Three steps to take to protect your account data from getting into the wrong handsWhether by choice or necessity, American consumers are increasingly relying on debit rather than credit cards. Debit card spending has risen steadily, growing from 47.7 percent of purchases made with plastic in 2003 to 58.9 percent in 2008 and it is expected to surpass 67 percent by 2013, according to the Nilson Report, a newsletter that tracks the consumer payment industry.When you use a debit card, the money is immediately taken from your checking account. While using debit guarantees that you pay as you go, these cards have downsides, including a growing appeal to thieves. "As economic conditions have worsened, there's been a noticeable increase in all types of card fraud," says Avivah Litan, an analyst specializing in fraud detection and prevention at Gartner Research in Stamford, Conn. "But ATM and debit-card fraud is the top area of concern we're hearing about from banks all over the world."Unlike credit-card thieves, who usually charge merchandise merchandise and then resell it to come up with money, people who create counterfeit ATM or debit cards by stealing your PIN and other account data can simply pull cold cash from your bank account. Using a technique known as skimming, they set up equipment that captures magnetic stripe and keypad information when you input your PIN at ATM machines, gas pumps, restaurants, or retailers.Here's how you can protect yourself:Don't Type in Your Pin at the PumpBe especially vigilant at gas stations, Litan says. "Gas pumps are notorious for skimming because they're produced by only a couple of different manufacturers, and if someone gets the key to one from a disgruntled employee, they can insert a skimming device inside the pump where it can't be seen," she says. She recommends using a credit card rather than a debit card when you fill your tank.If you must use a debit card at the gas pump, choose the screen prompt that identifies it as a credit card so that you do not have to type in your PIN. The purchase amount will still be deducted from your bank account, but it will be processed through a credit-card network, which will give you greater protection from liability if fraud does occur. This is because card issuers typically have "zero liability" policies for both debit and credit cards, but sometimes exclude PIN-based transactions from that protection.Stick With ATMs Located at BanksTo reduce your risk at ATMs, use machines at banks rather than in convenience stores, airports, or any isolated locations, advises Darrin Blackford, a spokesman for the U.S. Secret Service, which investigates financial crimes involving interstate commerce. "A thief has to be able to attach and retrieve a skimming device to use the data it's gathered," he says. "And that's more likely to happen in nonbank settings where there's less traffic and no surveillance cameras."That doesn't mean that bank ATMs are immune, however. In August 2008, Wachovia Bank reported that several debit-card "identities" were stolen when a skimming device was placed on an ATM at a branch in Cape Coral, Fla."It's often hard to spot skimmers," Blackford says. "But if you notice a change at an ATM you use routinely, such as a color difference in the card reader or a gap where something appears to be glued onto the slot where you insert your card, that's a warning sign you'd want to report to the bank that owns the machine."Closely Monitor Your Bank AccountsCheck them regularly—preferably online rather than waiting for monthly statements to arrive in the mail. Federal law limits your liability for fraudulent debit-card charges to $50, but only if you report the theft or loss of your card or PIN within two business days of discovering the problem. If you fail to report unauthorized charges within 60 days of the date the statement listing those charges was mailed, you could be liable for any unauthorized withdrawals afterward, including the full value of credit lines or savings accounts linked to your account for overdraft protection.Visa and MasterCard have zero liability policies that go beyond federal law by exempting debit cardholders from liability in most circumstances when a bank investigation confirms that a transaction is fraudulent. But dealing with debit-card fraud can have a greater impact on your finances than credit-card fraud.When you're a victim of unauthorized charges on a credit card, you won't be out any money while the disputed charges are being investigated. But when a thief steals money from your bank account using a counterfeit debit or ATM card, that cash won't be restored to your account until the bank conducts its investigation and classifies it as a case of fraud. Some victims of debit-card skimming scams who have contacted the Privacy Rights Clearinghouse, a nonprofit consumer advocacy group, about their experiences report that while banks in most cases replenished the stolen funds, some of them had no access to the money for several weeks while bank investigations were conducted.Consumer Reports has no relationship with any advertisers on Yahoo!Copyrighted 2009, Consumers Union of U.S., Inc. All Rights Reserved.
