5 Ways to Keep Hackers Away From Your Money

A Hacker

Start by rethinking your password strategy.

JPMorgan Chase, Domino’s, Home Depot, P.F. Chang’s, eBay — the list of targets continues to grow.

Information breaches that would have been difficult to fathom years ago are now common. And people are rightfully worried. After all, if the federal government can get hacked and its employees’ data stolen, how vulnerable is a personal account held at a bank or brokerage?

My friend Jack Vonder Heide, president of Technology Briefing Centers and one of America’s leading authorities on technology-related risks, says the image of cyber attackers as hipster kids in a basement hacking into websites for fun is a dangerous misconception. Cybercriminals, he says, are highly educated operatives of well-funded overseas groups, mostly based in China and Russia.

So what actions can you take to protect yourself in what feels like an endless battle to keep your data secure? Here are five steps to consider:

1. Diversify your passwords — and change them

For convenience’s sake, people often use the same password across multiple websites. Big mistake. It’s like giving an intruder a key that opens every lock. You want to make it extremely tough for a hacker to access your sensitive information. To create a different password for every financial website — brokerage, bank, credit card, mortgage account, and so on. Create unique password combinations that include letters, numbers, and, if possible, symbols. Establish a biannual schedule to change them. Security must be an ongoing endeavor.

2. Use an online password manager

All those hard-to-crack passwords can be a nightmare to try to store, recall, and keep secure, so use a reputable password manager. The best managers include password generators that create strong, unique choices. Most password managers allow you to sync your passwords across all electronic devices, making it easy to maintain multiple passwords. Select one that includes two-layer authentication for additional protection. Check out PC Mag’s best password manager selections for 2015. Many come with an annual fee — but they’re affordable and worthy protection against hackers.

3. Make life hard for crooks

Cross-shredding confidential documents, avoiding simplistic passwords, and keeping sensitive information off of unsecured channels like email are modest but effective actions. Thoroughly checking credit statements for suspicious activity and being aware of your surroundings when using ATMs are basic security measures that remain effective. Don’t let your guard down.

4. Check your credit reports at least annually

Periodically checking your credit report is a smart way to stay ahead of the bad guys — but many people don’t because of common misconceptions, such as the belief that you have to pay a fee to see your report, or you must subscribe to a service.

The fact is, federal law entitles you to a free copy of your credit report once a year from each of the three consumer credit reporting bureaus — TransUnion, Equifax, and Experian. You can get these reports at AnnualCreditReport.com. If you want to be especially vigilant, spread out your requests, so that you are looking at a different report every four months instead of all three at once every year. Increasing the frequency will help you catch suspicious inquiries earlier since credit activity customarily gets reported to all three bureaus.

The goal is to check for discrepancies, inconsistencies, and inaccuracies that might suggest identity theft. It’s not difficult to correct errors. The credit bureaus have improved their service and request response times. The Federal Trade Commission provides easy-to-follow instructions to dispute errors.

5. Keep your guard up when it comes to e-mails

Be wary of any email that requires you to click on a hyperlink to update a password or confirm confidential material. Such e-mails are often “phishing” expeditions seeking to scam you. They appear to come from your bank or brokerage firm, an online retailer — even the IRS.

The best rule to follow is that regardless of how real an e-mail looks, never click on such links. Contact the alleged sender’s customer service or fraud department directly to check the legitimacy of the email. Don’t use the phone numbers provided in the suspect email. Always use the contact information provided on your monthly statement or listed on the company’s website. It’s also advisable to forward the email to an organization’s fraud department.

What about inquiries from the IRS? That’s easy. The IRS does not initiate taxpayer communication through email or other electronic channels, period.

It’s understandable to feel helpless in the age of smart criminals who conduct endless assaults on privacy. But simply putting the threat out of mind is no solution. Nor is deciding that it can’t happen to you.

Personal Finance: 10 Ways to Become Financially Independent

After the 2008 economic crisis, many people assumed they would never be able to reach true financial independence – the ability to live comfortably off one’s savings and investments with no debt whatsoever.

However, individuals willing to use their time horizon to plan and adjust their spending, savings, and investment behaviors might just find financial independence is possible. Here are 10 ideas to get started.

