How to protect yourself from text scams

By now you probably know about a lot of scams thieves use to steal personal information from their victims. From ATM skimming devices to phishing emails and world-wide data breaches, thieves are finding new ways to get their hands on sensitive data every day.

More recently, police all over the world have seen a rise in cellphone identity theft scams—particularly those that originate through text message. It’s no surprise, considering there are almost as many active cellphone accounts as there are people in the world.

It might sound scary, but like any other identity theft scam, knowledge is your best weapon. So how are hackers using text messages to steal identities and other sensitive data?

Here’s what you should know:
There are a lot of variations, but ultimately you’re sent an unsolicited text message prompting you to call a 1-800 number to provide personal information, like your credit card number, PIN or social security number.. Hackers may pose as your financial institution saying that your account or card has been compromised, or they may claim to be the IRS seeking back taxes.

If you ever receive a bogus text like this, the best way to protect yourself is to remember these 2 things:

1. The IRS does not use unsolicited email, text messages or any social media to contact you about your personal tax issues.

If you receive a text message from someone claiming to be the IRS and demanding payment, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or atwww.tigta.gov.

2. Your financial institution should never ask you to input private information (like your credit card or account numbers) via text, or call you asking for personal information.

If someone ever calls or texts you about your account and it seems suspicious, hang up and call your financial institution’s published phone number. If they’re contacting you, it’s safe to assume they know your account information already; so while it’s reasonable for them to ask you some questions to verify your identity, asking for your full account or card number is a red flag.

If you get a text referring to accounts at an institution you’re not associated with, don’t assume they know something you don’t. Do a quick search on the internet to find that institution’s public phone number and call to verify the information. Don’t call any phone numbers given in the bogus text.

Bottom line? If something seems suspicious or out of place, it probably is. Don’t respond to suspicious texts, and instead call a publicly published phone number for whatever institution or company the texter claims to be associated with.  When it comes to your private information, you’re always better off safe than sorry.

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5 questions to ask before opening a business account

Whether you’re just starting up and only need a simple checking account for your business, or you’ve been in business for several years and are looking for a change, there’s a lot you should consider before opening or moving an account.

The kind of account you choose can make or break your business. Here’s what Evan Muench, a commercial loan officer at IHMVCU, thinks you should know before opening or switching your business accounts.

1. Does the account have a minimum balance requirement?
A minimum balance is one of the most common qualifiers for checking and savings accounts. For some accounts it’s simply the initial amount required to open the account, but others you might be charged a fee if your balance ever falls below that amount.

2. What’s the fee schedule?
Understanding the fees and costs associated with an account is the best way to avoid surprises down the road. A financial institution should provide you with a fee schedule before the account is opened, but it’s always good practice to ask for it just in case. So what should you be looking for when you read the fee schedule?

  • Monthly maintenance fees
    Are you being charged a fee just for having the account?
  • Overdraft fees
    How much will you be charged if your account is overdrawn?
  • Cost of checks
    Some accounts offer free checks when the account is opened, but charge a fee if the order is replenished.

3. What are the minimum transaction amounts? Maximum transfers?
Some checking and savings accounts require a minimum number of transactions to be eligible for the account perks (like earning dividends, ATM fee reimbursement, etc.). Other accounts, like Money Markets, might restrict the number of transactions you can make in a month. Knowing these requirements up front will allow you to make an informed decision based on your business’s needs.

4. Is the account interest bearing? How is interest calculated?
It’s important to know if you’ll be paid dividends on an account and what must be done in order to receive them. Typically, interest is calculated based on the Average Daily Balance of an account. You should confirm how that interest is calculated and if there are any eligibility requirements, like a minimum balance or transaction limit, so you can position your business to take advantage of this perk.

5. Is online banking available? What does it cost?
Online banking is a key platform in today’s culture. Many people prefer the convenience online banking provides over visiting a branch in person. While almost all financial institutions offer some form of online banking, it’s important to make sure it’s available with the account you need and that it offers the features you want—like mobile banking and remote deposit.  You should also find out if there’s a cost associated with having that access.

If you already have a business account, it’s good practice to review the terms at least once a year to make sure the account still fits your needs. If you can’t find the answers to all your questions by looking at your statement, make an appointment with your financial institution to have them walk you through it.

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Evan Muench
Commercial Lending Officer
(309) 793-6200 ext. 70110
emuench@ihmvcu.org

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[INFOGRAPHIC] Why you should choose a credit union for your business banking

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How to detect a skimming device

Probably one of the most frightening things to think about is the possibility of someone stealing your private information—whether it’s through a major international data breach or a totally avoidable mistake like losing your debit card.

