What happens if the IRS comes calling, wagging a finger at you for a mistake on your tax return – but the error was made by your tax preparer? Tax specialists say it totally depends on the mistake and the person who made it. 

The rule of thumb is if (regardless whose fault) you have short-changed Uncle Sam, you’re probably going to be responsible for the taxes you owe.  Your preparer, however, might/should offer to pay whatever penalties and interest you incur.  The best suggestion I can give you on this:  always ask.  Some companies like H&R Block, cover those costs and will even pay the difference in your tax bill up to $5000 if you want to ante up upfront an extra $30 to $50 for protection. 

How do you find a qualified professional tax preparer?  There are only two states – California and Oregon – that regulate them.  Ask for referrals from people you know and trust.  Look for members of the National Association of Tax Professionals (http://www.natptax.com/) or the American Institute of Certified Public Accountants (http://www.aicpa.org/) in your area.  

Remember my mantra?  It’s your money so take it personally.  You’re getting ready to hire someone to assist you in verifying to the government what your income is and what your tax responsibilities are. It’s your money so be sure the preparer is experienced with returns like yours and that you ask good questions.   

• How many years has the preparer been in business?  Your comfort level increases when you know the person has extended experience in the tax law.
• Is the preparer a CPA (certified public accountant)?  Different states have different requirements.
• What’s the focus of the preparer’s practice?  If you have specialized needs, such as real estate or small business, you’ll want to find a preparer who is familiar with your industry’s specific tax protocols.
• How does the preparer stay current?  There are 500 to 1000 changes to the tax code every year.
• How aggressive is the preparer regarding claiming deductions?  You’ll want someone whose philosophy is similar to your own.
• How available is the preparer to assist you?  In the event there’s a question or if you get a call from the IRS, you’ll want to know the preparer is available to help you year round.
• Has the preparer successfully negotiated with the IRS?  You’ll want to know the preparer has experience in the trenches in the event of an audit.
• Cost?  A simple return will be relatively inexpensive but more involved taxes take more time and cost more but could ultimately save you money down the line. 

When speaking with a tax preparer whose services you might be considering, never hire a paid preparer who:

• won’t sign your return (which they’re required to do by law);
• sets a fee for services depending on the amount of your anticipated return; or
• guarantees you a refund before even learning of your specific tax situation. 

Thursday, April 15^th is Tax Day this year.  Remember, even if you don’t have all the paperwork gathered and plan to file for an extension – you must pay whatever you owe on or before this date in order to avoid penalties.

Here’s to your health and wealth.

TAGS: choosing a certified tax preparer, Income taxes, questions to ask when choosing a cpa

Don’t shoot the messenger.

That’s long been my motto.  Even when things get so messed up and compromise your sense of well-being and your right to a remedy   – never shoot the messenger.  The messenger is often a very good person who has to figure out a way to sweeten bitter news.

I found two worthy messengers in the midst of my ING Direct debacle http://thethinpinkline.com/2010/02/04/banked-but-busted/ where a simple money transaction became a complicated and protracted ordeal that compromised a very important and time sensitive transfer of funds.   I want to thank these messengers publicly for not only doing their job but doing it well with a sense of personal commitment that made their professional credentials in financial services even more impressive:  Erica Borsella, the ING representative who stepped in to handle my situation from a supervisory level and Cathy MacFarlane, ING Direct Corporate Relations who, when notified by me with an email detailing the timeline and mistakes made - responded on behalf of the company.  Both made it clear that I had done nothing wrong – in fact, that I’d done a responsible job as a customer – but was the victim of an unfortunate circumstance:  an inadequately trained ING representative who gave me wrong information.

Though neither Borsella nor MacFarlane could ”fix” what happened to me, both provided an often forgotten asset called the human touch.  MacFarlane consented for me to share her email in full: 

Dear Valerie:

When I finished reading your timeline and blog I found myself feeling an overwhelming respect for the level headed and patient manner in which you dealt with a series of unintended and undesired events and total admiration that despite being jet lagged and tired, you posted a beautifully written, concise and very logically detailed blog at 3:33 a.m.!! As someone who’s ‘filters’ fall away when I’m tired, I definitely need to take a lesson from you. 

