(Disclaimer, all opinions and thoughts in this blog are of my own and
expressed by no company, no advice or ideas should be used as advice,
legal or otherwise)
This is a question a lot of people face, especially in today's times where fraud is such a big thing. So this article is going to focus on a few different things to know when choosing how to pay for things!
First we will start with everyone's favorite:
Cash:
Everyone seems to have their own opinion on whether or not you should carry cash, and how much you should carry...and when to use it. Here is how you should look at it. You should always have some amount of cash on you. We live in a world of technology, and sometimes it fails. If your debit card gets lost or breaks, or just stops working, you need a back up. But cash is also the second worst way to pay for things and here is why. You are not protected when you carry cash, if you lose it, it is gone. And there very difficult to trace. If you pay someone in cash and it turns out to be a scam, you are not protected by the bank and there is almost nothing anyone can do.
Checks:
People seem to think that it is safe to pay people by checks. They are not. There is no good reason to pay anyone with a check. Lets go over the reasons. People mail other people checks as a form of payment, and they get lost in the mail. ALL THE TIME. i do not have exact figures but look at just this alone http://www.consumeraffairs.com/delivery/usps_lost_mail.html. Now the simple solution here is just put a stop payment on your check right? Well aside from that costing usually between 10 and 40 dollars, it does not really protect you. It may stop a criminal from cashing the check, but they still have your address, your name, and your checking account number. That is more then enough to cause a significant amount of damage. Now lets say you pay someone who is committing fraud with a check. The bank will not protect you here either, at the moment you hand them the check, it has no protection and becomes a civil matter, the bank will not help.
A better alternative? Use your banks online billy pay. It is usually free, guaranteed, and keeps you safe.
Automatic payments:
These are very convenient and i definitely recommend them as a good form of payment. However, you should still be aware of the danger that comes with them. Most businesses have it written that if you do not contact them within a certain time frame, they will not be able to stop your automatic payment or ACH. And if you dispute it with the bank, the company will just say you agreed to the terms of service (TOS). So, read carefully what you sign up for and be aware of when you need to cancel them. It should also be notated that automatic payments bypass most Overdraft Options on accounts and can still cause fees.
Debit Card/Credit Card
As you may have guessed by now, this is the best way to pay for anything. Most all of them have 100% fraud protection and guarantees to help you in case of someone taking money they should not have. Also if they are lost, you do not have to worry about losing any money and are simple to replace. If you pay for services you did not receive or were not satisfactory you can even file a claim against that! There is just no good reason not to use a card when making any purchase that will accept it.
Tuesday, June 4, 2013
Thursday, May 30, 2013
Busting Bank Myths.
(Disclaimer, all opinions and thoughts in this blog are of my own and
expressed by no company, no advice or ideas should be used as advice,
legal or otherwise)
Today I am going to go over a few myths that many people believe are true about banks, but are not. The reason why this is important is;
Today I am going to go over a few myths that many people believe are true about banks, but are not. The reason why this is important is;
Having bad or untrue information can cause you to overdraft or have other problems.
So lets dive right in:
"Cash is available immediately, so, if I put it in before midnight; I won't get an overdraft fee."
This one is partially true and partially false. Cash is always
usable and in your account right away, but banks have different cut off
times and different processing times. So, even if you put the money in
before the next day, you may still receive fees depending on what time
you put it in. The best way to avoid this is talk to your local banker,
and ask for their cut off times in the store and at ATMs. (As they may
vary). It is also good to note that checks follow the same principle,
just because you put a check in, it does not mean it will cover
something already coming through.
"I am only overdrawn a dollar, the bank will not charge me a fee for that."
This one is again is partially true. Many banks have some sort
of threshold where they will not charge you if it is under a certain
amount. However, depending on what options are on your account (and the
circumstances), you may still get a fee for going even one dollar
overdrawn.
"If I deposit a check, even if I had no money in my account, I can use those funds right away."
Depending on what options you have on your account, and your
banks rules, this one may be true. But it is usually false. Most checks
take a day or two to clear, depending on when you deposit it and when
your bank processes. What this means is if you had a 0$ balance and
add
a check to the account, those funds might not be cleared until the next
day. So, if you try to make a purchase right away, it may still be
declined.