1. Visualize first, then plan. Start by considering what your vision of financial independence actually looks like – and then get a reality check. Qualified financial experts can examine your current financial circumstances, listen to what financial independence means to you, and help you craft a plan. The path to financial independence may be considerably different at age 20 than it is at age 50; the more time you have to save and invest generally produces a better outcome. But at any age, start with a realistic picture of your options.

2. Budget. Budgeting (http://www.practicalmoneyskills.com/budgeting/) – the process of tracking income, subtracting expenses, and deciding how to divert the difference to your goals each month – is the essential first task of personal finance. If you haven’t learned to budget, you need to do so.

3. Spend less than you earn. It might be obvious, but it’s one of the most difficult financial behaviors to execute. Adhering to a lower standard of living and expenses will help you put more money into savings and investments sooner.

4. Build smarter safety nets. Emergency funds and insurance are rarely discussed in combination. The traditional definition of an emergency fund is a separate account for cash that can be used instead of credit to repair a broken appliance or other expenses that may run a few hundred dollars. However, many people keep insurance deductibles high to keep premiums low. Would you have enough cash on hand to cover an insurance deductible if you had a sudden claim? If not, build your deductible amounts into your emergency fund.

5. Eliminate debt. Though consumer debt levels have generally fallen since the 2008 financial crisis, the Federal Reserve Bank of New York reported in February that home, student loan, auto, and credit card debt began creeping up again in 2014. Getting rid of revolving, non-housing debt (http://www.practicalmoneyskills.com/costofcredit) is one of the most effective ways to free up money for savings and investment.

6. Consider your career. Financial independence doesn’t require you to quit a career you love, but you really can’t get to financial independence without a steady income to fuel savings and investments that will build over time. Speak with qualified advisors about your income, benefits, and retirement picture first, and see if you might be able to expand your sources of work-related income, such as consulting part-time. Also keep in mind that over the age of 50, the Internal Revenue Service allows you to make catch-up contributions to both 401(k) and IRA accounts.

7. Downsize. You’ll generally reach wealth financial goals faster if you can cut your overall living expenses. For some, that means selling your home and moving to a smaller one or to an area with lower living costs and taxes. You can also sell or donate property you don’t need and use those proceeds to extinguish debt or add to savings or investments.

8. Invest frugally. Become a student of investment fees and commissions because they can cut significantly into your principal. Make a full evaluation of fees you are paying on every investment account you have and if you’re working with a licensed professional who sells you financial products, know what fees they’re charging for their investment and advisory services.

9. Buy assets that generate income. Stocks, real estate, collectibles, or cash investments all have up and down markets. But do your homework and focus on investments bought at attractive prices that are likely to appreciate over time. Also, don’t forget to study the tax ramifications of any investment transaction you make.

10. Always know where you are financially. Financial planning isn’t about making one set of financial decisions and assuming you’re set. Lives and situations change and your financial planning must be flexible enough to withstand both positive and negative changes without derailing your hopes for financial independence. If your forte is not investment, financial planning, or tax matters, by all means, bring in qualified experts to help. But financially independent people generally have their money issues at their fingertips not only for their own use but for estate purposes as well.

Bottom line: Financial independence involves diligence and a bit of sacrifice, but even the smallest moves can yield big outcomes.

Source:http://www.yourhoustonnews.com/atascocita/opinion/personal-finance-ways-to-become-financially-independent/article_b723796d-0916-55e0-ad41-36cda386557d.html

7 Ways to Increase Your Credit Score Quickly

Your credit score will determine whether you will get approved for credit cards, auto loans, mortgages, or other loans, as well as impact the interest rate you'll pay. If you aren't happy with where your credit score is today, take heart: There are some simple ways to improve it quickly. Once your credit score improves, you'll be able to enjoy perks like lower interest and insurance rates.

Note that while these tips will help you raise your credit score quickly, be patient, and remember that it can still take 30–60 days to see any noticeable improvement.

Credit Utilization Ratio

Your credit utilization ratio makes up 30% of your credit score. It's the number that shows how much debt you have compared to your total available credit. The more unused credit you have available, the lower your ratio. For example, if the credit limit on all your cards totals $10,000, but you owe $8,000, your credit utilization ratio is 80%. You're using 80% of your credit. That's pretty high — a ratio of 30% or less is ideal. There are three main ways to lower your credit utilization ratio.