One of the easiest ways for thieves to steal your financial information is through devices known as skimmers attached to ATMs or credit card terminals. The good news is when it comes to protecting your information, knowledge is the best weapon.

What is a skimmer?
A skimmer is a malicious card reader that grabs your data off the card’s magnetic strip. They’re usually a piece of plastic that fits over the top of a real card reader, like those at ATMs and pay-at-the-pump gas terminals, so they can harvest data undetected every time a card is swiped.

The device itself is usually no larger than a deck of cards, and is often disguised to look like part of the ATM or terminal. Thieves will also install a hidden camera that records PINs as they’re entered or a false keypad that sits directly on top of the real pad.  In order for this scam to work, the thieves must come back and retrieve the skimmer to extract the data.

Though chip cards will protect a user in many situations, classic skimmer scams are not one of them. In order to remain backwards compatible with terminals that haven’t been upgraded, chip cards still house sensitive data in the magnetic strip.

What to look for:

  • Check for any signs of tampering—damaged or wiggly parts, or parts that look out of place. Wiggly parts, especially around the card reader, are generally a really good sign of tampering.
  • If there are other ATMs next to the one you’re using, make sure they look alike. If there are obvious differences, don’t use either. For example, one might have light-up arrows showing which direction to insert your card while the other has only a solid plastic card slot.
  • Check the top, sides of the screen, card reader and keypad. If any part of it looks out of place, like an area with different coloring or an abnormally thick keypad, don’t use it.

You should also always consider the location of an ATM or card terminal before you use it. An ATM inside of a financial institution, for example, would be less likely to have a skimmer attached because of all the cameras, but one on a low traffic street corner might be more suspicious.

The best rule of thumb is to be cautious—cover your hand when you enter your PIN and don’t use your card somewhere that seems suspicious or makes you uncomfortable. While it might be less convenient to travel elsewhere in those situations, you’re better safe than sorry.

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[POP QUIZ] 14 ways to tell if you’re financially healthy

Financial health means different things to different people, but there are some universal truths. So how do you tell if your finances fit the bill? Read the comments below and see how many you identify with. While each statement doesn’t mean much individually, your finances are probably in good shape if you agree with a majority.

 1. You live within your means
You don’t overdraw your account or bounce a check, even if you have overdraft protection. You’ve got enough of a cushion that you aren’t spending down to the last penny every month. You’re able to save a bit without depriving yourself.

2. Financial stress isn’t keeping you up at night
You have enough in the bank that you’re not plagued by money worries. You know you’ve got enough to cover the bills, and you’re not ducking creditors. You don’t put off important financial conversations and you’re not just avoiding thinking about the things you can’t handle.

3. You use credit cards out of convenience, not necessity.
Using a credit card out of convenience or rewards and paying it off every month without paying interest is totally fine. Using a credit card because it’s the only way you can afford to make purchases is problematic and a good sign that you need to revisit your budget or change your spending habits.

4. You’re not worried about losing your job
Not only is your position stable, your finances wouldn’t be completely derailed by losing your job or getting laid off. Yes, you probably need to adjust your budget and change some spending habits, but you could get by for at least a month (ideally 3) while you look for replacement income.

5. You make payments on time
You’re not wasting money on late fees and penalty APRs.  You plan around your due dates and pay on time, or even in advance.

6. You aren’t living paycheck to paycheck
Part of every paycheck goes towards your savings or emergency fund. You aren’t spending down to the last penny every pay period, and you can handle an unplanned for gap in income (see #4).

7. You save automatically
Some people say to save what you don’t spend, but you know better. You’re only spending what you don’t save.  You pay yourself first. All of your money isn’t in your checking account, and you either set up transfers or have some of your money automatically deposited into savings accounts.

8. You’re not spending money on stupid stuff or to make yourself feel better
You know that retail therapy isn’t actually solving any of your problems and you’re not fooled by all the schemes retailers use to get you to spend money, like trick lighting and hypnotic music. You aren’t throwing money away on things you don’t need, clothes you won’t wear or already own in two different colors, or services you don’t use (here’s looking at you, 3000+ channel cable subscription).

 9. You don’t panic in the face of a financial emergency
If your furnace broke or your kids hit a baseball through the kitchen window, fixing it wouldn’t put you in dire straits. That’s what your emergency fund is for.

