Q&A: Social Security’s complex rules

Dear Liz: You recently mentioned that people can’t always trust the information they get from Social Security representatives. I worked for Social Security for 25 years. When I was ready to file for spousal benefits a few years later in another town, the rep I got immediately told me I wasn’t eligible and was not even going to fill out an application. I knew he was wrong but he was adamant. Always, always tell your readers to insist on filing an application no matter what, as that protects their appeal rights. The applicant might be wrong but will receive a formal determination telling them why. I spent 20 minutes educating that rep on what he should have already known. They don’t train them like they used to.

Answer: Social Security rules can be immensely complicated and, as you note, not every Social Security representative understands those rules as well as they should.

Anyone who’s thinking of applying should first educate themselves as much as possible (the latest edition of “Social Security for Dummies” by Jonathan Peterson is an excellent place to start). Consider using Social Security claiming software or getting personalized advice from a fee-only financial planner. Once you’re well informed, you’ll be better able to recognize and avoid bad advice.

Q&A: How to practice good credit card hygiene to avoid getting hacked

Dear Liz: We have one primary credit card, which we use all the time, that collects airline miles we use for travel. Every few months it is “compromised” and we have to get a new one. Is there something we’re not doing right? Are there “good hygiene” rules for credit cards?

Answer: Yes, and most involve reducing the number of places that have access to your card’s information.

Many online retailers and web browsers offer to save your card information to make future purchases easier.

While these autofills save time, they mean your credit number information is being stored in databases that are outside your control. Refusing this option — and deleting your stored cards from browsers and retail accounts — means less convenience but more security.

Another option is to add two-factor authentication to your retail accounts, which makes them harder to break into. This would require you to enter a code that’s texted or emailed to you or generated by an authentication app.

Some credit cards offer the option to use virtual numbers online. If yours does, this is another option worth using. The retailer never has access to your real credit card number, so it can’t wind up in a potentially vulnerable database.

You can avoid exposing your credit card numbers while shopping in person by using mobile payment apps such as Apple Pay and Google Pay.

These apps create a “token” from your credit card information that’s transmitted to the merchant when you want to buy something. Again, the merchant never sees and can’t store your actual card details.

Other good practices involve steering clear of unsafe merchants and sites. When shopping online, always make sure the little lock symbol shows in the left side of your browser’s address bar and that the site’s address starts with “https” rather than just “http.” If a site doesn’t offer these basic security features, you shouldn’t shop there.

Be wary of in-person merchants that use old-fashioned magnetic card readers, the ones that require you to swipe, without the option of tapping or inserting your chipped card. It’s much easier to clone the information on a card’s magnetic stripe than from its chip, so avoid swiping if you possibly can.

Also be wary of skimmers and shimmers, which are devices that thieves install on unattended ATMs and fuel pumps to steal card information. These devices can be hard to detect, so consider paying for your gas inside the station and using ATMs attached to banks.

You also should avoid using public Wi-Fi for any financial transactions because these networks usually aren’t encrypted and are easily compromised. Finally, be on the lookout for phishing attempts, which is when criminals try to get you to divulge credit card and other sensitive personal information by pretending to be from a trusted source.

Understand that you can do everything right and criminals may still steal your card’s information. Fortunately you’re protected against fraudulent charges, so a compromised card is more of a hassle than a financial disaster.

Thursday’s need-to-know money news

Today’s top story: How to find a happy balance among competing savings goals. Also in the news: Smart Money Podcast: live from Las Vegas, easy solutions to 3 common air travel nightmares, and how relaxed COVID guidelines will affect your next trips.

How to Find a Happy Balance Among Competing Savings Goals
Deciding how to prioritize different savings goals can be overwhelming, but financial experts recommend ordering them by urgency.

Smart Money Podcast: Live From Las Vegas!
This week’s episode is a special live episode that was recorded at a company gathering in Las Vegas over the summer.

Easy Solutions to 3 Common Air Travel Nightmares
Insuring your trip through a travel card or independent policy can come in handy if things don’t go as planned.

How Will Relaxed COVID Guidelines Affect Your Next Trip?
Reduced isolation periods and other changes to CDC recommendations make it less likely your trip will be disrupted.

Monday’s need-to-know money news

Today’s top story: Student debt cancellation news, and money 101. In other news: How public defender in Florida got her student loans forgiven, and how much fees do impact Airbnb prices.

Smart Money Podcast: Student Debt Cancellation News, and Money 101
Here’s what we know and what we still need answers to.

How I Got My Student Loans Forgiven: Public Defender in Florida
Beth Bourdon, an assistant public defender at the Orange County Public Defender’s Office in Orlando, Florida, was used to her student loans not qualifying for relief that other federal loans did.