1. Pay Down Your Debt

Using the above scenario, if you can pay down your debt from $8,000 to $5,000, then your ratio goes down to 50%. Once you lower your debt, your score will see a significant boost quickly.

2. Ask for a Credit Limit Increase

If you aren't able to come up with some cash to pay down your debt quickly, try to get your credit card issuer to raise your limit. If instead of having $10,000 in available credit, you have $15,000, your ratio would go down to 53% with an $8,000 debt. Keep in mind, however, that they'll usually only grant this if you've had a good record with them over the last year. If you've missed payments, you may not be able to get the increase.

3. Sign Up for a New Credit Card

If you've got a lot of credit card debt, getting another credit card may not be the wisest thing to do. But if you need to raise your credit score quickly, this may be your only option. If you can, try to get a card with a 0% intro balance transfer option, which will allow you to transfer your existing debt over and at least get a break from paying interest each month. 

If you can't get approved for credit cards because of your low score, get a secured credit card, which even those with bad credit can get approved for. 

Credit History

The length of your credit history makes up 15% of your score. If your score is low because you are new to credit, then you will just have to be patient. But you can build up your credit by opening up accounts now and keeping them in good standing in the future.

4. Keep Cards Open

You should not close any existing accounts, as each one continues to contribute to your credit history. In fact, many people hold the mistaken belief that closing credit card accounts will help their credit score when it will likely have the opposite effect. The longer you've had your accounts, the more it adds to your score. Even if you're no longer using your old credit cards, you can cut up the cards or lock them away, but don't cancel them.

5. Become an Authorized User

If you're having trouble getting approved for new accounts, see if you can become an authorized user on someone else's card. But make sure you sign on with someone who is a responsible user. Your score can tank if that person misses payments or has too much debt on that card, too.

Types of Credit

The types of credit in use also make up 10% of your credit score. These formulas favor those who have several types of loans including home loans, auto loans, student loans, credit cards, and store charge cards.

6. Mix up Your Forms of Credit

While you shouldn't borrow money for a home or car just to try to improve your score, it's worth keeping in mind that even opening a store charge card and using it for a few small purchases may help to improve your credit score slightly.

You can also consider opening a specialized card like a branded gas card (that only works for gas station payments). This will help you resist the urge to spend on other things and you'll rack up rewards in no time, such as free gas. Pay the balance off immediately after every use and your credit score will reflect your good credit history, payment history, and increased available credit.

Payment History

Your payment history makes up the biggest percentage of your score — 35%. There is no getting around the importance of paying your bills on time.

7. Set up Alerts and Auto-Pay

Sometimes payments are missed simply because you forgot or misplaced the bill. These small mistakes add up to your credit score. If you have trouble remembering to pay your bills, then set up automatic payments or set up reminder alerts on your calendar. No excuses!

Credit Monitoring

To maintain a good score, you should be diligent about monitoring your credit, as well. Check your credit report every year at AnnualCreditReport.com to ensure there are no errors. If you notice a discrepancy, act on it quickly. Your credit score may be unjustifiably low and you may simply need to make a call to correct any issues. In fact, studies have shown that up to 80% of consumer credit reports have an error, which may be costing you up to 50 credit points. Take advantage of services like CreditSesame.com to monitor your credit score for free throughout the year. 

Source:http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly

How Is Credit Card Interest Calculated?

How is credit card interest calculated?

Paying credit card interest is painful enough. Figuring out how that interest is calculated? That’s almost as bad! The entire process is rife with complexity — and not always set in stone.

Still, if you’re carrying a balance on a credit card, you should know the science behind how much interest you’ll ultimately pay. This post aims to answer the question: “How is credit card interest calculated, anyway?”

How to Calculate Credit Card Interest

When you’re carrying a balance on your credit card, you probably focus most of your attention on your card’s APR, or annual percentage rate. Although that’s a decent way to figure out how much you’ll pay over time, it’s not the best.

Why? Because credit cards don’t add interest to your account annually as the name suggests – they actually charge interest every day.

This daily interest calculation is decided on using your cards DPR, or daily periodic rate. You can figure out your DPR by taking your APR and dividing it by the number of days in the year.

One caveat, though: Some banks divide by 365, while others divide by 360. Confused yet? We thought so.

Here’s an example that shows how it works:

Let’s say your credit card’s APR is 11%. Divide that number by 365, and you’ll discover that your daily periodic rate is 0.03%.

