-use. It can become a very costly lapse in good judgment.

Transactions could be viewed as short-term loans. You are borrowing from the bank that issued the card to make your purchase or payment. In emergencies, such as a broken pipe in the basement or a car problem far from home, when you haven’t the cash to resolve the situation, a credit card is mighty handy to have. Or when a necessary item is too expensive for a one-time payment, that’s when credit should be (judiciously) used.

Debit Card Purchases

A debit card, on the other hand, is tied to your own checking account. The money you are spending with your card comes directly out of your checking or savings account. No interest is attached but you should have cash in your account to cover your transaction.

The benefits of a debit card include ease of purchasing. The card becomes a substitute for cash, so you don’t have to carry cash with you. Purchases and payments are easy to track because you have access to your online checking account. Or you can check your balance at an ATM. It is simple, too, to access cash at an ATM with your debit card, as long as there is money in your account to back your request.

The downside to debits is that if you are not careful about keeping sufficient money in the supporting account, your card may be denied. Some banks allow overdrafts, but charge a fee, which cancels out the interest savings. Be aware of the policies at your financial institution.

Debit Cards That Process As Credit Cards

With debit cards you can also have the transaction itself processed through the credit procedure. When you choose this option, the merchant pays the credit card company for processing the transaction. That can cost the merchant money which can be recouped in higher prices charged to the customer. The advantage for you choosing credit is that usually that takes several days so you have a little time to get money into your account.

About The Usage Of PINs

Many stores allow the option of using your PIN to get cash as you are shopping and there is usually an ATM close at hand, so the debit card option is handy. Remember that using your own bank’s ATM avoids the fee that is charged at “generic” ATMs or those attached to other banks.

The card offers some security. Even if you should accidentally leave it at the place where you are doing business or lose it in the haste of everyday living, anyone who picks it up is not likely to be able to access your account because of the PIN requirement. That makes safeguarding your PIN very important. It is possible in some instances to bypass the PIN, so fraudulent use is not totally out of the question. The same cautions you would apply when using cash should apply here. Be careful. Most banks have fraud protection policies in place to help when things go wrong.

Bank Of America Improves Customer Relations

March 21, 2014 by Twila Van Leer

America’s largest banks know that customers with a good understanding of basic financial principles are among the best with whom they deal. In an effort to improve customer satisfaction, Bank of America has partnered with the Khan Academy to provide educational materials that add to personal financial education. The partnership was announced in 2013 and since that time a lot of progress has been made.

The Khan Academy is the brainchild of financial guru Sal Khan, who developed a series of videos that helped people learn high school mathematics. With his expertise in finance and creating interactive, engaging videos and Bank of America’s expertise in helping customers they have created a phenomenal collection of personal finance learning videos.

To showcase the learning videos, they have launched a website called Better Money Habits. The finance lessons feature 50 videos, each focusing on a bite-sized topic in language easily understood by non-experts. They are crisp, visually attractive, fun to watch and give succinct directions as to how to apply the information for better personal money management. Among the topics are easy ways to save, how to get out of debt, setting and sticking to a budget, understanding mortgage issues and other aspects of personal resource management. Though created with bank customers as the target audience, they are available free to anyone who has an interest in enhancing his or her understanding of grassroots financial matters.

“At Kahn Academy, our mission is to provide a free, world-class education for anyone, anywhere and we believe that financial understanding is now an economic imperative for all, said Kahn. He said the bank partnerships will help the academy “reach a significantly larger group of people searching for unbiased information on personal finance and other topics we teach.”

Surveys made by the National Foundation for Credit Counseling in 2013 indicated there is fertile ground for basic, easily accessed financial education. When asked to grade themselves on their understanding of personal finance issues, 40 percent of the survey respondents graded themselves at C, D or F. A whopping 78 percent said they would welcome professional advice and answers to basic questions. The desire to obtain the understanding that would make their money work harder and better was overwhelming. With such clear direction, huge financial companies such as Bank of America allied themselves with Kahn to provide that information in a simple, easily understood format.

Bank of America expanded on the online Kahn Academy series by sponsoring financial workshops in several major US. cities.

CPSA Sets Standards For The Check Printing Industry

February 27, 2014 by Twila Van Leer

Although paying by check is not as common as it once was, it’s a financial practice that is likely to have long-term value in the economic scheme of things, according to the Check Payment Systems Association. And their prime role is to promote and protect what is referred to as the “paper-based” payment system.

The non-profit organization has been involved since 1952 in assuring that using personal checks and business checks will remain a viable option for individuals and businesses. It is dedicated to the integrity, security and convenience of checks. It has been at the forefront of developing safeguards that are built right into the checks you use. Its advice has been incorporated into check-printing practices for ValueChecks.net main check printing partners.