Just How Much Do Fees Impact Airbnb Prices?
The base price on an Airbnb isn’t what you’ll end up paying, so always compare final prices when booking.

Q&A: When to start Social Security

Dear Liz: I’m confused by your answer to the question about starting Social Security too early. You wrote that someone who decides they made a mistake can suspend the benefit once they reach full retirement age. From the description, it sounds like there is no penalty for this option, so everyone should do it! This sounds too good to be true, so I (and maybe others) might be misinterpreting this. It sounds like you get early benefits from 62 to full retirement age, then the full delayed benefit at 70.

Answer: Keep in mind that your Social Security benefit is permanently reduced when you start it early. The earlier you start, the bigger the reduction.

Social Security allows you to suspend your benefit once you’ve reached full retirement age (currently between age 66 to 67). While it’s suspended, your benefit will receive delayed retirement credits that will increase your checks by 8% each year until age 70. Your benefit also continues to receive cost of living adjustments, whether you’re currently receiving it or not.

A suspension can help you offset some of the reduction you incurred by starting early, but you’ll never get as much as if you’d waited until age 70 to apply.

Q&A: How to build a credit history so you don’t turn ‘credit invisible’

Dear Liz: After reading about people being “credit invisible,” I’m wondering if I should have a credit card to build a payment history. I’m 67 and on Social Security. I thought having a guaranteed income and no outstanding debt would be appealing to a potential landlord while applying for an apartment, but maybe that’s not the case. What do you recommend?

Answer: Roughly 1 in 10 U.S. adults doesn’t have a credit report and is considered “credit invisible,” according to the Consumer Financial Protection Bureau. Without a credit history, many common financial transactions can become more difficult or expensive, and that includes renting an apartment. Landlords often check credit reports or credit scores or both when evaluating potential tenants.

You can use the free AnnualCreditReport.com site to see if you have credit reports at the three major credit bureaus. (Make sure you type “annualcreditreport.com” into your browser, because using a search engine may turn up a lot of lookalike sites that will try to charge you for credit monitoring and other services. If you’re asked for a credit card, you’re on the wrong site.)

If you don’t have a credit history, there are a number of ways to start building one.

Perhaps the quickest is to ask someone with good credit to add you as an authorized user on one of their credit cards.

Another good option is a credit builder loan, which is offered by some credit unions and online lenders. The money you borrow is typically placed in a savings account or certificate of deposit that you can claim once you’ve made all the monthly payments.

Finally, there are secured credit cards which give you a line of credit that’s usually equal to the amount you deposit with the issuing bank. Ideally, you would be able to upgrade to a regular unsecured card in a year or so.

Q&A: Service at online banks

Dear Liz: You recently wrote about online banks versus brick and mortar, but you missed one point in favor of local banks. If there is a major screw-up, you can go there and talk with a person. That’s better than being stuck in an endless phone loop or with an unhelpful “bot” online. And being face to face (pleasantly) is more likely to get help and sympathy.

Answer: Banks vary enormously in the quality of their service. Some online banks pride themselves on quickly connecting their customers to well-trained human representatives around the clock. Meanwhile, some local banks have indifferent staff and inconvenient hours.

But we can agree that chatbots — computer programs that purport to answer common customer questions — often provide a truly awful user experience. Any bank that refuses to connect you to a human being on request is a bank to be avoided.

Friday’s need-to-know money news

Today’s top story: When and why you should open a CD. Also in the news: Increase credit limits now in case the economy worsens later, and if it is possible to live without credit cards, debit cards, and cash apps.

Ask a Nerd: When and Why Should I Open a CD?
Certificates of deposit are having a moment, but they’re best for specific savings goals.

Increase Credit Limits Now in Case the Economy Worsens Later
Consider increasing available credit on credit cards when your accounts and the economy are still in good standing.

Is It Possible to Live Without Credit Cards, Debit Cards, and Cash Apps?
Cash is the ultimate in anonymity—but it’s tough to live without a card or payment apps these days.

Thursday’s need-to-know money news

Today’s top story: 7 new details on how student loan cancellation will actually work. Also in the news: What student loan cancellation could mean for your budget, and how to turn your finished basement into a (legal) apartment for extra income.

7 New Details on How Student Loan Cancellation Will Actually Work
Here’s the latest about how student loan cancellation will actually work.

What Student Loan Cancellation Could Mean for Your Budget
Student loan cancellation could give you more breathing room in your budget, but it depends on how plans play out.

How to Turn Your Finished Basement Into a (Legal) Apartment for Extra Income
If you need some extra cash, your basement might be a potential income stream.