Here’s where things get even trickier. When credit card issuers charge interest using your DPR, they figure how much you owe using your average daily balance. This is because your credit card balance can vary widely throughout the month as you make partial payments or more purchases.

Here’s an example to illustrate how this works:

Let’s say you owe $500 on your credit card at the beginning of the month. Fifteen days after the new billing period begins, you charge another $500 on your card. Your card issuer determines your average daily balance for the month by multiplying each balance by the number of days you carried it, then combining them and dividing by the total number of days in the month:

($500 * 15 days) + ($1,000 * 15 days) = $22,500/30 days = $750

Using the daily periodic rate above, you’ll be charged $6.75 in credit card interest that month:

$750 * 0.0003 * 30 days = $6.75

How Is My APR Decided in the First Place?

No one wants to pay a lot of credit card interest, so it’s always in your best interest to choose a card with a low APR. The good news is, there is a wealth of credit card offers with low APRs, or even promotional 0% APRs, on the market. The bad news is, you may not always be able to qualify for them – at least not yet.

That’s because card issuers use your personal information and credit history to determine what type of interest rate they’ll charge you.

For example, those with good and excellent credit who have scored over 690 will generally qualify for cards with the most attractive rates. Meanwhile, those with a FICO score in the average, poor, or bad range (630 and below) may have trouble qualifying for cards with the best terms. Compare your FICO score to these credit ranges to see how your score stacks up:

• Excellent credit: 720 and up
• Good credit: 690 to 719
• Average credit: 630-689
• Bad credit: 300-629

If your score isn’t where you want it to be, take some steps to improve it over time. Above all else, those steps should include paying all of your bills on time, paying off as much debt as possible, and taking care of any delinquent accounts or inaccuracies on your credit report.

Once you do, credit reporting agencies will take note and adjust your score accordingly.

How to Avoid Paying Credit Card Interest

If you hate the idea of paying credit card interest on your purchases, one tried and true method will save you heartache every time. Pay your balance on time and in full every month, and you’ll never have to estimate an interest payment again.

That’s right; staying out of debt is the only true way to avoid paying interest on your purchases. Here are a few tips that can help you avoid paying interest altogether:

Set a reminder to pay your bill early: All credit cards offer a 25- to 30-day grace period where you won’t be charged interest on your purchases. Paying your bill in full before your due date can help you avoid paying interest altogether.

Only charge what you can afford to pay off each month: If you’re worried about overspending, only use your card for purchases you have the cash in the bank to pay for. One way to keep track is to carry a notebook in your pocket and write down each purchase you make on credit.

Take advantage of a 0% APR balance transfer offer: If you’re paying too much interest on a balance, you might want to consider transferring your balance to a different card with better terms. Some cards even offer 0% APR on balance transfers for a limited time.

Use your card only in emergencies: If you’re still worried you’ll overspend, it might be wise to save your credit card just for emergencies. For everyday purchases, stick to cash or use a debit card connected to your bank account.

Source:http://www.thesimpledollar.com/how-is-credit-card-interest-calculated/

7 Dangerous Credit Card Mistakes You're Making

Consumer credit makes buying the stuff we want and need easy and convenient. Credit can also bail us out of a jam, especially if our emergency funds aren't quite up to the task. Unfortunately, that convenience comes at a price. Aside from uncontrolled, in-the-moment spending, credit card use opens us to a variety of dangerous financial mistakes, some with long-term effects.

You probably already understand the dangers of running up those credit card balances, but here are few more dangerous mistakes you may be making, plus some tips on how to avoid them.

1. You only pay the minimum due. Banks use several formulas to calculate the minimum amount due each month. Most start with a percent or two of the outstanding balance and then add in any fees for late payments, exceeding the credit limit, and monthly interest charges. However it's calculated, simply paying the minimum will result in lots and lots of interest payments over time.

You can find out how your credit card issuer calculates the minimum payment by visiting your issuer's website. Your bank's site may also include a calculator that shows you how long you'll owe -- and how much interest you'll pay -- if you merely pay the minimum. If not, try this credit card debt calculator.

2. You pay late. According to FICO, which generates credit scores, payment history is the largest component of a credit score -- 35 percent of the score, in fact. This makes sense because lenders want to know how promptly borrowers have paid in the past, and nobody likes getting paid late. Late payments mean a lower credit score.

