Monthly Archives: May 2019

The Savvy vs The Shyster

Every day, someone is a victim of some form of fraud. It’s something that hurts when it happens and can really set you back when it does. There are many ways that fraud can happen but, at the same time, there are many ways to protect yourself against it from happening to you.

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One common method of fraud involves your debit/credit card use. This is a common one I see daily. You find things being purchased on obscure sites and even sites you might even use frequently but haven’t touched in a while. On way this can happen is via data breach in a website or a company database. Any cards that were utilized could be subject to risk of fraud in those situations. One such example of this would be you use your card at the store and your financial institution shuts the card down due to notification of someone breaching the stores systems. The same concept could also be applied for online retailers if there is a notice of breach given as well.

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In addition to a merchant database being compromised there is also the possibility of “skimming”. Skimming is lifting data from the card via magnetic stripe or via RFID scan. A skimmer can be placed anywhere a magnetic stripe can be swiped on a card. Thigs such as the gas pump and even the terminal at a restaurant where the card can be swiped. One way to protect yourself from this kind of skimming would be to utilize your chip enabled debit/credit card(s). EVM chip cards have been around for several years and overseas they’ve been around even longer. There are some groups who are skeptical of the chip card but these are much more secure than the magnetic stripe due to how similar they work to Apple Pay. There is a unique code that is ran each time the chip is ran and that code will no longer be used once the card is ran through the terminal. In response fraudsters will try using RFID scanning sensors to get your card info. To protect yourself from this, a simple lined wallet with an RFID proof lining will deflect the RFID ray from a skimmer. These special wallets can be in the form of a regular wallet or a car carrying wallet. These are relatively inexpensive but a worthwhile investment. As a word of advice, never share your pin to your card with anyone because if fraud happens with the card it lowers the likelyhood of regaining the lost funds from the transactions. If you find yourself a victim of  debit/credit card fraud, contact your financial institution and dispute the charge. Once the dispute complete you would be able to recover funds and even acquire a new card.

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Another type of fraud that occurs would be in the form of a check. The check could be made out for several reasons. One such would be communication via email for a “job” and you need to do some purchasing or send money to someone. Another way would be via overnight delivery service and having a check wrote for an amount that is more than an item you paid for online or even from someone unrelated to any business you had dealings with. These typically happen during online sales on sites such as eBay or craigslist. The person you are corresponding with may also get you to send money overseas as well via some sort of international lottery that you never signed up for but allegedly won. A frequent one that comes up would also be being asked to send funds overseas for an inheritance from another country (commonly called the Nigerian prince scam). You also might be solicited for accepting money transfers through your bank and/or PayPal account to receive a “commission” of some sort. There might also be people asking you to cash or deposit a check through your account, or the alternative of usingyour debit card to deposit a check in the ATM. Lastly, and one of the most frequent I’ve seen, would be via online dating sites and the person you’re “dating” is sending or requesting funds to or from you. If that check is cashed or deposited the item will return as fraudulent and you will be out of the funds you’ve deposited/ cashed on top of a returned item fee from your institution. These instances will leave you with the bill and the person you’ve aided several hundred (or thousand) dollars richer. If you come across anything like this report it to your financial institution and local law enforcement. They would be able to assist you in determining if what is happening is a legitimate transaction or someone trying to set you up for failure.

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In the digital age there are so many ways we can communicate and access information; but there is a price to consider when we have all this power at our fingertips.  Scammers are always looking to find ways to get into your information and do damage. On method used is called “Phishing” aka email fraud; this involves a scammer pretending to be sending correspondence from a trusted source such as the government or your local doctors office. They might try to direct to a site to “verify” personal information or reset your password. Do not fall for this trap! If you notice an email for confirming certain information do not click on it, instead use a legitimate website or phone number to reach the organization in question. Also look for the “look” icon on your browsers status bar and see if the URL uses “https” in it’s addresses and check the spelling of the site to see if there is anything out of place. Pharming is also a form of information fraud in which a scammer will divert you to a copycat web site that looks legitimate but is not. Be on the look out for emails coming unexpectedly and treat it as a phishing attempt. There is also malware aka “spyware” that comes in the form of spam emails and that software can leak data and take control of your computer and leave you at the fraudster’s mercy.

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Keeping your computer safe is paramount in mitigating electronic information fraud. In this day and age you’ll want to consider investing in good antivirus and antimalware programs and keep up to date with your computer’s OS and software patches. Do not judge by initial appearance because there are plenty of software options for a shyster to make a site look legitimate and catch you in a trap! Be diligent in how much information you put online as well as exercising caution on giving personal data. You will also want to use secure passwords for different software that you use. You shouldn’t keep the same pin or password for everything, which many people do because it is easy to remeber, because if one site is compromised the rest could be in danger as well! Never leave your passwords wrote down in the open that will set you up for compromise as well.  Invest in a firewall to keep the bad guys out but above all else, you are your own human firewall, so you must know the signs and know how to protect yourself from internet fraud!

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If you or anyone you know are a victim, or potential victim of fraud on the internet you will want to visit the internet crime complaint center (ic3). This is designed to report complaints of cybercrimes and alert authorities of suspected violations. The center identifies current crime trends on the web as well as aid local law enforcement in investigating the bad guys involved. This overall will help with reducing losses that you, your loved ones, your work or anywhere else could lose due to cybercrime. The website is www.ic3.gov and it is a valuable tool in the fight against fraud. Use these tools and knowledge to protect yourself and your information and money. Be careful out there and stay savvy my friend.

CDs are in!