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Put Savings (and Yourself) First With a Budget1Put Savings First With a BudgetWhere does that money go? America, it seems, is in the midst of a savings crisis. Personal savings rates have dropped in recent years and remain low by historical standards as many people continue to spend beyond their means.If you're among those Americans who can't seem to save, it might be time to create a budget. A budget allows you to understand where the money goes and may help you free up cash for important savings goals, such as college and retirement.Back to top2Getting StartedSetting up a budget will require some work, but the benefits more than offset the time invested. How you create your budget is up to you. You may choose a piece of financial planning software, such as Microsoft Money or Quicken, or you may choose the paper and pencil route. The above worksheet is a simple yet inclusive budget that you can use to get started.The first element of any budget is your income, or how much money you receive each month. This can include paychecks, legal settlements, alimony, royalties, fees, and dividends from investments that you do not reinvest. Once you know what your monthly income is, you can use a budget to make sure you don't spend more than you earn, thus helping to reduce debt and freeing up cash for savings.Next, you need to know how you spend your money. Start by tracking your spending for a month. Gather bills and receipts, and don't forget to include newspapers from the corner store and trips to the soda machine. Don't assume any expense is too small to record.Write down your expenses and break them into categories. Using the budget worksheet as an example, we find Fixed Committed Expenses -- mortgage, loan, and insurance payments that stay the same from month to month; Other Committed Expenses -- things you can't live without, like food, utilities, and clothing; and Discretionary Expenses -- things you like but don't necessarily need.Back to top3Less Spending = More SavingsOnce you know where the money goes, it's time to analyze your expenses. There probably isn't much you can do about Fixed Committed Expenses without moving or getting rid of the family car. However, if these expenses are greater than your monthly income, you are probably carrying too much debt to effectively save.You may find some room to economize in Other Committed Expenses, but look at Discretionary Expenses first. This is typically the easiest place to reduce spending. Begin by canceling magazine subscriptions to titles you don't read. Eat fewer meals out, or choose less expensive restaurants. Across much of the country, you can rent two DVDs for the price of a single adult ticket to a movie and throw in some microwave popcorn for a dollar more.Back to top4Digging DeeperOnce you've reduced discretionary spending, look at those Other Committed Expenses. Can you reduce the grocery bill with coupons or more economical meals? How about taking public transportation instead of cabs?One area to closely examine is credit card debt. If a high balance is keeping you from saving, you need to find ways to trim those monthly payments. Call your credit card company and ask them for an interest-rate reduction, or shop around for a card with a lower rate. You can find a list of low-rate cards through CardWeb (1-301-631-9100 or online at www.cardweb.com). Beware of low introductory "teaser" rates that increase to much higher rates after six months.You could also consider a home equity loan, which may offer a tax deduction, or a consolidation loan. Make sure that you'll be able to afford the monthly payments before you take the loan. Banks can foreclose on a home equity loan within 90 days if you miss payments.If your savings are still being crushed under the weight of debt, or if you're having trouble making minimum monthly payments and covering necessary expenses, consider getting some help. The nonprofit National Federation for Credit Counseling (call 1-800-388-2227, or visit www.nfcc.org) can help you set up a budget and negotiate payment schedules with lenders for a modest fee. Once you start paying off your credit cards, the extra money can be used to build savings.Back to top5The Goal: More SavingsOnce you've figured out where to economize, you can enter amounts in the Expected column of the budget. Notice that Savings and Children's Education appear under Fixed Committed Expenses. This is to encourage you to pay yourself first, a key rule of saving. By setting aside a certain amount each month for savings, you can build toward your goal without missing the money. You may be able to set up a payroll savings plan through your bank or credit union. Also look into any employer-sponsored retirement plans you may have at work, which potentially offer tax benefits along with savings for the future.It might also help to set a savings goal, both for short- and long-term needs. Studies have revealed that families with savings goals tend to save more.Remember that your budget is a living document. As your circumstances change, so will your goals and needs. Review your budget every few months to make sure it reflects your goals and to see if you are saving as much as you possibly can.SUMMARYYou can use computer software or a pencil and paper to create a budget.Analyze your spending for a month to see where your income goes. If your living expenses are greater than your income, you'll need to find ways to economize.Your spending can be broken down into three categories: Fixed Committed Expenses, Other Committed Expenses, and Discretionary Expenses.To free up cash for savings, begin by reducing Discretionary Expenses, then look at Other Committed Expenses.Pay down credit-card debt aggressively. Once the debt is paid off, direct the extra money to savings.Set aside some of each paycheck for savings goals. Ask your bank or credit union about payroll savings plans and investigate your employer-sponsored retirement plan.Review your budget periodically to make sure it is still in line with your needs and goals.(Article extracted from Yahoo Finance)
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