There's a second danger here as well. Late payments will result in late payment fees from your bank, which not only cost you a bit more (or a lot more, depending on your agreement) but may also boost your monthly minimum (again, depending on your agreement).

3. Your utilization ratio is too high. After payment history, FICO looks at the "amount owed," which makes up 30 percent of a credit score. The key calculation here is the borrower's credit utilization ratio, which is how much available credit you use. For example, if you have a card with a $5,000 credit limit and a $2,500 balance, your utilization ratio is 50 percent. In generating the score, FICO analyzes each account and the total of all your accounts.

A high utilization ratio can harm your credit score, which impacts your ability to secure loans on favorable terms. It also means you have less credit available for emergencies. High utilization ratios may also indicate some deeper financial difficulties. If yours is creeping up, it may be time to do some serious budgeting.

There is no hard-and-fast rule, but many personal finance experts advise consumers to keep their utilization ratio below 30 percent.

4. You don't read your statement. With more banks pushing us toward paperless billing and automatic bill pay services, it's getting easier to skip looking over the monthly statement. The first danger here is that you may overlook erroneous charges and pay for products and services you haven't actually bought. You may even miss that you have been a victim of identity theft or other forms of credit fraud.

A more subtle danger associated with ignoring the monthly credit card statement is personal finance complacency. When we don't review and monitor our spending, we stop being in command of our finances, making it that much more difficult to reach our personal finance goals, whatever they may be.

Set aside a few moments every month to review your statements, whether paper or digital and make it part of a monthly budget review routine.

5. You haven't read the fine print. Do you know how your credit card issuer calculates and applies interest? Do you know what the fees are for late fees or credit limit overages? What about fees for cash advances?

Your bank is required by law to make all of that information available to you (and more), in an easy to read and understand format called the "Schumer Box," after Senator Charles Schumer of New York, who championed the law.

Before you apply and sign up for any credit account, make sure you understand the key terms spelled out in the Schumer box.

6. You apply for too many accounts at once. Every time you apply for a credit card you trigger a credit score inquiry. A couple inquiries won't impact your credit score, but several inquiries in a short period of time will affect your score, although the effect is minor. Experian, one of the big three credit bureaus, notes that while minor score adjustments don't harm those with good or excellent credit, consumers with weaker scores are at greater risk. Even a modest reduction in score, combined with other risk factors, can make it harder to secure additional credit.

There is an exception: Multiple inquiries made while rate shopping home and auto loans within a 30-day period are treated as a single inquiry.

7. You take cash advances. If you look at the line item for cash advances on your Schumer box, you may be stunned by the interest rate of your bank charges. A May CreditCards.com survey found that the average for cash advances is 23.53 percent -- or 8.54 percent higher than the average rate for purchases. Some banks even charge as much as 36 percent for cash advances! But the dangers of cash advances mount. Unlike charges for purchases, most banks begin applying interest the moment the advance is taken -- and this is on top of the 5 percent fee most charge to execute the advance.

Needless to say, consumers are wise to avoid cash advances, lest they find themselves caught in a never-ending debt treadmill.

3 Pearls of Financial Wisdom From Dave Ramsey

Between his best-selling books, radio show, and motivational speeches, Dave Ramsey has been giving solid personal finance advice for more than two decades. He takes a no-nonsense approach to manage money — just the way I like it — while offering advice that's practical, actionable, and guaranteed to put you on the path toward financial freedom. Ramsey's pearls of financial wisdom can help you get ahead and gain control of your finances. Here are three of my favorites.

1. Don't Worship Stuff

Many people grow up thinking they need the stuff to be happy. We often confuse our wants with our needs, and convince ourselves we "need" a big house, a fancy car, and everything else in between. The more we have, the more successful we feel. The problem, however, is that stuff costs money — money we might not have.

In his book, The Total Money Makeover: A Proven Plan for Financial Fitness, Ramsey nails it when he says, "We buy things we don't need with money we don't have to impress people we don't like." Ain't that the truth.

Some of us become so obsessed with keeping up that we sacrifice our future financial health and willingly go into debt just so others will think we're successful and can afford a certain lifestyle. However, the joke's on us because this type of thinking gets us nowhere financially — and fast.

