Friday’s need-to-know money news

financial doomToday’s top story: Five signs of impending financial doom. Also in the news: Spring cleaning your finances, the risks of automatic bill pay, and why you should keep a burner email account.

5 Signs You’re Financially Overextended
Your finances could be heading for disaster.

7 tips for financial spring cleaning
Time to clean the dust out of your wallet.

The Hidden Risks of Paying Your Bills Automatically
Automatic payments could leave you short on cash.

Why I Keep a Burner Email Account
An alternative email address could help protect your identity.

Lies, damn lies and press releases

Customer Support liarA recent press release from an “identity theft protection company” was so filled with misinformation, I had to double-check make sure it wasn’t April Fool’s Day.

Here’s what it said:

The Federal Trade Commission believes ID Fraud will be a significant issue during this tax season. Many people will consider freezing their credit report if they fear they’ve been a victim of ID Theft but national ID theft protection company, Protect Your Bubble, says consumers may want to be patient before going through the the credit freeze process.

Reasons To Rethink Freezing Your Credit During ID Fraud Scare

Here are some reasons you may want to consider for any stories you might be planning around tax season:

  • If you do put a freeze on your credit report it can take up to a month for the credit bureaus to do the unfreeze

  • During a freeze, all credit cards are frozen

  • Your debit card may also be impacted

  • Consumers may need to go to a cash lifestyle even to pay bills

  • All of your automated bill payments are then frozen and that can negatively impact your credit even further if/when you miss payment

It goes on, but each of those bullet points is patently, demonstrably untrue. In reality:

  • Unfreezing a credit report takes a few minutes by phone or online. Credit bureaus have to respond to written requests within three days.
  • Credit cards are not affected by a credit freeze.
  • Debit cards are not impacted by a credit freeze (freezes apply to credit reports, not bank accounts).
  • There’s no reason to go to cash when your credit and debit cards still work.
  • Automated bill payments aren’t affected, since neither your credit cards nor your bank accounts are altered by a freeze.

When I asked the public relations person who sent out the press release to explain, I got back an apology for for “miswording the bank/credit card payments in the pitch” but then she repeated some of the [baloney]:

If they [individuals] are alerted to the fact that they may have been a victim of ID Theft, they should not rush to freeze their credit report since it can be a lengthy process to unfreeze. Due to the growth in phishing scams consumers need to be cognizant of the realities of what may or may not be taking place.

Um, what?

I tried again, contacting the company itself. This is what I got back:

Upon reviewing the press release, we see how the statement about the payment of bills and credit cards when a credit report is frozen was misleading. You’re correct: A frozen credit account will not prevent you from paying bills. But, I think it’s important to point out that consumers will have a difficult time applying for a new credit / debit card while their account is frozen. In any case, consumers should check with their financial institutions and creditors to verify their unique policies.

I’m not sure why you’d have trouble getting a debit card, unless you were opening a new account and the bank ran a credit check. But the fact that you have to unfreeze your credit reports if you want to apply for a new credit card is indeed a potential downside. It’s a potential downside that wasn’t even mentioned in the press release, however. And the statements weren’t “misleading.” They were wrong. As in “Holy cow, we blew it, this is embarrassing” wrong.

Credit freezes are something you should consider if you’ve already been the victim of identity theft or you’re at high risk because your Social Security number has been stolen or exposed in a breach. Credit freezes pretty much prevent new account identity theft, where someone opens new credit accounts in your name. If you’ve got a freeze in place, you likely won’t need “identity theft protection,” which is an oxymoron anyway because the companies can’t protect you from anything; at best, they can give you early warning and help you clean up the mess. The press release’s suggestion that you hold off on a freeze “until there has been an activity reported against you specifically” is rather witless. Waiting for the bad guys to steal your credit after they’ve got their hands on the keys is like closing the barn doors after the horses have fled.

Credit freezes come with costs. You typically must pay to freeze and unfreeze your reports ($2 to $15 per bureau, depending on your state law, for each freeze and thaw). If you’re planning to apply for credit, change insurers or wireless carriers, or start utility service, you have to remember to thaw your report so those providers can have access. So there’s a hassle factor, but credit freezes won’t mess up your day-to-day financial life.

A final thought: The press release mentions tax season identity theft, a reference to the fact that identity thieves are filing phony tax returns right and left. But nothing–not a credit freeze, and certainly not an “identity theft protection company”–can protect you from that crime. That’s what’s so awful about it. For more, read my Reuters column, “Why identity thieves are targeting your tax return.

 

 

Thursday’s need-to-know money news

Stress Level Conceptual Meter Indicating MaximumToday’s top story: How to pass a financial stress test. Also in the news: How smart parents teach their kids about money, the worst money mistakes made by Millennials, and what to do if your homeowner’s insurance claim is denied.