First, I have to say that your experience with ING DIRECT distresses me.  I assure you that as a bank and as a culture Erica Borsella (who tried to assist you in correcting the issue) is the norm and not the exception. Unfortunately, the entirety of the problems started with what you so aptly called “an inadequately trained associate.” 

I appreciate your thoughtful posting and there are several lessons we can take from your unfortunate experience so we can try to ensure that all our customers have positive experiences. We need to ask our customers for the facts – and all the facts – and then explain the way the system and its features work. Indeed, a P2P (person to person) payment with the recipient’s bank account and routing number would have arrived in two days.  Minus the necessary details (recipient’s bank account and routing number) the payment ‘could’ become a paper check and take 5–7 business days as it travels snail mail. The new training contains simple steps – hopefully it will prevent customer pain! 

Valerie, on behalf of the bank I want to thank you again for your patience and extraordinary understanding. You helped us see a point of weakness and we’re correcting it.

Please feel free to contact me at any time with suggestions for ensuring we maintain a brand that deserves people’s trust.

Best regards,

Cathy MacFarlane

As I so often write in my blog:  It’s your money so take it personally.  I just wanted each of you to know that I practice what I preach.  It was my money that was needed for a major project – my book “Mind Over Money Matters”.  It details the mindset individuals and families need in order to recover from the recession - and is being published this summer by Sterling and Ross Publishers, New York.  The transfer of those funds were compromised and I took that personally. 

I hope the detailing of my banked but busted experience will help each of you know that we do have a voice and can effect change (even if not for our own particular circumstance).  What helped me most is that I kept good records:  names, dates and times and followed through.  And along the way found two messengers who appreciated my attention to detail and the opportunity for their company to learn how to better assist customers.

And despite automated emails I continue to receive declaring that I “haven’t yet activated” my ING Electric Orange card – I’m not going to.   As my 3-year old granddaughter Savannah would declare:  “No way!  The memory of the botched transfer experience won’t allow me to do that.  I remain an ING Direct Orange Savings customer.  It has worked seamlessly for me.  But the “banked but busted” debacle is why I see red when it comes to ING Electric Orange.  

Here’s to your health and wealth.

TAGS: Customer service, Rant

I’ve been doing a lot of thinking about rights and privileges.  Needs and wants.  Obligations and choices.  And I’m hoping every parent will actively assume the responsibility of making sure their children understand and respect the differences. 

What I’ve been thinking is that we adults might be able to explain the differences to our children by drawing some parallels for them.  Parallels that encourage a thrifty, frugal, value-minded approach to growing up.  Parallels that connect them in a healthy way to the mentality of the post-Depression generation of some of our parents rather than the access (and excess) to everything of those of us who are from the Baby Boomer generation.  

I’m not indicting my generation.  I’m just indicating that we Baby Boomers support a positive and responsible financial direction and mindset for the generation we produced.   

Our modern day recession had all the sights and sounds of a depression; we just didn’t call it that.  As a result, I think it’s our obligation as parents to remind our children that nothing is promised, that life and security can be fragile and that stated bluntly – in business, you’re only worth what you are and produce today. 

It may be a sobering thought to them but I think all children should be taught from a very early age to understand that what they want is far less than what they need.  Teach them the mindset:  it’s your money so take it personally.   It will help them make better money choices.

I hope and believe that we Boomers have produced a generation that has the entrepreneurial spirit, independence and motivation of their grand and great-grandparents rather than a generation that will just work for somebody to sign their paycheck. 

Every time I read a post from my Thin Pink Line colleague Lindsey Pollack on Generation Y career and workplace issues – I celebrate.  She confirms my hope:  young adults are building successful careers.  She’s addressing my concern:  teaching/advising organizations on how to maximize the potential of the new workforce.   

Here’s to your health and wealth.

