Thirty percent of U.S. consumers have been notified of potential compromise of their personal information in a data breach. In 2017, for the first time, more Social Security numbers were exposed than credit account numbers. Research finds that counterfeit use of credit cards is more difficult with the new microchip technology; as a result, criminals are focusing on new account creation. The number tripled in 2017 resulting in $5.1 million in losses. Now the Federal government is joining states to give consumers options to protect their credit history.
New federal legislation supports the right for individuals in all states to apply, free of charge, a credit freeze to their credit reports. The action can be taken after September 21, 2018. By activating a freeze, you put a block on the creation of any new credit account by preventing prospective lenders from viewing your credit report. If lenders can’t confirm your capacity to repay a potential debt, they are unlikely to open an account in your name. Iowa’s law went into effect in May. Note: a freeze requires management; you must lift the freeze when applying for new credit.
If you are denied credit, lenders and agencies are required, by law, to send you documents informing you of your right to obtain your credit report and to dispute errors. The documents are now required to also notify you of your right to freeze your files.
In cases of identity theft, consumers have long had the option to place a fraud alert on their credit reports; the alert is a tip that this individual’s personal information was compromised, and consumers are still encouraged to pursue this action. The time frame for how long an alert is posted has been extended from 90 days to one year. A fraud alert does not, however, block potential lenders from viewing your information; therefore it does not prevent unauthorized opening of new accounts in your name.
First, what is a Digital Asset? It is personal information that is stored electronically on either a computer or an online “cloud” server account. If you use a computer, a password protected cell phone, social media, OR if you make online purchases, pay bills or do banking online – you have digital assets to consider.
Generally required is a user name and a password and/or PIN to access. If a family member or friend becomes incapacitated or passes away, it is almost impossible to retrieve information without the user name and log in information.
Take time to record all of your digital assets in a safe place. Share the information with the person to whom you have granted power of attorney, with your executor, and with other trusted people who would need to have it.
Need help identifying the potential digital assets? Consider the following:
Electronic Devices; Benefit Accounts; E-mail accounts; Financial accounts; online merchant accounts – Amazon or Zappos.; Organization Accounts; Photography and Music Accounts; Publication Accounts; Social Media Accounts; Video Account; Virtual Currency Accounts with Cash Value; and Web Site Accounts.
So how do you plan for your digital assets?
Use specific language in estate planning documents (will, trusts, and power of attorney) that authorizes your representative to handle digital assets as well as tangible assets. Make a list of your digital assets in your will as you would for untitled personal property. Don’t include private information (e.g. passwords) in your will, however, as it becomes a public document after someone dies.
What happens if a credit card balance goes unpaid? If you aren’t receiving collection calls, does it mean the debt is no longer a problem?
All states have statute of limitation laws setting a time when a debt can no longer be collected. Credit card debt is considered open account debt because the lender has the option to change the terms of the agreement at any time. Iowa law states open account balances can no longer be collected after 5 years from the last charge, payment, or admission of ownership of the debt in writing.
Once the original lender has exhausted their attempts to collect and elects to discharge the balance, the debt is sold to collection agencies. Timelines vary for when an account is sold, typically at 180 days. Collection agencies will contact you and attempt to collect a settlement. If the agency is unsuccessful they may bundle the uncollected debts and sell it again to a different agency. Attempts to collect your debt can occur at any time in the five year period and can result in court action. If the debt results in a court judgement to pay, it is valid for 20 years. Iowa allows actions to be taken to renew judgements extending the time when active collection can take place.
Ignoring unpaid debt won’t make it go away. Resources that may help are available through the Iowa Attorney General’s office, the Consumer Finance Protection Bureau, the National Consumer Law Center, and local attorneys.
Many students recently marked a big milestone by graduating from school. Looking back, what words of wisdom regarding personal finance would you like to have received when you left high school?
Personal finance does not have to be boring! The National Endowment Financial Education – www.nefe.org has a couple resources to help your graduate be an independent young adult.
On Your Own –is a blog with a range from credit score calculated, making better money decisions, and the pros and cons of college? This is a trustworthy site.
Another option is Smart About Money (SAM) is an in-depth, guided learning experience. There are five sections with valuable tools, worksheets, calculators and quizzes. Each course is about 45 minutes.
Cash Course targets college students. Some colleges and universities offer it especially for their students, but any student can enroll independently. It’s free, with no strings attached, but you do need to create a user account.
Forty Money Management Tips Every College Student Should Know – this Cash Course resource helps young people learn how to take control of their money instead of letting their money control them.
A big thank you is in order from Iowa consumers to the Legislature, Governor Kim Reynolds, and Attorney General Tom Miller for passage and enactment of Senate File 2177 . Beginning on July 1st you will no longer be charged fees to use a “freeze” on your credit report.
The Equifax Breach put many individuals in a pool of consumers whose personal information was compromised. Faced with potential misuse, one step to limit damage was freezing your credit report at the three credit reporting bureaus, but the cost was $30. In passing the new law, Iowa government officials reasoned that consumers should not be forced to bear the cost when a reporting bureau is negligent.
The credit bureaus are also making other changes: what data they collect; how it is reported; and credit score calculations.
- All public record information, except for bankruptcy, is being removed from files.
- Reports on medically-related debts are held for six months before posting to allow for insurance closures.
- Medical debt is given less weight compared to other consumer spending when calculating your credit score.
- Rent data can now be included in your credit report; only positive reports will be accepted.
- A series of auto or mortgage inquiries are treated as one event.
- Paid collection accounts will be removed from reports.
- Keeping a card open that is paid in full will not help your credit score if it isn’t used. A card that is not used in a 3-6 month time period is dropped from credit score calculations.