5 Tips For Passing a Financial Stress Test
How would you do?

7 Ways Smart Parents Teach Their Kids About Money
Valuable lessons for your kids.

5 Worst Money Blunders Made By Millennials
Avoid these at all costs.

What to Do If Your Homeowner’s Insurance Claim is Denied
Don’t panic.

Will You Finally Be Able to Get Rid of Your Student Loans in Bankruptcy?
Introducing the Student Aid Bill of Rights.

Wednesday’s need-to-know money news

debt-freeToday’s top story: How to perform a debt autopsy. Also in the news: How to choose between leasing and financing a new vehicle, spring break travel tips, and how to tell if a credit card has a good interest rate.

If You Really Want to Kill Off Your Debt, Do a Debt Autopsy
Not nearly as scary as it sounds.

How to Choose Between Vehicle Leasing and Financing
Deciding what’s best for you.

12 Major Travel Sites Reveal How to Save on Top Spring Break Destinations
Spend less on travel and more on fun.

How to Tell If a Credit Card Has a Good Interest Rate
Do your research.

Tuesday’s need-to-know money news

o-CREDIT-REPORT-facebookToday’s top story: Changes to the credit report dispute process are on the way. Also in the news: What to do with your tax refund, things you should consider as you approach retirement, and the biggest tax law changes you need to know about.

Your Biggest Credit Report Complaint May Be Getting Fixed
Changes in the dispute process are on the way.

What to Do With Your Tax Refund
Suggestions other than an Apple Watch.

7 Items for Your To-Do List in the Year You Retire
Things to consider as you approach the finish line.

The Biggest Tax Law Changes You Need to Know About This Year
April 15th is just around the corner.

Big changes afoot for credit bureaus and your scores

check-credit-report-easilyCredit bureaus will have to hold off on reporting delinquent medical bills and supply actual human beings to review disputes under an agreement announced today with New York’s attorney general.

The Wall Street Journal reported that the agreement, to be announced later today, will change how credit bureaus operate nationally. Bureaus will have to wait 180 days before reporting any medical debt on people’s credit reports. When an insurance company pays a medical bill, all references to it will have to be deleted from the individual’s reports.

This is a big deal, since the Consumer Financial Protection Bureau estimates about 43 million Americans medical collection accounts on their credit reports. One such collection can devastate an otherwise pristine credit report and cause credit scores to plunge.

Having human beings review disputes is another significant change. Currently, humans stick a code on disputes before they’re sent to lenders, but the process is highly automated. Errors that have been removed from a report can crop up again (and again and again) when the lenders upload their data files to the bureaus. Getting problems fixed can be a frustrating process when you can’t get a human being to intervene.

The changes won’t happen overnight. The bureaus have three and a half years to roll them out.

Monday’s need-to-know money news

download (1)Today’s top story: The right card to get when you’re looking to build or rebuild your credit. Also in the news: How to cut your monthly expenses, what you need to know about renter’s insurance, and the habits of successful early retirees.

5 Credit Cards to Help You Build Credit
Cards that can help you establish or rebuild credit.

Ways to slash your monthly expenses
How to make your monthly expenses more manageable.

8 Facts You Didn’t Know About Renter’s Insurance
Protecting your belongings.

The 9 Habits of Highly Successful Early Retirees
Could you follow in their footsteps?

The 20 Worst (and 20 Best) Cities For Saving Money
Did yours make the list?

Friday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How to find the most important information in your credit report. Also in the news: Financial scams that target seniors, questions for first time tax filers, and how to cut your tax bill with credit card deductions.

5 Things You Absolutely Need to Find in Your Credit Reports
How to find the important information.

7 Financial Scams that Target Seniors
What to look out for.

5 Questions First-Time Tax Filers Need to Answer
Welcome to the real world!

Cut Your Tax Bill with Credit Card Deductions
Business owners should pay close attention.

Thursday’s need-to-know money news

22856641_SAToday’s top story: The comeback of the 529 plans. Also in the news: Who’s to blame for the TurboTax scam, how to pay off student debt, and the top cities for identity theft.

529 Plans Make a Money-Saving Comeback
The college savings plan is back from the brink.

Who’s to blame when fraudsters use TurboTax to steal refunds?
It’s been a rough year for TurboTax customers.

Planning Key to Paying Off Student Debt
Tackling a long-term debt.

10 Cities Where Identity Theft Is a Huge Problem
Did yours make the list?

Wednesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How to manage your credit cards while traveling abroad. Also in the news: The biggest financial mistakes each generation makes, tax mistakes you need to avoid, and how to protect your bank account from being looted by cyber criminals.

5 Credit Card Tips for Traveling Abroad
Don’t get hit with heavy fees.

3 biggest financial mistakes made by each generation
Which one is yours?

9 Tax Mistakes You Should Never Make
Simple errors that could end up costing a lot.

5 Ways to Keep Your Bank Account From Being Looted
Protecting your money.