TAGS: Money needs versus money wants

Let’s be clear.  Bad financial habits have no color and don’t discriminate.  But in the spirit of Black History Month, I wanted to speak specifically about women of color and money.     

As an African-American woman, wife, mother, grandmother and financial literacy advocate/activist … please hear me roar!  Sister/women of color: you can’t afford to keep bad money habits anymore.  

For everything there is a season.  Make this Black History Month February 2010 your starting point.  Now repeat after me your new money mantra:  Black is beautiful but being in the black is my financial state of mind.    

As a group Black women tend to remain steadfast in our spending habits despite the crumbling economy.  Why?  Yes, we are trend setters and influencers who are more likely to shop impulsively and spend to cheer ourselves up.  But the systemic problem is we’ve not been taught good financial habits and we have some deeply cultural bad money habits that put us behind the savings curve and negatively impact our ability to save. 

• Our retirement accounts, stock/bond portfolio and mutual funds holdings are lower than other women of other races.
• Budgeting isn’t a high priority or not done correctly.
• Most purchases are made on credit cards – which is a good way of keeping track with those year end statements that categorize spending for you but credit card spending tends to mask seeing the economy and one’s personal money circumstances clearly. 

Those are the circumstances that make the road to your long term financial stability – longer.  

There’s another dynamic at work in the hearts, minds and pocketbooks of Black women:  generosity.  

As a group, we tend to be steady and generous contributors to family and church money needs.  This long held and deep seated sense of obligation has put many women of color behind the savings curve and negatively impacted our ability to save.  I’m not judging what you do with your money.  I’m just advocating knowing why you’ve made that decision.  And what are the ramifications (good or bad) for you.  We must recalculate our relationship with our money, who gets it, when, how and how often.  And I advocate that the recalculation begin with a mindset that will be new to many African-American women: pay yourself first.  That means every time you get money, put something away (savings) for yourself.  The amount isn’t as important as the discipline. 

Overwhelmingly, when I give a keynote or seminar on the importance of women becoming comfortable with their personal money – almost every Black woman regardless of age tells me:  “I wish I’d learned more about money and investing growing up.” 

My goal this Black History Month 2010 is to let my sister/friends of color hear me roar!  You can’t afford to keep bad money habits anymore.  And we can’t afford to pay them forward to future generations of girls and women.  Mind over your money matters.  Get out of the cycle of overspending and not saving.   Being Black is beautiful but being ‘in the black’ should be your financial state of mind. 

Here’s to your health and wealth.

TAGS: black women and money, February Black History Month, women of color

When it comes to money and remarriage, stepfamilies need to find sensitive solutions to avoid stepping on anybody’s financial toes.   

Money has always been a potential source of conflict in marriage and is the number one reason for divorce.  So how do couples divvy up the income and cover the costs when two families with children are combined?  Who gets how much and when?  Who says when too much is being spent on one child and not the other?  You’ll need to mind over this potentially destructive money matter. 

Here are some suggestions on how to make sense out of stretching limited dollars and keep you and your spouse in a better money frame of mind: 

• Set up and focus on the present family budget.
• Be sure both of you are involved in decisions about how family funds are spent.
• Remind one another not to fall victim to buying your children’s affection because you feel guilty about having divorced their other parent.
• Figure out ways of saying “I love you” to your children that are more meaningful than by giving gifts.
• Look for low-cost adventures and events instead of trying find extra money necessary for more traditional activities. 

Some second marriage couples with children choose to set up a “three-pot money system”:  yours, mine, and ours.  

Under this plan, you and your spouse pool resources in one bank account that will pay for joint present family expenses.  Then each of you takes out an agreed-upon amount for discretionary spending.  Since the extras each of you buy for your own children will come from your own individual money pot, guilt spending is easier limited and money needed for your present family remains intact. 

Here’s to your health and wealth.

TAGS: 3-pot money system, second marriages with children, Stepfamilies

What do you do when you are banked – but busted because of the system? 

RANT!  Then get a plan and find a fix.  