"I don't overdraft often, so the bank will waive one of my fees"
This one is very false. Let me explain why. Think of a store you
go to often, and have shopped there for years. Have they ever given you
anything for free? No, because they are a business and need to make
money. Banks are the exact same, they don't waive fees just because you
have been with them for a long time. If you go to McDonald's every day,
for five years, they won't give you anything for free, why would any
other business be different? As a note here, some financial institutions
do waive fees on occasion, so it never hurts to ask; My point here is
that don't get upset when they say they do not.
"I did not know about that fee, and was not informed of it, therefore you cannot charge me it"
There are certain things that are not often discussed, but are
in the paperwork that you signed when you agreed to your account.One of
these things is a government regulation. This government regulation
states you can only make a certain amount of electronic transfers from
your
savings account before you incur penalties or fees. Usually, unless you
directly ask about it, this fee is not brought up. This is because many
people are not affected by it. But when you are, even if you were not
told about the fee, you are still responsible for it for two reasons.
1)
You did not fully read the paperwork before you signed it, you agreed
to something without fully reading it. The bank will not take
responsibility for it.
2) just because you did not know, does not mean you cannot be charged
for it. Here is an example: You are speeding and an officer gives you a
ticket...If you tell him you did not know the speed limit, will he still
give you a ticket? yes. Because you still violated a rule, regardless
of whether you were aware of it or not.
"With direct deposit, my money is available right at midnight!"
Again, this may be true or false. Many banks have a wide range of
processing times that usually do not end at midnight. You will have to
talk to your local banker to see if this is actually true.
Well,
that does it, a few myths that can cause you problems are busted. Feel
free to shoot me an email or post a question below, and I will answer is
as soon as I can. Also, if you want a certain topic covered, feel free
to post it below and I will get to it as well.
Friday, May 24, 2013
Overdrafting
(Disclaimer, all opinions and thoughts in this blog are of my own and
expressed by no company, no advice or ideas should be used as advice,
legal or otherwise)
Today we are going to talk about those most dreaded fees, how they really work, and how best you can avoid them. To best understand how to avoid the fee, we will first talk about all the details that cause them and circumstances where you will still get a fee, even though you probably feel like you shouldn't (But you still will).
Overdrafts are caused mostly when you spend money that wasn't in the account, obviously. But, there are other situations where they can occur even without you realising it. An example that is becoming more and more common, you pay your phone bill for 100$ and they take the money out of your account. So you check your balance and see you have 50 dollars, the next day you spend that 50$ and check your balance and you still have 50$, So you buy a few things that you need. The day after you are now overdrawn, even though your account showed you had that 50$ in there, why? What happens most of the time in these situations is that your phone company took the money out, then they put it back in, or canceled the transaction; choosing to run it at another time. So your balance was wrong because the amount they were suppose to take out is not factored in. Now no bank has the technology to predict this happening, so they see it as you spending money that you didn't have and will charge you overdrafts. A similar situation is if you make a purchase one Tuesday knowing a direct deposit will come in Wednesday, trying to beat the overdraft, this idea is similar to floating checks, and is a very bad idea. Banks can see you trying to float a purchase and they will charge you a full fee for this.
A quick side-note, many banks are also offering accounts that "don't allow overdrafts". This usually means that if you try and slide your card and you don't have money, it will not work.You will still get overdraft fees for writing checks without funds, or if any of the situations above occur. There is no account that just flat out does not overdraft you.
So, the big question here is how do we avoid these fees. With the fees ranging from 15-35 dollars, sometimes even higher, no one these days can afford to pay them. The first thing you need to do is avoid automatic payments. If you are constantly over drafting because you forget when your payments come out, find a different way to pay these companies. Is your 8 dollars service to Netflix really worth the extra 35 dollars, or potentially more? The second thing you need to do is write down every transaction you make, it may seem old school, but it will help. Once you write down your transactions, go online and read all the transactions listed...you may find some are missing, and that money has not come out of your account, this will cause an overdraft. If need be you can always separate out your purchases, for example: have one account that only pays bills, and once your bills are paid move the remaining money to another account, that way you don't accidentally spend your bill money. And lastly, have overdraft protection, even if its from a credit card. There is no sense in paying 35 dollars extra for anything, at all.