The best thing you can do for your money is to stop worrying about the opinions of others and realize stuff doesn't make you happy or richer. Ramsey encourages "living substantially below your means." Just because you make $75,000 a year doesn't mean you have to spend $75,000 a year. Simplicity is the key to acquiring financial freedom.

2. Build a $1,000 Emergency Fund — Now

According to Ramsey, this is the first step to financial stability. This doesn't suggest you can't have more in your emergency fund. Like many other financial experts, Ramsey speaks about the importance of having a sizable cash cushion — at least three to six months of income. But since this takes time, Ramsey's Financial Peace University program recommends baby steps and starting with a $1,000 emergency fund.

This ensures enough cash to handle life's curveballs, so you don't have to rely on credit cards. This might come as a shock, but building a small emergency fund takes priority over paying off debt (although you'll still need to make minimum debt payments while growing a small emergency fund).

Do whatever you can to build this emergency fund. For example, sell stuff you don't need at a yard sale, work overtime, or get a side hustle. The idea is to fund this account as soon as possible. You'll enjoy peace of mind knowing you can handle an emergency, and it's only after building an emergency fund that you can start improving other areas of your personal finance.

3. Don't Be a Slave to a Lender

We live in a world where anything can be financed — from electronics to houses. And some people fall in the trap of thinking they can afford something as long as they're able to make the minimum payments.

Ramsey's financial philosophy revolves around living debt-free. He's a big believer in not carrying any type of debt, including an auto loan and a mortgage. In fact, he says he would rather ride a bike than take out a car loan.

In his book, Financial Peace Revisited, Ramsey says, "We want it all, and we can borrow to get it all before we can afford it all." For some, getting a loan or credit card has never been easier. But the more debt you have, the more you have to work, and the less money and time you'll have to enjoy your life.

Once you have a small emergency fund, Ramsey says it's time to tackle your non-mortgage debt. Not just your credit card debt — all of your debt. He feels that debt-free living isn't just about paying off revolving debt but also paying off student loans and car loans.

He recommends the debt snowball method, in which you pay off your smallest balance first. You'll make large payments toward this debt every month while making the minimum payments on all your other debts. After you get rid of the smallest balance, take the money you were using to pay off this balance and apply it to the next smallest balance, and so on. You'll eventually pay off your debts, at which point you can start increasing your $1,000 emergency fund, aiming for three to six month's worth of income.

After paying off debt and building a "real" emergency fund, Ramsey puts the focus on your mortgage and encourages paying off this debt as fast as you can. Becoming mortgage-free might feel like a stretch, but since you don't have other debts hanging over your head, you're able to increase your mortgage payments without breaking a sweat and pay off this debt year sooner.

That's the American dream if I've ever heard of it.

Source:http://www.wisebread.com/3-pearls-of-financial-wisdom-from-dave-ramsey

5 Credit Card Perks

Ever lost your luggage? Had a new purchase gone on the fritz just outside of the 30-day return window? Come down with the stomach flu the day before a long-awaited cruise?

If so, you know how costly, not to mention frustrating, these scenarios can be. It’s hard watching both time and money run down the drain. But you may have a makeshift insurance policy against these experiences right in your wallet: your credit card.

Yes, credit card benefits can extend to coverage of the aforementioned issues, among many others, as long as the original purchase was put on the card. It’s all in the fine print, which many consumers toss without reading, missing these perks altogether. "You have to read the terms and conditions on your card," says Bill Hardekopf, founder of LowCards.com. "And if you want to take advantage of one of these benefits, I highly recommend calling your issuer and talking about the benefit details over the phone."

That’s because the policies can vary, as can the requirements for meeting them. But here are five benefits to look for:

Travel protections. These benefits can include both delayed luggage insurance, which will cover the cost of any "essential" items you need to purchase until your luggage is returned (up to a limit), and lost or damaged luggage insurance, which will cover replacing luggage that is not found -- again, up to a limit. Many cards also offer trip cancellation service, which can reimburse you if your travels get canceled and the services you've booked are nonrefundable.

Extended warranties. If you’ve ever purchased an electronic item, you’ve probably been offered an extended warranty -- for a price. You may not need it if you’re making the purchase with a credit card. "The manufacturer may give you a year’s warranty. If you buy it with a credit card, the issuer in its terms and conditions may give you an extra year of warranty on that item," says Hardekopf. "That may be adequate protection and you can skip the extended warranty from the retailer." On top of that, many cards offer you additional coverage (up to a limit) if an item you purchase is damaged or stolen inside of a set period of time -- often 30 to 90 days, says Beverly Harzog, a credit card expert and author of "The Debt Escape Plan."

