As banking has moved more and more online, it’s more important than ever to know what steps to take to protect your finances from scammers, fees, and fraud.
The good news is, with the right protections in place, your money can be far more safe and secure than it would be in a coffee can or under your mattress. All you need to know is how to set up secure financial practices and what to look out for.
What’s Ahead:
Protecting your finances
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Fraudsters, high fees, expensive interest rates – these are all things that can drain your bank account before you know what hit you. But you don’t have to let them. You can build a fortress of security around your money and learn how to avoid scams as well as unnecessary costs, so you can keep more of your cash for yourself.
Fraud
Your primary concern in securing your money is to protect against fraud, theft, and other crimes. Technology can actually help you do this, if you use it properly (no more ABC123 passwords!).
It’s also on you to choose financial institutions that actually protect their customers. Make sure you read reviews before choosing a bank or credit card company, and go with one that’s got a strong reputation for security.
You also have to be really careful to protect yourself against identity theft, which includes guarding your personal information.
Read more: 7 Signs You’re At Risk For Identity Theft
Fees
Fees can eat up so much of your money. Fees to send, fees to buy, fees for every little thing. The more you can avoid fees and interest expense, the more of your own money you get to keep.
No tricks required. All you have to do is know what tools are available for you, and take advantage of them.
Use only FDIC-insured banks
The first step in protecting your money is putting it in a bank that’s actually going to take care of it for you. Only use a bank that is FDIC-insured. That means that no matter what happens to the bank, your money is safe. Bank goes under? CEO quits? An asteroid hits bank headquarters? Don’t worry, you’re protected.
The FDIC is an agency created by the government to protect consumers and back up Americans’ faith in the banking system. In the olden days, if there was a run on the banks, that meant people rushed to the bank to withdraw their cash, and there might not be enough left for the folks last in line. But with FDIC insurance, you know you’ll always be able to get your cash.
When a bank is FDIC-insured, that means the Federal Deposit Insurance Corporation guarantees to replace the money you have there, usually up to the max of $250,000 per person.
Take Chime®, for example. It’s a financial app and thanks to the FDIC, of which it’s a member (through parent bank The Bancorp Bank or Stride Bank NA), your money is guaranteed up to $250,000.
A bank that is not FDIC-insured is one that has decided not to give its customers this extra insurance that their money is safe. If that bank fails, your money could be gone forever.
If you already have a bank, check that it is FDIC-insured. If you don’t have a bank yet or are considering switching, check first before signing up for an account.
How to find out if a bank is FDIC-insured
To find out if your bank is FDIC-insured, ask your bank representative. You can also look for the FDIC sign on the bank building, check the bank’s website, call the FDIC directly (877-275-3342), or use the FDIC’s look-up tool on their site.
Choose a card that protects you
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Not all credit cards are the same. To get the most value and keep your accounts safe, sign up for a card that offers outstanding fraud protection. If you’re committed to protecting your money, there are plenty of cards available with no annual fee, either.
Fair to Good credit
The Capital One Platinum Credit Card only requires fair/average credit for approval and has no annual fee. If your card is lost or stolen, simply call Capital One to report it. With this Mastercard, your fraud liability is $0 – even less than the standard limit.
Plus, you can protect yourself in other ways, too. Use the free online portal or mobile app to see your balance, credit details, and recent transactions. You can also pay online with virtual card numbers, which protects your real credit card number. And, using the CreditWise feature, you can easily check your credit score and sign up for alerts to be notified immediately if anything changes.
Good credit and above
If you’ve been working hard to improve your credit score and have lifted it above 700, some new cards will be available to you that offer even more perks.
The Capital One Quicksilver Cash Rewards Credit Card has no annual fee and is available for users with good credit (700 and above). What’s more, this card actually rewards you on your purchases; 1.5% cash back on all purchases.
The Capital One Quicksilver Cash Rewards Credit Card also offers $0 Fraud Liability, so you’re never on the hook if you’re a victim of fraud.
Monitor your accounts
Once your money has been put in an FDIC-insured bank, it’s important to keep an eye on it. Check your account balance regularly, and compare your transactions with your receipts. This will help you spot bank errors, fraudulent charges, and even theft.
How to check your account
There are several different ways you can check your bank account. A great way is to sign up for online banking. You can usually do this at your bank’s website, or you could ask for help setting it up at a nearby bank branch. Once you’ve signed up and received your username and password, go to the bank website and sign in. Click on your account to see recent transactions and your current bank balance. Note that some transactions don’t show up immediately, so if you just got back from the store, for example, you might not see that transaction posted yet. Check back a little later or the next day.
You can also check your bank balance from an ATM, keep track with a paper ledger or log, or ask a bank teller for your balance. Some banks will also provide a number you can call to hear your most recent transactions.
It’s important to check your accounts regularly so you know immediately if something is wrong. If a scammer has gotten hold of your bank account information, they could empty the whole thing, so you want to put a stop to any fraudulent activity as soon as possible.
Sign up for account alerts
An easy way to keep tabs on your bank account is to sign up for account alerts. You can sign up to be notified if your balance drops below a certain amount, or if there’s a large transaction.