It just happened to me and despite my healthy neurosis regarding all things money (aka knowing most of the rules and always having a financial backup plan) – the system held me and my money captive. 

It was a simple request on January 21st:  I needed to move a chunk of money from my longtime ING Direct Orange Savings account to my Chase checking account to provide money for phase two of a very important project.  Usually the process of transferring my money from savings to checking is one I do by myself, seamlessly, online since my savings account is linked to my checking account.  But in this particular case, the funds needed to be disbursed and received within a few days – so I called ING directly to see if the process could be expedited. 

The ING representative suggested with confidence that my needs could be better served if I opened an ING Electric Orange Account that would – within 2 to 3 business days – have the funds electronically transferred into the project company’s bank account.  I’m a problem/resolve kind of person.  The solution was set and the process completed online with the ING representative.  That was January 21^st.  

A week later – still no deposit.   

The ING representative had made a mistake.  And the only way I knew that was the case is when the project manager called to say:  “Nothing’s been received.  Could you check with ING?”  This by the way was after I’d received an email from ING confirming the transfer had been made. 

Here’s the rest of the story. 

The funds couldn’t be transferred electronically to the project company’s bank account because – oops “ING doesn’t have an electronic connection/capability to all businesses”.  OK.  I’m a logical person.  I understand that though we’re a nano second, wired, advanced technology world – not everything can be connected that way.  But here’s the rub.  ING opted to send a paper check through the United States Postal Service mail.  No, not by certified mail.  No, not by registered mail.  By regular mail with a 44-cent stamp and no ability to track it.   Even more insulting and adding insult to injury – ING never contacted me to tell me the problem.  ING never asked me if they could send a paper check.  ING made a decision about my money and a transaction that I needed done in a timely expedient manner.  ING didn’t deliver.  And the real irritation is that I could have employed another option to get money to the project on time – if I’d known there was a problem – with my money, going to my project manager who’s the one who became the victim of circumstances neither he nor I created.

I won’t bore you with the litany of the many phone calls, emails and conference call conversations (ING, me and my project manager) – I’ll just rant directly to the conclusion.  

Financial institutions are working over time to stay ahead of their customer needs in the midst of tight margins and threatened restrictions by the Fed.  To manage the tight money margins, financial institutions are changing rules fast.  Fees for banking services are going up; some are being allegedly eliminated; services that customers didn’t have to pay before are now being charged; lines of credit are being narrowed and interest rates are poised to punish if you don’t keep an eye out for change notices. 

And I believe the rules are changing so fast that ING and other financial services institutions’ own people can’t keep up!  That’s when we consumers/customers pay the price for the banking system’s bureaucracy which in my current frame of mind feels a lot like a shell game. 

ING has reviewed the initial call I made January 21^st and has confirmed:  “It wasn’t your fault, Valerie.  Our representative gave you incorrect information and is in the process of being retrained.”  They made a $25 gift deposit into my account for my troubles.  

In between the admission of an inadequately trained representative having botched up my request and the $25 apology, a very deliberate, experienced and empathetic supervisor has been working on my situation since January 26^th.  We’re on a first name basis and speak daily.  She stopped payment on the paper check which was still floating around in the postal system somewhere and untraceable.  The ING system meantime still requires a standard two business days to return my money to my account even though it was their mistake.  She is monitoring when the returned money hits my account and will immediately wire it (though ING protocols don’t usually allow wires) to my project manager’s account. 

That was the situation until Monday when the money was finally returned to my account.  How was the situation resolved?  I’ll tell you the conclusion another time.  I’m just off a late flight back home from travel and jet lagged.  Suffice it to say – not soon enough or well enough.  But I’m smarter and learned a lot.  There’s my story.  Hopefully a rant with a purpose and message for you.  Be sure to really mind over your money matters.  These days when it comes to your money, check and double check the rules because a policy or procedure yesterday may not be in play today or anymore.

 Here’s to you health and wealth.

TAGS: banking procedures, Rant

Do you handle your money or does your money handle you? 