10. You don’t feel guilty spending on special occasions
Anniversary gift? Birthday party? Night on the town? No problem, within reason. Your budget is flexible and you don’t have to rob Peter to pay Paul (or, skip the electric bill so you can order a pizza). If the thought of spending a little extra money one month to pay for a gift or dinner out makes you break a sweat, you might want to analyze your spending habits.

11. You’re not worried about other peoples’ opinion of your finances
Keeping up with the Joneses is not your game. You’re comfortable with where you are financially, and don’t feel the need to make big purchases in order to impress others.

12. Your debt-to-income ratio is below 30%
The lower your debt-to-income ratio the better, but most experts recommend keeping it at or below 30%. If yours is creeping up higher than you’d like, you either need to pay down your debts or find an additional source of income.

13. You buy assets that appreciate, instead of depreciate

Wealthy people don’t blow large amounts of money on things that quickly lose value, and neither should you. New cars and other fancy toys shouldn’t be a priority. Instead, invest your money wisely or put it towards wealth-building purchases.

14. A large purchase doesn’t deplete your savings
Your budget is fairly consistent month-to-month, but an unexpected or abnormally large purchase doesn’t throw your whole system out of whack. You’ve build a buffer that allows you to splurge occasionally, for fun or emergencies.

Results:
10 – 15
You’re the picture of financial health. You’ve figured out how to make your finances work for you, and you’re prepared to handle a financial emergency.

5 – 9 You’re on the right track to financial health. You’re living within your means, paying attention to your spending habits and using credit responsibly.

0 – 4 You’re missing that financially healthy glow. Your budget deserves a second look. You might benefit from establishing a flexible budget that accounts for saving for emergencies and spending on fun stuff.

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5 ways to make reaching your financial goals easier

Maybe you hope to someday own a house, or pay for your kids’ college education or maybe even just pay off your own student loans before your kids go to college. . .

We all have goals for our financial future, but reaching them can be really hard — especially when it comes to leaving that extra $500 or $1000 sitting in your savings account.  Turning down a new pair of shoes when you’ve had a bad day, or waiting to borrow a video game from a friend instead of buying every new release for the sake of some far off financial dream can be a daily struggle.

So how do you do it? Here’s what we suggest:

1. Get prepared.
Before you do anything else, you need to start an emergency fund.

No matter how diligently you plan, you’re bound to encounter some unexpected expenses. Whether it’s a one-time charge like a broken furnace or a major ongoing expense like unemployment or a serious illness, having some backup funds will keep you from racking up more debt or using funds planned for something more fun.

2. Set a budget.
If you’re flying by the seat of your pants every month when it comes to your finances, you’re not doing yourself any favors.

Admittedly, budgets are not fun. They can be time consuming and tedious.
But stick with us here: they don’t have to be.

We’re big fans of the 50/20/30 method. It’s a pretty simple way to categorize and prioritize your spending, plus it’s flexible. So you can easily adjust it for months when there’s unusual spending (like back-to-school time, or that summer all your friends are getting married).

3. Spend less.
This is obvious. The only way you can save money is if you spend less than you earn. Whatever your financial goals, you’ll never meet them if you’re spending every last penny.  This is where that budget we just talked about comes in. You have to track to your spending and earning to know where you’re making mistakes and learn what changes you can make in the future.

4, Get insurance.
Don’t go into debt because you aren’t prepared to cover unexpected expenses. Whether it’s auto and gap insurance in case you get into an accident, disability insurance in case you lose the ability to work or life insurance to protect your family if something terrible happens to you, insurance keeps you from taking a loss when the unexpected happens.

5. Use technology.
Technology is your friend. As an IHMVCU member, you get access to some pretty awesome features to help keep your finances in check. From financial calculators to help plan for the future to FinanceWorks, a free budgeting software available in Online Branch, we make it easy to reach your goals.

FinanceWorks automatically tracks and categorizes your spending and helps identify trends each month, allows you to set goals and will even notify you when you’re approaching the spending limits you set up.  If you’re not already enrolled in Online Branch, get started today.

Reaching your goals is a lot easier when you’re prepared. Don’t get discouraged if it doesn’t start working right away—mastering personal finance management takes time, but we promise it’s worth the effort.

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How to create a back-to-school budget that works for you

Back-to-school time is the perfect opportunity to start talking about everyone’s favorite subject: budgets.

Depending on how organized your finances are, this time of year might come with a lot of unplanned expenses—and we all know how those notebooks, binders, markers and glue can add up. If you’re someone who is always caught off guard by these once-a-year type expenses (see also: birthdays, baby showers, graduations etc.), you might be in need of a flexible budget overhaul.

When it comes to building a budget that can handle almost anything life throws at it, there’s one formula most experts recommend: the 50/20/30 method.

