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download (1)If your credit or debit cards haven’t been compromised, you’re part of a shrinking demographic. Database breaches in recent months have exposed tens of millions of cards to potential fraud.

But Apple’s new payment system has the potential to sidestep the bad guys and someday, perhaps, make breaches a thing of the past, according to LowCards.com’s Bill Hardekopf.

Apple Pay, announced Monday, allows people to pay for stuff with their phones, but your credit and debit card numbers won’t live there. The system generates unique tokens that are used instead. No longer would your sensitive financial information be sent into the ether, to be stored in insecure databases.

You can read more at “Could Apple Pay Be the End of Data Breaches?

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Are you falling behind?

Sep 08, 2014 | | Comments (3)

siblingsMore than half of Americans—56 percent—say they’re falling behind financially, according to a new national survey by the Pew Research Center.

That’s not surprising, given that a recent Census Bureau study concluded that most Americans are worse off financially than they were before the recession, despite gains in the stock market and home prices.

Which is why Donna Freedman’s latest piece for Get Rich Slowly, “Why I voluntarily slashed my salary,” is a timely read.

Like the rest of us who wrote for MSN Money, Donna faced a big drop in income when the site pulled the plug on original content. Rather than try to recoup what she’d lost, though, Donna made a conscious decision to live on a lot less.

Donna’s situation is Donna’s. Yours is probably quite different. But I’m always inspired reading what she has to say about the benefits of a more frugal, conscious life.

That doesn’t mean I think that status quo is okay. The ever-widening gap between rich and poor is not okay. The huge debts young people take on to get educated is not okay.  The fact that most people’s finances can be seriously and permanently upended–by a layoff, a divorce, a death in the family–is not okay.

It’s also not okay to keep blaming individuals for what are clearly huge economic trends. Overspending on credit cards did not trigger the Great Recession.

But if you’re living with less, Job One is figuring out how to make that work, at least for now. Job Two may be pushing for change.

 

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Q&A: Repairing your credit score

Sep 08, 2014 | | Comments (0)

Dear Liz: After a divorce, I had to start my life over at 62. I got three credit cards. Somehow, I failed to see the online bills for one of them and neglected to pay it. The company didn’t contact me until three months had passed. I got a letter saying the small balance ($130) was forgiven and the card had been canceled. I was shocked. I made several calls but was told nothing could be done. Now one of the credit bureaus has my score at 640. I’m a reliable person and always pay my bills on time. This was a great oversight. Is there anything else I can do?

Answer: Even seemingly small missteps can have outsized effects on your credit scores. Missing even one payment can knock more than 100 points off good scores.

And as you’ve learned, creditors tend not to be sympathetic to the idea that you didn’t pay because you didn’t see the bills. You’re expected to know when your bills are due and pay them. A quick phone call or visit to the credit issuer’s website would have told you what you owed.
Fortunately, you still have the other two cards. Those should help you rehabilitate your credit scores as long as you use them properly and you don’t cause any further damage.

Before another day passes, set up automatic payments for both accounts. You typically can choose to have one of three amounts taken every month from your checking account: the minimum payment, the full balance or a dollar amount that you specify. Ideally, you would choose to pay off the full balance each month, since carrying a balance won’t help your scores and will cause you to pay unnecessary interest.

Mark the dates of the automatic payments on your calendar and set up alerts to make sure that there’s enough money in your checking account on that day.

Use both of your cards lightly but regularly, charging small amounts each month. Don’t use more than about 30% of your available credit — less is better. To rehabilitate your credit scores even faster, consider adding an installment loan to your credit mix, if you don’t already have one. Mortgages, car loans and personal loans are examples of installment loans.

Finally, make sure you don’t fall behind on any other bills or let any account, such as a medical bill, fall into collections. Another black mark would just extend the time it takes to rebuild your scores.

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Dear Liz: I am 64 and happily, gratefully receiving early Social Security benefits. My wife is 59, and when she turns 62 she will get half of my $1,650 monthly benefit. My question, though, is this: If she starts getting half of my benefit at 62, can she later switch to her own benefit? If she can get spousal benefits at 62 and switch to her own benefit when it maxes out at age 70, then starting early would be a no-brainer.

Answer: Yes it would, but that’s not how Social Security works.

First, your wife will not receive an amount equal to half of your check if she applies for spousal benefits before her own full retirement age, which is 66. Instead, she would be locked into a significantly discounted amount — closer to 35% of your benefit than 50% if she applies at 62. She also would lose the option of switching to her own benefit later. The “claim now, claim more later” strategy of starting with spousal benefits and then switching to one’s own benefit isn’t available to those who start early.

You’ve already left a lot of money on the table by starting benefits before you reached your own full retirement age. Having her begin benefits prematurely would just compound the problem. Remember too that when one of you dies, the other will have to live perhaps for many years on a single check. It makes sense to make sure that check is as large as it can possibly be.

AARP has excellent information on its site about Social Security claiming strategies, as well as a calculator that can help you see how much it pays to wait. Please educate yourselves before making a decision that you, or she, could live to regret.

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