There are basic financial fundamentals that we all need to address every year.  It’s a New Year and time for all of us to get a financial grip! 

The timing couldn’t be better.    

Everybody’s still in that “clean slate” state of mind, right?  After all it is a new year.  But what I’m talking about aren’t resolutions.  These are doable, incremental, achievable money management goals that will alleviate a lot of your/our money anxieties.  And more importantly, your money mindset need only be:  once a month is all it takes.

If you agree to that simple stipulation, by year’s end, you’ll have done at least a dozen things to take care of your money and improve your money knowledge.  Have I peaked your interest?  Perfect. 

Here’s a calendar of suggestions for what to do financially each month this year.      

January:  Get your free annual credit reports.

• Only from the government mandated site https://www.annualcreditreport.com/.
• Read them, challenge in writing anything that’s incorrect or not yours.
• It’s important that you know what’s being said about you and your money.

February:  Organize your documents in preparation for doing your taxes.

• Use folders and label (Receipts 2010, insurance, investments, etc).
• Create a safe place to store the documents.
• Shred old or no longer needed documents.

March:  Review all your insurances.

• Life, health, disability, long-term care and casualty.
• http://moneycentral.msn.com/investor/calcs/n_life/main.asp has a calculator to help figure out how much insurance you need.

April:  Review all your debts.

• Credit cards, mortgages, auto loans, any long-term obligations.
• Check to see if rates and/or terms have changed.

May:  Review your will and update it.

• Especially if major life changes such as births, deaths, divorce, marriage, job loss or relocation.
• 66% of Americans do not have a will.
• If you have children and no will, the state will decide their guardianship if both parents are deceased.

June:  Find a certified financial planner.

• The National Association of Personal Financial Advisors http://www.napfa.org/.
• Be sure to know how they get paid (fee only, hourly, % of assets).

July:  Review employer matched savings programs.

• Make sure you’re contributing the % necessary to qualify.
• Check the diversity of your investment portfolio. 

August:  Determine your net worth.

• List the value of all your assets and possessions.
• List the amount of your liabilities and debt.
• Helps accurately determine the level of home/renters insurance you need.

September:  Go paperless with bills.

• Every account that’s paperless can be retrieved online 24 hours a day.
• Saves time and money – no stamps needed.
• Convert to online banking and bill paying.

October:  Create an automatic savings contribution.

• Easy to set up an automatic, recurring transfer with your bank to move money from checking to savings.
• The easiest money saved is money you never see.

November:  Check your retirement contribution.

• Set up contribution that coincides with your pay day.
• The best time to start saving for your retirement is in your 20s.

December:  Analyze your auto insurance coverage.

• Make sure you’re getting the best deal and are adequately covered.

Remember that mind over money matters.  If you want to jumpstart your financial education, make a decision to read the first paragraph of stories on the front page and Marketplace page of the Wall Street Journal, for example, and see how your interest and your money knowledge will grow.  It’s your money, so take it personally.

Here’s to your health and wealth!

TAGS: credit reports, debt, finding a CPA, insurance, Monthly tips for managing your money, net worth, paperless bills, retirement contributions, wills

A nearly 5.9 aftershock in Haiti yesterday, nine days after the poorest nation in the western hemisphere was hit by a catastrophic 7.o earthquake that the United Nations calls one of the deadliest on record.  This disaster hit a country already barely functional and poses an infinitely tougher relief challenge because there is no infrastructure. 

I searched for a sense – a measureable sense – of how America’s businesses are responding to this global need called Haiti Relief.  I came across this Wall Street Journal/BLOG.  BigLaw props for “stepping up to the plate and providing aid when major disasters strike.” It’s true: when it comes to disaster help — and charitable giving more generally — big law firms time and time again rise to the occasion.  And in regard to the Haiti earthquake, it’s no different.”  http://blogs.wsj.com/law/2010/01/20/biglaw-stepping-up-on-haiti-aid/ .  Big law firms are practicing aggregate donating.  The list is growing.  The effort’s worthy.  And that deserves mentioning.   