Return protection. If you make a purchase with an eligible card, and the retailer won’t allow you to make a return, your credit card may offer a refund, says Harzog. There will be a limit on the time frame -- often within 90 days of purchase -- and the reimbursement amount.

Roadside assistance. If you’re stranded, you may be able to call the number on the back of your card for access to emergency services such as a locksmith, tow truck or tire change. You’ll pay for the cost of service, or in the case of Discover, a flat fee of $69.95 for any covered services rendered. Again, read the fine print on this one.

Zero liability. In this age of data breaches, this may be the most important benefit of all. "When you use a credit card, you’re really protected if it or your information gets stolen. With cash, you’re out of luck, and with check or debit, the thief has stolen your money and you’re trying to get the bank to replace it. With a credit card, you’re not out your own money," says Hardekopf.

This is one good reason to always use a credit card when shopping online, and traveling, as long as you pay off the balance in full, before triggering any interest charges.

7 Reasons Why Malaysians Don’t Save

Do you have a problem with saving money? You are not alone.

We all have our excuses or reasons for why we can’t save. The only way to overcome this difficulty is to realise and identify the problem first. Then, we should work towards eliminating our excuses and working to find better solutions.

In 2012, Visa conducted a Financial Literacy Barometer survey on over 900 participants in Malaysia. The survey showed that one in five respondents had no savings at all and over 70% cannot endure a personal emergency of over three months.

That’s pretty scary, and to overcome this biggest financial hurdle, one must understand the cause.

Here are seven excuses that are perhaps unique to Malaysians for not saving money—and how you can bust them to build your financial stability.

1. Low income

The most common reason for not saving money might not seem like much of an excuse at all for many. Instead, it might feel more like a fact. Currently, Malaysia’s minimum wages is RM900 for Peninsular and RM800 for Sabah and Sarawak. This is hardly enough for a family to fulfil their basic needs, what more saving.

It is easy for one to save money when they make four or five figures a month. However, if you earn minimum wages and live in a city with a high cost of living, it can be difficult to save money no matter how frugal you are. It’s scary because the importance of savings is especially important for those in the lower-income bracket.

It’s essential that you try your absolute hardest .to save. Even if it’s a little bit at the start. If trying to cut corners on your spending fails, you might want to look into increasing your income.

Quick tips

Negotiate for a raise, consider finding a different position, work more hours, or establish some part-time work on the side by monetising your hobbies.

2. Lack of financial literacy

People with higher financial literacy will assume greater responsibility for their financial well-being. For example, individuals need to determine not only how much to save for retirement, but also how to allocate retirement wealth wisely. They can learn about budgeting and saving to manage expenses and debt. Indeed, financial literacy is an essential living skill for all of us to build financial security and achieve financial well-being.

However, individuals with low financial literacy are less likely to take calculated risks and invest their money in stocks. Many have also fallen prey to financial scams and lost their life savings.

Quick tips

You must stop telling yourself this excuse. There are so many fantastic resources at your disposal that will help you boost your financial education.

On the bright side, if you’re reading this article then you’re on the right track!
Take the initiative and start reading up on personal finance and how money works in the real world. Seek help from trusted professionals and don’t be afraid to ask questions.

3. Servicing multiple debts

Another reason that prevents people from saving money is the continual need to play catch up on their debts. You most likely fall into this category if you owe massive amounts of debts – credit card, student loan, personal loan, housing loan and/or car loan.

The worst part about this position is that it is hard to get ahead. Once you are behind, it makes it that much harder to reverse things unless you make drastic changes.

According to the Malaysia Department of Insolvency, 41 Malaysians are declared bankrupt every day, with the majority of them being under the age of 44. The main reasons cited are the inability to pay off car loans, poor control of credit card usage and a failure to pay off personal loans.

It is highly possible for an average Malaysia earning RM4,000 to service debts worth RM3,700 every month:

	Monthly repayment
Total	RM3,700
Credit card	RM500
Student loan	RM200
Personal loan	RM300
Housing loan	RM2,000
Car loan	RM700

Sure, you need to repay your debt. But it’s not the only financial priority that deserves your attention. Your twenties and thirties are your prime saving years. A Ringgit saved today can be more than a Ringgit earned tomorrow – thanks to the power of compound interest over time.