Here’s how it works:
50% of your budget should go towards essentials. This includes housing, groceries, utilities, insurance and so on. There aren’t many gray areas in this part of the budget. If you have to ask yourself if something is essential, it probably isn’t.

20% is reserved for priorities like paying down debts, college savings, retirement accounts and your emergency fund.

30% is for optional expenses like vacations, hobbies and going out to eat, as well as one-off expenses like (you guessed it!) school supplies, birthday presents etc.

So what makes this plan so flexible? If you’re feeling like the budget is a little tight, you already know which portion gets cut back to pay for that “surprise” expense. Eliminate some of the optional expenses, by say eating at home a few more nights this month and skipping those morning lattes, and suddenly there’s room for the kids’ new gym shoes without the stress of paying the power bill late.

If moving things around in the “optional” category still has you feeling strapped, you know to plan differently for next year. Maybe set up a school supplies savings account in the priorities category, and start contributing a little bit each month.

Keep in mind that these guidelines are helpful, but they’re not hard and fast rules. Make adjustments based on your family’s needs. Whatever changes you make, just make sure it all adds up to 100%.

Try IHMVCU’s budgeting and saving calculators to find out what would happen if you changed your money habits. IHMVCU members also get free access to FinanceWorks, a budgeting tool within Online Branch. FinanceWorks tracks your income and expenses, allows you to set realistic spending goals, and even alerts you when you meet or exceed your spending limits.

Now that you have a place to start, calculate your current spending and see how it compares to the recommended percentages. No matter what adjustments you need to make, keep in mind that every month will be different. The most important thing is to be diligent.

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Crash Course in Credit, Lesson 4: Fixing Damaged Credit

There’s no quick fix for damaged credit. In Lesson 2 of our Crash Course in Credit you learned that nothing falls off your credit report quickly—good or bad, most things stay for at least seven years. But there are things you can do in the meantime to fix your broken score.

Step 1: Check your credit report.
Contrary to popular belief, it’s not bad to check your own credit report. It’s something you should do at least once a year. You’ll never know what’s hurting your score if you don’t look. You can get a free copy of your report from all three credit bureaus once a year at annualcreditreport.com.

Got your report? Good. Now look for any mistakes, like falsely reported late payments or accounts that aren’t even yours. If anything is amiss, you can dispute errors with the creditor and have it removed.

Step 2: Set payment reminders.
A good payment history is a huge part of your credit score. If late or missed payments are your problem, automatic payments might be your solution. As long as you actually have the money in your account, it’s a fool proof way to guarantee your bills are paid on time. You can set up automatic payments through Bill Pay or, depending on what services are available, directly through your lender.

If you’re not comfortable having your bills paid automatically, or you aren’t certain the funds will be available when the due date rolls around, try setting up payment alerts on your phone’s calendar. You can set them up however you like, but a good idea might be setting an alert the pay period before a bill is due. That way you’ll know to budget around the upcoming payment.

Step 3: Call your creditors.
If you’re really struggling to make your payments, burying your head in the sand will only make things worse. All creditors and lenders have at least one thing in common: they want you to pay them back. Many will work with you to set up a modified payment schedule that works for both of you, even if it’s just for a couple months. Yes, you could end up paying more in interest in the long run but you’ll at least have a chance to get back on your feet. So how do you know if your lender will be willing to work with you? You have to call and ask.

Looking for more credit advice? Check out the rest of our Crash Course in Credit:
Lesson 1: The Basics
Lesson 2: Common Credit Myths Busted
Lesson 3: Good and Bad Debt

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Crash Course in Credit, Lesson 3: Good and Bad Debt

Originally published Feb. 25, 2015

Most of us can’t afford to live entirely debt free, but not all debt is the same. While some types of debt can actually be beneficial, others can be dangerous. Before you borrow money, it’s good to know the difference between “good” debt and “bad” debt.

In general, “good” debt will: create value over time, is often tax deductible and is used for a purchase that appreciates in value, or produces more wealth. Any debt that you accrue for things that have no potential to increase in value can be considered “bad” debt.

Mortgages
You probably can’t afford to purchase a home in cash, but that doesn’t mean you can’t own a home. If you plan carefully and only borrow what you can afford to pay back, getting a mortgage to purchase a home can be a great example of “good” debt. Your purchase will likely appreciate, especially if you make any renovations or improvements to the property. Plus, any interest paid may be tax deductible (but you should talk to your tax advisor for details).