You can customize the dollar amount, so you’ll get a text or email anytime your bank posts a transaction larger than, say, $20 (or whatever you choose). I set up my account to notify me of any transactions larger than $1, which is basically all of them, so I get frequent reminders to check my balance and make sure there’s no funny business going on.
Depending on the bank you choose, you might get even more security features that protect your cash. For instance, Aspiration is a neo-bank company that goes the extra mile. Not only do they do their part to contribute to socially and environmentally conscious causes, but they use multi-factor authentication on all accounts for an extra layer of security. So if you lose your phone or your account is compromised, scammers and hackers have an even harder time breaking in. Plus, they have sophisticated systems in place that detect suspicious account access and unauthorized account activity, helping you stop problems before they become, well, a problem.
Get a VPN
Secure your financial data and account information by using a VPN (Virtual Private Network). A VPN will encrypt your traffic, so hackers can’t sniff out your login credentials and break into your account. VPNs provide a direct, secure connection to your financial institution’s app or mobile site, reducing the ability of outside agents to steal your identity and take your money. Your activity becomes anonymous and untraceable.
It’s particularly important to use a VPN if you’re using public Wifi. Using public internet creates a situation where you’re sharing sensitive financial information on the same network as other random strangers, and there’s no telling who could be up to no good. However, you can also use a VPN at home for an extra layer of security. It still protects your activity from identity thieves.
Move your money out of reach
Another way to protect your money is to move it out of reach. If you keep all your money in a checking account for bills and purchases, consider whether you could start moving some of it to a separate savings account. Not only does this make it a little harder for you to spend (which could help you accelerate your savings), but it can protect your money in case of theft, too.
Imagine your debit card number is skimmed at a gas station. If some of your money is in a separate savings account, it would be protected from the skimmer and you wouldn’t be wiped out by a stroke of bad luck.
Read more: Using Multiple Bank Accounts To Control Your Spending
Check your credit score often
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Do you know your credit score? Unless you’ve been seeking it out, you may not. Your credit score is sort of like a rating of how successful you’ve been at borrowing money and paying it back. Lots of places rely on your credit score to make decisions about you: credit card companies, lenders, sometimes even utility companies, or landlords who want to know if you’re reliable, and they might use your credit score to find out.
If your credit score is like a grade, your credit report is like your whole report card. It shows lenders the big picture, and it contains all the information about your borrowing history, including previous addresses, lenders, credit card companies, and more. Your credit report changes as your credit history changes, so if you take out a car loan, open a new credit card, or pay off a loan balance, that will be reflected in your credit report.
It’s important to check your credit report often to make sure there are no mistakes or errors. And if anyone has used your information to take out credit in your name, you’ll spot it on your credit report.
Read more: How Credit Works: Understand The Credit History Reporting System
How to check your credit
The federal government has protected your right to see your credit report for free once a year from each of the three major credit reporting bureaus: TransUnion, Equifax, and Experian. You can go to annualcreditreport.com to get them. You’ll need to provide a little personal information to verify your identity and download your report. You can get all three at once, or you can get a different one every four months – it’s your choice.
You can see your credit score in other places, too. For example, Credit Karma will give you your credit scores from two of the three major credit reporting bureaus, for free – as often as you’d like to check. You can use this credit score to keep tabs on your credit and watch it grow over time as you build a solid history of paying down your debt.
Know when to use credit over debit
A lot of people are scared of credit cards, and that is completely understandable: if you don’t know how to use it properly, you could rack up a LOT of debt and get in over your head. The interest begins to compound, and if you’re not careful, you could be spending hundreds or thousands of dollars more than necessary.
It’s best to use your credit card only for what you could afford to pay in cash, and then pay the card off in full. And you don’t need to wait until your balance arrives on your monthly statement, either. Paying your card off right away helps you avoid credit card interest, which can be damaging if uncontrolled.
So why use credit cards at all? Why not stick to a straightforward debit card? Well, it’s important to know that while your debit card is directly linked to your checking account balance, your credit card is not. So that builds in a layer of protection. If something happens to your credit card, it won’t drain your bank account the way it might if it was your debit card.
Furthermore, credit card issuers build a lot of protection into your credit card account. Whereas you could be on the hook for the entire sum if your debit card is compromised, you are only liable for the first $50 if it happens to your credit card. That’s a huge safeguard. However, you have to report the fraud right away to take advantage of it. (See above re: checking your accounts frequently).
Finally, once you’ve built up a decent credit score, you could be eligible for a rewards card. Then you’d actually earn rewards for using your credit card instead. If you can pay off your balance in full, then using your credit card could get you cash back, discounts off purchases, or even airline miles and hotel points – just for making the everyday purchases you used to put on your debit card.
Summary
You don’t have to fear financial ruin from your online banking and credit cards. But you do have to know what safeguards are out there and take advantage of them. Make sure you’ve activated account alerts, set a secure password and multifactor authentication, and signed up for banks and credit cards that will help protect your information.
Keep an eye on your credit reports, and always report any unauthorized activity immediately so you can keep your hard-earned cash in your account, and not some scammer’s wallet.
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