The American Red Cross says that cash is best right now if you want to help Haiti.  Donations of other items will be better known in the days and weeks to come.  Right now distributing available water and food to survivors is what’s needed – and finally is happening.  Collect and store whatever you and your family, organization, or community might want to gather to send to Haiti.  Relief workers there are putting together planned distributions throughout the island nation because dropping supplies from the air or distributing without security in place could cause riots and add to an already desperately fragile civil order.  “Trying to jump start the economy in Haiti, the United Nations Development Programme hired 400 Haitians, paying them cash to help deliver supplies. By the end of the week, the organization hopes to pay 700 more people to remove debris, repair roads and rehabilitate other infrastructure”. http://www.miamiherald.com/1060/story/1435672.html

In the midst of any calamity – there are always opportunists.  Haiti is no different.  In fact, Haiti could be the poster child for being a prime target of scammers.  Three million people – a third of the country’s population – need help.  50% of Haiti’s population is under the age of 18.  Those facts, those pictures remind us of Katrina and the Tsunami devastation and tug at our collective humanity.  The world is responding with cash donations of unprecedented magnitude.  Scammers are having a feeding frenzy.

Don’t let the frenzy frighten you out of giving money.  There are absolutely good and secure organizations and ways of doing this.  One is through the advances in technology that allow instant giving via cell phone.  Secretary of State Hillary Clinton and the American Red Cross confirm more than $3.6 million has been raised through text-giving which automatically adds $10 to your cell phone bill.

Text the word “HAITI” and send to 90999. 

Less than 20 seconds later you’ll receive Free Msg:  To confirm your $10 donation to Red Cross Haiti relief efforts reply with YES.  Reply HELP for help or visit redcross.org.  Text the word “YES” reply and less than 20 seconds later you’ll receive Free Msg:  Thanks!  $10 charged t your phone bill for Red Cross Haiti relief.  Reply ELP for help or visit redcross.org Reply STOP to cancel.

If each of you reading this would consider reaching for your mobile phone right now – together we can make a difference – easily, yet nonetheless heartfelt.  In my mind, what matters is that each of us chooses to do something financially – now.  And if for whatever reason, you choose not to give to Haiti relief – give something to someone in need – but do it now.  That allows us all to be included in a common moment of responding to our humanity through collective economic power. 

Here’s to your health and sharing wealth.

TAGS: aggregate donating, American Red Cross, Haiti Relief, scammers

It was 6:01 PM, April 2^nd, 1968.  

Just about everyone remembers where they were when they heard the news.  Dr. Martin Luther King, Junior had been shot and killed – assassinated while standing on the balcony of the Lorraine Hotel in Memphis, Tennessee. 

I was a senior journalism student at San Jose State University in northern California.  I got the news as I walked back across campus from the J-School radio and television studios to my apartment. Only hours earlier, I had done two reports about Dr. King’s trip to Memphis to support the city garbage workers who were on strike.  I remember using video of the signs the strikers carried and wore that declared:  “I am a Man”.  Dr. King, the 39-year old man known as the prophet for racial justice in America had finished what was to be his last speech with the words: “I may not get there with you, but I want you to know tonight, that we as a people will get to the Promised Land.”  

The question now 42 years later is:  “When?” 

The Memphis garbage workers strike for economic security is widely remembered as when Dr. King began contesting financial privileges and organized a mass, multi-racial protest called the Poor People’s Campaign.  The campaign’s goal was to help poor people by uniting all races through their common hardship of financial desperation and provide a plan to start a solution. 

Dr. King’s solution was a $30-billion anti-poverty package called the “Economic Bill of Rights” asking the federal government to make helping poor Americans a priority.  The package included a commitment to full employment, a guaranteed annual income measure and more low-income housing.  It truly was Phase Two of the Civil Rights Movement.  Phase One had been exposing the problem/inequities of segregation.  Phase Two was going to be about the money.  It was going to focus on the inequities of money and the solution:  increasing earning power and financial self-reliance. 