Today we are going to talk about those most dreaded fees, how they really work, and how best you can avoid them. To best understand how to avoid the fee, we will first talk about all the details that cause them and circumstances where you will still get a fee, even though you probably feel like you shouldn't (But you still will).
Overdrafts are caused mostly when you spend money that wasn't in the account, obviously. But, there are other situations where they can occur even without you realising it. An example that is becoming more and more common, you pay your phone bill for 100$ and they take the money out of your account. So you check your balance and see you have 50 dollars, the next day you spend that 50$ and check your balance and you still have 50$, So you buy a few things that you need. The day after you are now overdrawn, even though your account showed you had that 50$ in there, why? What happens most of the time in these situations is that your phone company took the money out, then they put it back in, or canceled the transaction; choosing to run it at another time. So your balance was wrong because the amount they were suppose to take out is not factored in. Now no bank has the technology to predict this happening, so they see it as you spending money that you didn't have and will charge you overdrafts. A similar situation is if you make a purchase one Tuesday knowing a direct deposit will come in Wednesday, trying to beat the overdraft, this idea is similar to floating checks, and is a very bad idea. Banks can see you trying to float a purchase and they will charge you a full fee for this.
A quick side-note, many banks are also offering accounts that "don't allow overdrafts". This usually means that if you try and slide your card and you don't have money, it will not work.You will still get overdraft fees for writing checks without funds, or if any of the situations above occur. There is no account that just flat out does not overdraft you.
So, the big question here is how do we avoid these fees. With the fees ranging from 15-35 dollars, sometimes even higher, no one these days can afford to pay them. The first thing you need to do is avoid automatic payments. If you are constantly over drafting because you forget when your payments come out, find a different way to pay these companies. Is your 8 dollars service to Netflix really worth the extra 35 dollars, or potentially more? The second thing you need to do is write down every transaction you make, it may seem old school, but it will help. Once you write down your transactions, go online and read all the transactions listed...you may find some are missing, and that money has not come out of your account, this will cause an overdraft. If need be you can always separate out your purchases, for example: have one account that only pays bills, and once your bills are paid move the remaining money to another account, that way you don't accidentally spend your bill money. And lastly, have overdraft protection, even if its from a credit card. There is no sense in paying 35 dollars extra for anything, at all.
Tuesday, January 15, 2013
Gaining credit
Hello ya'll i know i have been away for a while, i got a little bit discouraged, but i am back for another lesson!
So the last few posts we have been talking about how important credit is and what we need it for and all that jazz. That's great, but as many of you know its easy to talk about that responsibility. Many of use have abused it in the past, or learned our lesson on credit and are afraid to get back in the game. Well honestly i could give you a hundred excuses of why i am not ready to get credit, or how i need more time, but its all bollocks. You need to start making repairs and you need to do it now!
The first step to repairing your credit is to find out what is on your score. Many banks offer to check your credit, and you can find the government website to check it as well. (( as a side note, beware of signing up for credit checking services, as many will charge you a monthly service fee)). Once you get your credit report it will come in a big packet, that will not only show your score, but it will also show you what is lowering it. Missed payments, collections, too many lines of credit....all those sorts of things will be on there. Focus on paying something off, the sooner you can get it off of your credit the more your score will improve. If you credit has not been completely ruined, i always suggest looking into debt consolidation. Yes it is another loan, but making one monthly payment of 100 or 200 dollars makes more sense then paying five 75 dollar payments.
If your credit score is just too low, look into prepaid cards. Many prepaid cards let you put your own cash down as a security and then borrow against it. Yes it does seem dumb to pay interest on your own money, but remember you are paying for the credit. Once you have a decent credit score again, you will be saving more money then when you had bad credit and were just paying for everything in cash.
I know todays post is a bit skimpy but there is not a whole lot to cover on this topic as options are limited. Please leave any comments below and i will answer promptly.