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I can imagine you are probably wondering, if you don’t already know already, why should you care about a CD? The answer is quite simple: CDs are great listening for long road trips and save on your battery life on your phone! Case closed.

I am obviously kidding here; CDs in this context are great financial tools that come in handy for a period of time when you have adequate funds that you don’t feel like taking a big market risk by putting them into the market. Keep in mind that markets can have an effect on banks, credit unions and other financial institutions but CDs are not likely to go up and down as much as your stock in apple or JC penny on a daily basis.

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A CD (certificate of deposit) is a savings certificate with a fixed maturity date and specified fixed interest rate that can be issued in any denomination aside from minimum investment requirements. A CD restricts access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks and are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per individual.

A certificate of deposit (CD) is a promissory note issued by a bank or credit union. It is a time deposit that restricts holders from withdrawing funds on demand. A CD is typically issued electronically and may automatically renew upon the maturity of the original CD. When the CD matures, the entire amount of principal, as well as interest earned, is available for withdrawal. CDs typically do not have a fee unless withdrawn before the maturity date. Most CDs offer higher interest rates than those available from savings and money market accounts.

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There are some pros and cons to using a CD so you want to do your homework to make sure that a CD will work for you. One thing to keep in mind with a CD is that is not accessible until it’s maturity date without some kind of penalty being incurred, the early withdraw penalty varies depending on your financial institution. The moment money is put into a CD it loses liquidity, the ability to be touched at any time penalty free. CDs operate under the premise that you forfeit liquidity for a higher return. Under typical market conditions, long-term CDs have higher interest rates when compared to short-term CDs. There is more uncertainty and risk associated with holding the investment for a long period of time. In addition, because you are forgoing the opportunity to utilize the funds for a specific period, you are compensated by earning more interest.

Although CDs do not provide a high return, especially compared to investing the same amount in the stock market, investing in CDs is considered relatively safe. The funds are insured, and, assuming there are no early withdrawal penalties, the investment is considered to be as safe as cash in a savings or checking account. As CDs typically pay higher interest than savings accounts, but offer lower returns than stocks, they are a good option for those who don’t need access to the cash for a set period and want to minimize risk. A five-year CD with a 3.15% annual percentage yield (APY) compounded monthly will earn $4,258.48 on a $25,000 initial deposit. The same amount of money kept in a savings account that pays 2.25% would earn just $2,973.86, assuming the interest rate stays the same, something that is not guaranteed with a savings account. Online banks tend to have the most competitive rates for both CDs and savings accounts.

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There are also additional benefits to having a CD in terms of negotiability and the style of the CD. Most CDs are non-negotiable, meaning they can’t be transferred, sold, bought or exchanged. In most cases, non-negotiable CDs can be cashed in before maturity by paying an early withdrawal penalty. Negotiable CDs, also known as NCDs, are just the opposite. They can be sold in the secondary market but can’t be cashed in before they mature. With few exceptions, NCDs are issued in large denominations of $100,000 or more. Another feature of NCDs is that they are short term and have maturity dates of between two weeks and one year.

Most financial institutions also offer promotional rates on CDs depending on the amount brought and have specific stipulations as well. Those stipulations can include the term, if a percentage of it are new funds to be deposited, or even in some cases, a rate match from a rival institution. There are also special CDs you can get depending on your institution. Here are some of the different types:

  1. Liquid CDs: These feature low or no penalty for early withdrawal, overcoming one of the main objections people have about CDs. This feature comes at a cost, including a lower rate of return, and, in many cases, a minimum balance requirement. Even with those caveats, in a fluctuating interest environment, liquid CDs enable you to move your funds to a higher-paying certificate when opportunity presents itself.
  2. Bump-Up CDs: Like liquid CDs, these have a lower interest rate than fixed-rate CDs but let you take advantage of a new higher interest rate and apply that rate to your existing CD. As with liquid CDs, bump-up CDs may also require a high minimum deposit. Bump-up CDs also typically limit the number of times a higher rate can be activated, depending on the length of the term.
  3. Step-Up CDs: These are often confused with bump-up certificates, although they are not the same. Unlike bump-up CDs, which allow you to take advantage of a higher rate, step-up CDs raise rates at regular intervals on a preset basis. It’s important to know what the overall (blended) interest rate is and compare that with a regular CD of the same term length.
  4. IRA CDs: These are regular CDs held in a tax-advantaged individual retirement account (IRA). As CDs offer relatively low interest rates compared to other investments, taking up a significant part of your annual IRA contribution limit with CDs could lead to much-lower-than-expected returns in your IRA retirement account. These are a personal favorite of mine
  5. Brokered CDs: These are sold through brokerage accounts and sometimes offer better rates than those sold through a bank or credit union. It’s important to make sure the brokered CD is FDIC insured or offers a high enough interest rate to outweigh the risk when it isn’t insured. It’s also worth noting that brokered CDs can be difficult to get out of when you want to exit the investment.

There are also other types of CDs such as save to win CDs (these give you a chance to deposit multiple times into a 1-year CD program and every set amount is deposited you get an entry into a sweepstakes for cash prize, think lottery but no way to lose) and other CDs your institution may offer that haven’t been brought out to the public yet.

As someone who has a CD and helps people obtain them I can confidently say that these are excellent saving tools. These are for the more risk adverse and those who want to diversify their investments. Additionally, these funds can be pledged on secured loans as well and be used as collateral. That can helpful in seeking a lower rate of interest on your loan and help build up your credit. CDs are a cool thing and you can expect these to stay in style for a while. Invest wisely my friends. Excelsior!