Quick tips

You can put the bulk of the money available each month toward debt repayment. But still set aside 10% to 20% for savings. It’s okay to work towards more than one financial goal at a time.

It’s important to know how to clear your debts effectively so you can start saving quicker. Here are some effective methods!

4. A low financial incentive for saving

Savings and fixed deposit (FD) accounts do not yield returns as much as investments do. The maximum interest rate offered is only 4% per annum, which may come with various terms and conditions. If that’s not bad enough, the current inflation rate stands at about 1.8% – and this means the effective interest rate we earn from our savings is only 2.2%.

Some may still stick to savings and FDs as they have a low tolerance for risk and is deadly afraid that they will lose all their hard-earned money in investments. However, understanding how an investment works can help you take calculated risks when it comes to growing your money through investments. Consider investments like unit trust, REITs and share trading if you are looking for a higher yield for your savings.

Quick tips

Savings or FDs accounts can be good to put some of your savings intended for an emergency as they are more liquid than investments. They are a place to stash away your cash so that you do not use it until you really need it.

5. Procrastination

This is another huge financial mistake. Procrastination can be very costly; for example, if you save RM100 per month for 25 years at an interest rate of 3% you will accumulate RM44,712. If you chose to start saving later, and you saved for 15 years instead, you would only have accumulated RM22,754. This is the advantage of compounding interest. And this is a really conservative example!

Quick tips

If you start saving earlier, you can get away with making smaller monthly contributions to your nest egg than if you waited and tried to play catch up down the road.

Let compound interest do the heavy lifting for you!

6. Having the wrong misconception of saving

Whenever there is a hike in petrol prices, we can see Malaysians queuing up at the petrol station to fill petrol the night before the price rise. They somehow believe that they are saving money on petrol – which is a misconception altogether.

If a Toyota Vios driver decided to fill up a full tank before the recent petrol hike of RM0.10 for RON95. Before the price hike, his full tank would have cost him RM87.75 (RM1.95 x 45 litres). After the price hike, it would cost him RM92.25 (RM2.05 x 45 litres). So, he would have made a one-time saving of RM4.50 only.

That may just be enough for a plate of mixed rice with two dishes. Look for real ways to save instead of focusing on petty things.

Quick tips

If you are really looking forward to saving money on petrol, consider driving at a moderate speed, avoiding congested zones, or dump the car whenever you can and start walking or taking public transport.

These real money-saving tips will definitely help you save hundreds a month.

7. Malaysia is a shopping heaven

Not shopping is probably a tough thing to do for most Malaysians. With shopping malls at almost every neighbourhood, Pasar Malam, warehouse sales every weekend, cutting off spending can be truly torturous.

And this is probably the number one cause for Malaysians’ inability to save money. As Malaysians, we are always spoilt for choices, from food, entertainment or branded items. A friends gathering never goes away without an eat-out or sales never swing by without us taking advantage of that.

You can always enjoy a better television or a newer car, but splurging on the latest models can be a very expensive (and unnecessary) habit. You should only upgrade when your current item, be it smartphone or TV, is broken, not every time a newer model comes out. This is a result of the mentality that believes your money is yours to spend (now).

Quick tips

Prioritise your spending and buy according to your needs and not wants. When there is a sale, it does not automatically mean that you must buy something. Buy only if you really need something.

Anytime you must spend, think thrice if you can do without it. And the money you put into savings is the highest priority “spending” you can do. Pay yourself first, and then use what’s leftover to purchase something you want. Here are tips to help curb the temptation to spend money!

Don’t let these excuses stop you from saving for the rest of your life. If you don’t, you won’t achieve what you want. Or worse, if something bad happens, you’ll be completely exposed financially.

Identify the common excuses that stop you from saving and start taking proactive steps in overcoming your stumbling blocks. Once you have done that, you may find saving money much easier to accomplish. It may not be easy, but it is possible and it is well worth it because saving gives you peace of mind and financial independence.

Source:https://www.imoney.my/articles/7-reasons-why-malaysians-dont-save?utm_source=newsletter&utm_medium=email&utm_campaign=2015-07-09-7-reasons-why-malaysians-dont-save