That’s what Dr. King was doing in Memphis April 2^nd, 1968.   He was at the turning point of the civil rights movement. Despite efforts to continue after his death, the earnest proposition for creating jobs, income and housing as contained in the “Economic Bill of Rights” was never passed.  

The recession has emphasized that now 42 years after his death, on the eve of what would have been his 81^st birthday – Dr. King’s dream of racial and economic equality – remains unfinished business.  Needing jobs, healthcare and homes are still the concerns and sorrows today’s poor and newly poor are facing.  

Martin Luther King, Jr., was president of the Southern Leadership Conference.  He directed the 1963 March on Washington.  He received 5 honorary degrees.  He was Time Magazine’s “Man of the Year”.  He was the youngest recipient of the Noble Peace Prize.   He fought for equal rights for African Americans.  He fought for improving the lives of all poor.   He had an unfinished agenda:” The problem indicates that our emphasis must be two-fold. We must create full employment or we must create incomes. People must be made consumers by one method or the other.”  – Martin Luther King, Jr., from his book “Where Do We Go From Here: Chaos or  Community?”  http://nobelprize.org/nobel_prizes/peace/laureates/1964/king-bio.html

As the nation pauses to honor him on Monday, remember that he lived and died for his belief in the importance of social and economic power as the tools people needed to seek self-improvement.  Both were needed then – and now. 

Here’s to your health and wealth.

TAGS: economic civil rights movment, Jr., Martin Luther King

Debit cards are great as long as you do the math – regularly.   

When it comes to debit cards – it’s important to stay in check.  By that I mean be disciplined and always record in your check register the amount you just spent from your checking account.  The concept is basic but many people find themselves in a debit dilemma because they forget to do that. 

It’s a good mindset/discipline to always think of debit cards this way:  you’re paying now – unlike with credit cards where you’re paying later.  To use your debit card means you have to have money in the bank right now to cover your purchase.

In the event your debit card is lost or stolen, the Federal Reserve (http://www.frbsf.org/publications/consumer/plastic.html) – says:

• Your liability is limited to $50 if you notify the financial institution within two business days of discovering the loss or theft. 
• However, you could lose as much as $500 if you delay. 
• And if, within 60 days after receiving your statement on which the unauthorized charge appears, you don’t report it, you risk unlimited loss – meaning you could lose all the money in your account (plus anything in your maximum overdraft line of credit.)

Debit cards can share some of the same features and protections of credit cards:

• Zero liability:  (as mentioned above) you’re generally not liable for unauthorized purchases as long as you notify the lender immediately. 
• Fraud protection:  the law requires financial institutions to replace funds within ten business days of notification (though sometimes sooner) for losses resulting from fraudulent card use. 
• Disputes:  you may have dispute resolution options if an issue arises from a debit card purchase. 

Debit cards are hugely popular these days.  But given the potential risk due to the direct access to your checking account, here are some suggestions on how to wisely and mindfully use yours:

• Protect your ATM/debit card as you would cash.
• If your card’s lost, stolen or you suspect it is being used fraudulently, report it immediately to your bank.
• Save your debit transaction receipts for better oversight of your account and be sure to always shred them when disposing of old receipts.
• Choose and memorize a safe PIN which means avoiding obvious numbers such as your birthday or address and share it with no one.
• Always know how much money you have in your account, and review bank statements carefully.
• Remember – your debit card may allow you to access money that you have set aside to cover a check that has not yet cleared your bank.

It’s a good idea to always notify your financial institution before traveling out-of-state (and certainly when out of the country) if you plan to use your debit card.  Some banks will even send you alerts when your card is being used outside of its normal usage area – which is an attempt to prevent suspected fraud or theft.

And finally, know your card’s limits.  Your debit card will have a “purchase limit” and also a “withdrawal (such as via your ATM) limit”. Usually they are not the same amount. If you don’t know what those limits are – find out!  It’s your money, so take it personally.  Mind over your money matters because mind over money – matters. 

Here’s to your health and wealth.

TAGS: Debit cards, features, liability, protections