Preventing Check Fraud

One of CPSA’s most valuable contributions has been in developing strategies that thwart criminals bent on check fraud. In 1994 the association created a set of guidelines intended to prevent the production of counterfeit checks. The guidelines are voluntary, but have been applied by the majority of check-printing companies in North America. Would-be counterfeiters have been significantly stymied in attempting to use computer scanners, laser printers or photocopiers to produce fake checks.

Key to the effort is the Padlock Icon, touted as CPSA’s greatest contribution to the fight against check fraud. The small symbol appears on the front and back of personal and business checks that were designed with at least three safety features. Those who routinely accept checks recognize the Padlock as evidence that the checks are protected by production safety steps. Only CPSA can legally grant the right to use of the Padlock on checks. The association’s website lists authorized users, such as those check companies who print checks for Valuechecks.net.

CPSA partners with the American National Standards Institute to study issues surrounding the use of checks. It also does research to assist members with development of products and services. It’s influence is recognized and respected in Washington D.C. as federal government agencies consider these issues. Lawmakers whose business is to protect citizens make use of the information generated by CPSA researchers.

Beneficiaries of the efforts being made by such organizations are those at the end of the chain — the individuals and companies that continue to make writing checks their standard for doing business.

The Target Credit Card Theft Of 2013

January 3, 2014 by Twila Van Leer

It would have given Arthur Conan Doyle, British creator of never-lose sleuth Sherlock Holmes, a headache. International theft, creative detective work, suggestions of piracy and, hopefully, quick intervention – all are part of the huge credit card breach that struck Target stores in the period from Nov. 27 to December 15 last year. The breach was announced Dec. 18 and was quickly picked up by the media.

The loss was huge. “Track Data” from the magnetic strips on the back side of cards, was stolen from cards used at Target outlets across the United States. The theft was immediately followed by quick activity on underground black markets, where the information sells in batches of a million cards, which then are re-sold at prices from $20 to more than $100 per card.

Hundreds of criminal businesses sell stolen credit and debit cards from every bank and country, but some have earned the dubious reputation of offering quality “dumps.” With the pirated information from the stolen cards, experts can effectively clone the cards and use them in stores. Typically, the cards are used by savvy thieves for high-cost merchandise that can easily be converted to cash.

If the PINs associated with the stolen cards could be retrieved, the thieves could even use their false cards to withdraw money from the nearest ATM. There is no evidence that PIN numbers were compromised in this case, investigators say.

Fraud investigators are taking advantage of the known patterns used by such cyber thieves and using the illicit stores to “buy back” some of the stolen cards. In a surprising number of incidents, they were able to establish a direct link to the Target thefts by matching dates. In the Target breach, shadows of piracy emerged as particular dump shops adopted names associated with the history of buccaneering. Investigators identified a major outlet for the stolen cards as “Tortuga,” Spanish for turtle or tortoise, and also a historic base for pirate activities. This particular shop also was linked to an individual whose nickname is “Rescator,” a key figure in Russian cybercrime, who also is known as “Lampeduza.”

Recently, the proprietor of this illicit card shop announced a new base, Barbarossa, again a relic of piracy. (It also was the code name given to Germany’s invasion of the USSR during World War II.) One large American bank investigating the target situation purchased a sampling of cards across several countries and all of the cards the investigators purchased from Barbarossa had been used in Target stores during the breach timeframe.

Gregg Steinhafel, Target president and CEO, issued a statement to customers, acknowledging the breach as a serious crime, not only against the store, but especially against its clientele. “We understand that a situation like this creates stress and anxiety about the safety of your payment card data at Target. Our brand has been built on a 50-year foundation of trust with our guests and we want to assure you that the cause of this issue has been addressed and you can shop with confidence at Target.”

It appeared by late December that the company would re-issue some or all of the 5,300-plus cards affected by the breach. And Steinhafel also had advice for credit card users nervous about the possibility of repeat incidents of theft of personal financial information on this scale:

Closely review account statements, being vigilant for any evidence of misuse of your credit and/or debit cards. Free credit reports are available. Review your status regularly via both these sources, and if you suspect fraud, report it immediately to your financial institutions. You may contact the Federal Trade Commission or report suspicions to local law enforcement. The FTC web site is Consumer.Gov, or call the agency at 877-IDTHEFT (438-4338.) Or write to the FTC Consumer Response Center, 600 Pennsylvania Ave. NW, Washington DC 20580.

If you find fraudulent transactions on your credit report, request that the credit reporting agency delete the information from your report. Under federal law, you are entitled to one free copy of your credit report each 12 months from each of the three nationwide credit reporting agencies. Obtain a report by going to www.AnnualCreditReport.com, or call 877-322-8288.

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