Wednesday, November 28, 2012
Credit
(Disclaimer, all opinions and thoughts in this blog are of my own and expressed by no company, no advice or ideas should be used as advice, legal or otherwise)
In today's world it seems most people fear this topic; CREDIT. now there are many misconceptions about credit and many ideas about credit, good or bad. So i will start this topic by going over some of the misconceptions and ideas. Afterwards i will talk about how it can help you, and more importantly, why you need it.
Lets tackle the big one, credit is evil and/or my parents say I don't need it. This one is just a flat out lie. Credit is not evil, it is not a living sentient being it cannot be evil. Having credit does not mean you are a bad person, nor does it mean you have any personal label because of it (This refers to the thoughts like "oh he has a lot of credit he must be in a lot of debt" or my favorite "He has a credit card he must be bad with money"). I will tell you anyone who does not have credit or a credit card is bad with money (I will talk about this later). The other part of the resentment towards credit is people are told they just do not need it. They are told if they stay away from it they will prevent debt and create good budgeting practices and be more apt for success, again this is wrong. The credit companies do not care if you think you need it or not, they will judge you the same. Then, when it comes time to buy a house or a car; you will not have it and either not get the object or have to pay dearly for it.
I will expand on that idea a little more. Usually i would show the vast amount of difference you would pay for having different rates on mortgages. But that is a lot of math and very complicated. For the sake of keeping things simple and easy to understand lets take two people, Bob and Kathy. Bob is a normal person he has a few credit cards and bills and pays them on time. He goes to the bank and asks for a ten thousand dollar loan. The terms are 10% interest over the course of five years. Now again i am going to try and keep this simple (and since all lending offices are different) i will just link a calculator where you can plug it in http://www.banksite.com/cgi-bin/bankloanacalc2.cgi . You will find Bob will pay about 212 dollars a month and paid an extra 2720$ in interest. Now lets take Kathy, and say she doesn't have any credit at all! (NOTE: having no credit is WORSE then having bad credit). So she finally finds a bank that will loan her the same ten thousand dollars. But because she has no credit she has to pay a 25% rate. plug that in. That makes her monthly payment about 294 dollars and a total of 7640 dollars of extra interest paid. That is almost 5000$ extra, for the same amount, just because Kathy did not believe in credit.
That was just one illustration of why credit is important. i will provide one more in a different scenario. Bob's mother is ill and lives in another state. Bob cannot afford to fly to florida to see her, but uses his credit card to visit her before she passes. Kathy (not believing in credit still) has the same situation but does not have a credit card. She applies and applies but is denied and does not get a chance to see her mother before she passes.
You don't buy insurance because you think you will get in a car wreck, you buy it just in case. Credit should be looked at in the same light, get it while you can. Use it responsibly and it will save you money, and from bad situations.
One final thing. Credit cards almost always offer rewards. So you get cash back on your purchases you are going to make anyways. Debit cards do not. By not using a credit card, you are throwing away free money.
Next blog i will talk about how to improve your credit so make sure to check back in! Also if you ever have any questions or want anything discussed you can always reach me at Survivingfinancescharles@gmail.com
In today's world it seems most people fear this topic; CREDIT. now there are many misconceptions about credit and many ideas about credit, good or bad. So i will start this topic by going over some of the misconceptions and ideas. Afterwards i will talk about how it can help you, and more importantly, why you need it.
Lets tackle the big one, credit is evil and/or my parents say I don't need it. This one is just a flat out lie. Credit is not evil, it is not a living sentient being it cannot be evil. Having credit does not mean you are a bad person, nor does it mean you have any personal label because of it (This refers to the thoughts like "oh he has a lot of credit he must be in a lot of debt" or my favorite "He has a credit card he must be bad with money"). I will tell you anyone who does not have credit or a credit card is bad with money (I will talk about this later). The other part of the resentment towards credit is people are told they just do not need it. They are told if they stay away from it they will prevent debt and create good budgeting practices and be more apt for success, again this is wrong. The credit companies do not care if you think you need it or not, they will judge you the same. Then, when it comes time to buy a house or a car; you will not have it and either not get the object or have to pay dearly for it.