Checking your credit report for accuracy is a good habit to maintain. If you haven’t checked yours in the past 12 months, now would be a good day to start!
Having a debt – perhaps a mortgage or a car payment – may feel as if you have a ball and chain around you for the duration of the loan. Is there a way to lessen the load?
One option is to simply round up your payments. Suppose your current car payment is $360 per month. If you round up and make monthly payments of $400, that is like making one extra payment during the year on your car, and the extra money goes toward the principal on the loan. You’ll reduce your interest costs, and you will also pay off the loan faster.
Here’s a mortgage example: if your mortgage payment is $900, but you pay $1,000/month, the extra $100 goes toward the loan principal. That’s an extra $1200/year! If $1,000 is too much for your spending plan, try $950, which is an extra $600 per year. Over several years, either strategy will save thousands in interest and get your mortgage paid off years early. Read the fine print on your contract. Make sure your lender accepts larger payments. Need to know so it helps your cause.
You can use the same strategy with any credit card bills where you are carrying a balance, and on any other loans, as well.
Every time you round up you’re getting closer to debt freedom without feeling much of a pinch. Once you start this habit, it will be hard to break. Fortunately, it’s a very helpful habit!
Spring is in the air. Are looking to buy your first home or upgrade your current one? Understanding mortgage vocabulary will help your purchase or refinancing go more smoothly. Do you know the difference between pre-qualification and pre-approval mortgage?
Even though the terms sound similar, mortgage pre-qualification and pre-approval are two very different processes. A pre-qualification is designed only to give you an idea of the mortgage amount you might qualify for, based on information you provide without verification. Some mortgage professionals believe pre-qualification is virtually useless.
A pre-approval letter from a lender shows that you qualify for a specific mortgage amount based on an underwriter’s review of your actual (verified) financial information, such as your outstanding debt, credit history, income and assets. Your home buying journey will be easier with a pre-approval letter. Why? With clear verification that you will be able to get the loan you need, a seller of a home will take your offer more seriously.
If you want more information, Iowa State University Extension and Outreach offers a comprehensive homebuyer workshop online: A Place of Your Own.
In a 2017, a T. Rowe Price survey, found parents are talking to their children about shopping, but are skipping conversations about household budgets, savings and financial goals. Close to 75% of survey respondents say they regularly have conversations with their children about money, but the focus is on spending—not the family’s current financial situation.
Are we sheltering our children from money?
The survey found that many parents think they strongly encourage their children to talk about money, the children only agreed 19% of the time. One in four parents discouraged their children from talking about money.
Children want to learn the financial basics – 34% want to know how banks and credit cards work; and 29% want to learn about managing money.
Protecting children from the financial challenges and decisions faced by adults may not be giving them an opportunity to form habits that can prevent financial stress when they are older. Understanding the source of money, choices involved with use, and it’s limitations form a basis that will impact attitudes and skills in management.
There are places to teach money management – the grocery store, or when paying everyday utility bills. Lessons taught by parents will reinforce and strengthen school based lessons in financial literacy. Basic skills become stronger when practiced. It can include balancing a checkbook, keeping spending records, comparing returns from savings to other investment options.
The T. Rowe Price survey shows that only half or fewer of parents have strong financial habits. One example – more parents save for a family vacation than have an up-to-date will. One in ten do not save regularly for retirement, purchase life insurance or save for a family vacation.
Where does your family fall in the 10% or 90%?
Now that the holiday bills are in, what do you think? Any worries or regrets? If so, how can you change your behavior to prevent worries or regrets next year?
This month, many folks have had mailboxes or autopay accounts full of holiday bills or credit card bills; I have a few myself. But next year at this time it doesn’t have to be that way if we take action now.
Think about the amounts you spent on gifts, food, and other holiday-related expenses and add them up. Divide the amount by 10 (months). Suppose your total spending was $400. Then 400 ÷10 = $40; if you save $40 each month until November, you will have $400 available in November for next year’s holiday purchases.
Another approach could involve saving $20 per week; after a year you would have $1,040. This could be a holiday fund or a vacation fund; the money could be used for other annual expenses too, like back-to-school costs or car registration. Think about your goals for this year and save accordingly.
People who plan to save excel in reaching their goals.
Here are a few places you may want to look into regarding protecting your credit report and personal information.
- To prevent others from accessing your Social Security information follow the recommended security steps listed on the SSA site to establish password protection. Check your work history and contact your nearest SSA office to report errors.
- File your income tax returns early. If a false return is filed in your name the IRS will allow you to file a paper return with additional information. The IRS investigates the false return and will invite you to opt-in to a PIN program. The PIN is sent by mail with a number to attach to your return. New ones are issued annually. Note: If you have put a credit freeze in place – you must do a temporary lift so the IRS can confirm your identity to issue the original PIN. All future tax returns must have the PIN or they will be rejected by the IRS.
- The breach can result in false claims for benefits from private health insurance, Medicare, or Medicaid. Read all correspondence from your health insurance providers including settlement statements. Your first clue that false claims have been filed may be a call from a collection agency. If you have evidence of theft, contact medical providers for your records and take steps to remove the false information.
- Are you aware of MIB – not men in black, but Medical Information Bureau. If you have applied for life insurance or private health insurance they prepare a summary of your health records using information from their member insurers. Milliman Intelliscript reports information about your prescription drug information.
- Your driver’s license number can be used for identification on bad checks. To find out whether any bad checks are attributed to your accounts, request your free annual consumer report from major check verification companies – ChexSystems, Certegy, Early Warning Services, and TeleCheck.
- Ask the motor vehicles department to give you a copy of your driving record; most states charge for this, about $10. To protect yourself, ask the motor vehicle department to flag your license number for the police if they stop someone using your number.
This breach caused more headaches for consumers – protect your identity!