Student Loans
People with college degrees or education in a skilled trade tend to make more money in a lifetime than those who stop after high school. A college degree or skilled-trade program is likely to pay for itself within the first few years after you enter the work force. But just like all other debt, it’s important that you don’t borrow more than you really need or student loans can quickly become “bad” debt. Experts recommend borrowing no more than what you expect to make in the first year of employment after graduation.

Business Loans
This is one case where the saying “it takes money to make money” can be true. You need a little capital to start a new business or expand an already successful one. Keep in mind that business loans are only “good” debt if you borrow reasonably and have a clear plan to generate more business or income in the future.

Credit Cards
Credit cards are often used to purchase wants rather than needs, and the ease of use can have debt piling up faster than you realize. How do you know if you’re building up bad debt? One sign is using credit cards for things that won’t appreciate in value, like clothes, food or vacations, without paying off the balance every month. You’re charged interest every month you carry a balance, which means the stuff you bought continues to lose value while the price you paid for it increases.

Car loans
You need a car to get to work and run all of life’s other errands, but you don’t have to go broke getting one. Most new cars depreciate quickly, sometimes as much as 20% in the first year. We’re not saying you should never buy a brand new car but, if you’re not careful, you could end up upside down on your loan—meaning you owe more than your car is actually worth. Whatever you decide to buy, look for a loan with little-to-no interest and pay it off as quickly as you can.

If you’re struggling with too much debt, our friends at GreenPath can help.

You might also be interested in Lesson One and Lesson Two from our Crash Course in Credit.

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Crash Course in Credit, Lesson 2: Common Credit Myths Busted

Does it ever seem like everyone you know has advice or “facts” to share with you about credit? While a lot of it might be helpful, chances are pretty good that at least some of it is false. For part two of our Crash Course in Credit, we rounded up some of the most common credit misconceptions we hear to set the record straight.

You have to have credit to get credit.
While it doesn’t make much sense in the real world to say you can’t get credit if you don’t already have it, it can be significantly harder to get if you have a short (or non-existent) credit history.  Most lenders require borrowers with little or no credit to have a cosigner for any loans, like auto loans or private student loans.  If you don’t want to or can’t find a cosigner, a good way to start building your own credit is a secured credit card, which allows you to make a cash deposit as collateral—a protection for the card company if you fail to make payments.

Checking your credit report damages your credit score.
Checking your credit report does not hurt your score. It’s actually recommended that you check your credit report at least once a year to ensure it doesn’t contain any errors. When you look at your own credit report, it’s called a “soft inquiry.” Soft inquiries can occur without your permission, and are only visible to you. If you’ve ever received a credit card preapproval in the mail, that creditor performed a soft inquiry on your credit.  Hard inquiries, on the other hand, can only happen with your permission. Only hard inquiries affect your credit score because they’re the result of a request to extend credit, like a loan or credit card.

Carrying a balance on a credit card helps your credit score.
As long as you’re making payments on time, carrying a balance doesn’t hurt your credit score, but it doesn’t help it either. The only thing you get from carrying a balance is more interest charged. If you use a credit card, your best bet is to pay the balance on time and in full every month. The on-time payment is a positive mark on your report, and paying in full prevents you from paying any interest. It’s as simple as that.

Delinquent credit accounts fall of your report once they’re paid in full.
While it would be nice if anything potentially damaging to your score would disappear once you fixed it, that’s not the case. Credit relationships generally remain on your report for seven years. So just because you’re paid up with a lender you’d fallen behind with, it doesn’t mean other lenders won’t be able to see that you were once delinquent. The good news is that positive relationships hang around for up to ten years.

Bankruptcy is a good solution if you have too much debt.
While it might seem like a good way to get creditors to stop calling if you’re in over your head, it’s not always the best long term solution. If you file for bankruptcy, you may be relieved of paying all of your debts or just some of them. Debts owed on mortgages, student loans, taxes, alimony or child support are rarely dismissed.

Once you file, credit reporting agencies are required to list bankruptcy on your credit report for seven or 10 years, depending on whether you file chapter 7 or chapter 13. Having bankruptcy on your credit report doesn’t just make it harder to get credit in the future—it might also affect your insurance rates or your ability to get a job or apartment.

Rather than rushing to bankruptcy, you should start by working with a credit counselor, like our friends at GreenPath, who might be able to suggest better options to pay off your debt.

Struggling with your own credit conundrums? Leave us a comment, reach out to us on Facebook or talk to a Financial Services Officer. We’ll make sure you (and your credit score!) are moving in the right direction.

Want to learn more? Check out part one of our series A Crash Course in Credit: The Basics

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