I will expand on that idea a little more. Usually i would show the vast amount of difference you would pay for having different rates on mortgages. But that is a lot of math and very complicated. For the sake of keeping things simple and easy to understand lets take two people, Bob and Kathy. Bob is a normal person he has a few credit cards and bills and pays them on time. He goes to the bank and asks for a ten thousand dollar loan. The terms are 10% interest over the course of five years. Now again i am going to try and keep this simple (and since all lending offices are different) i will just link a calculator where you can plug it in http://www.banksite.com/cgi-bin/bankloanacalc2.cgi . You will find Bob will pay about 212 dollars a month and paid an extra 2720$ in interest. Now lets take Kathy, and say she doesn't have any credit at all! (NOTE: having no credit is WORSE then having bad credit). So she finally finds a bank that will loan her the same ten thousand dollars. But because she has no credit she has to pay a 25% rate. plug that in. That makes her monthly payment about 294 dollars and a total of 7640 dollars of extra interest paid. That is almost 5000$ extra, for the same amount, just because Kathy did not believe in credit.
That was just one illustration of why credit is important. i will provide one more in a different scenario. Bob's mother is ill and lives in another state. Bob cannot afford to fly to florida to see her, but uses his credit card to visit her before she passes. Kathy (not believing in credit still) has the same situation but does not have a credit card. She applies and applies but is denied and does not get a chance to see her mother before she passes.
You don't buy insurance because you think you will get in a car wreck, you buy it just in case. Credit should be looked at in the same light, get it while you can. Use it responsibly and it will save you money, and from bad situations.
One final thing. Credit cards almost always offer rewards. So you get cash back on your purchases you are going to make anyways. Debit cards do not. By not using a credit card, you are throwing away free money.
Next blog i will talk about how to improve your credit so make sure to check back in! Also if you ever have any questions or want anything discussed you can always reach me at Survivingfinancescharles@gmail.com
Wednesday, November 21, 2012
The basics
Today's blog is going to talk about...you guessed it, the basics. Before you can find yourself succeeding at any stage, you need to start from square one. This is going to involve: banks, ATMS, rewards, and budgets.
Many people have the opinion that all banks (including credit unions) are all the same. A way a friend once described it to me was this, "I feel like all the banks are essentially the same...the difference feels like either liking McDonalds or Burger King". Now granted that is a valid point, the minor differences are the ones that can make the biggest difference. I'll give some key examples that have a large impact. The first one is, how do i keep my accounts free. Each bank has different options to keep accounts free: Direct deposit, average balance, transfers, loans, or even no stipulations. It is important that you do your research and see which one best suits your need. There is no sense in paying fees for a bank account, when it can be free. An important note on that the banking world and regulations are ever changing, you never know when your account may have changed since when it is opened. It is important to do regular reviews of your account and statements to make sure such a change has happened. The reason that is important is when banks do change them, they will notify you, but if you do not catch the notification you could find yourself paying unnecessary fees.
The second thing you need to look at to avoid the fees is what does the bank offer? Do they offer a wide ATM network? If they do not, you may find yourself traveling and paying excessive fees. Look at how often your travel outside of where their ATMs are, and compare that against other networks.
The third thing is not a fee, rather the opposite. What kind of rewards does your bank offer; you have to spend money, might as well earn some back right? Cash back rewards are great, but also things like free access to certain things (online, billy pay) or even free checks may all have their own benefits for you.
The last thing i want to touch on, again very basic, is creating a budget. Almost everyone agrees it is important but many people do not stick to it. There are many different styles of budgets, and tools to help and ect, ect. But we want to keep it simple, take how much you make and minus what you HAVE to pay (bills, rent, ect). What you have left is what you can spend, very simple right? Unfortunately today, and in many households, the need to pay outweighs the income. We will talk about how to help fix that and get on your way to financial stability next blog post (hopefully coming in the next week)
As i just mentioned, next blog post we will discuss ways to help with the budget problems of spending to much and not making enough. I will also go over why credit cards are not the devil. I will try to keep this updated weekly and i would also like to help as many people as i can. If there are any topics you would like to see, any questions you have about the banking or financial worlds feel free to contact me at survivingfinancescharles@gmail.com. I will try to reply, or bring your feedback into the following blogs.
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