Advertiser Disclosure

Consumer Watchdog, Fine Print Alert

Warnings From An Insider: 7 Store Credit Card Traps To Avoid

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

7 Store Credit Card Traps To Avoid

This holiday season, you will likely be offered a store credit card. You need to be careful before signing on the dotted line. Although the in-store discounts might look appealing, there are some real dangers and traps you need to avoid. (And I know, because I used to run a rather large credit card company).

Why are these products so dangerous? First, the retailer just wants you to spend as much as possible. So, all of the incentives will be to get you to spend more money than you had originally planned.

Second, the credit card companies pay a lot of money to the retailers in order to get the credit card deal. Typically, credit card companies have to pay a “bounty” for every credit card booked to the retailer. In addition, most credit card companies have to share a percentage of interchange revenue with the retailer. (Interchange is the fee paid by merchants to credit card companies when a card is used for a purchase). Because credit card companies have to give all of this money to the retailer, they need to make it up somehow. And the usual way to make back that money is by charging much higher interest rates.

You can get a good deal. I once moved into a new house. I was very tactical: I went shopping on a day with deep in-store discounts (Columbus day, ironically), and I applied for a credit card that had a 10% discount for purchases made on the day. Because I knew I would be spending more than $2,000, the savings (more than $200 for the credit card purchase alone) was a great deal. And, most importantly, I paid the balance in full at the end of the month. I had planned my purchase in advance and used the store card offer to save more money. That is the only way to get a good deal.

Here are the 7 traps to beware:

1. The interest rates are high, regardless of your credit score.

The vast majority of store credit cards do not offer lower interest rates for people with excellent credit scores. In other words, there is no risk-based pricing. In addition, the average interest rate on store cards is much higher than traditional credit cards, and often starts with a “2”. Even people with an 800 FICO would receive a 20% (or higher) interest rate on most store cards.

2. 0% financing is not really 0%.

Most store cards will offer some form of 0% financing. However, most store cards do not waive the interest. Instead, the interest is deferred. If you pay off the balance in full during the promotional period, you don’t pay any interest. However, if you don’t pay the balance in full you will end up getting charged interest retroactively at the high store card interest rate. Using deferred interest is a common practice. Even Apple, in partnership with Barclaycard, uses this offer.

3. Your Credit Score Will Be Hit With A Hard Inquiry.

When you apply for a store card, a hard inquiry will hit your credit report and your score. Although inquiries do not have a major impact (it could be as few as five points), the impact could be consequential if you plan on applying for a mortgage or auto loan in the near future. With a mortgage, five points could be enough to put you in a different pricing bracket, costing you thousands of dollars over the life of the loan.

4. Rewards for “out of store spend” are usually much better on other cards.

Store cards often have great rewards for in-store spend. For example, the Amazon Visa offers 3% cash back for purchases at Amazon.com. The Target Red Card offers 5% off in-store purchases at Target. However, the deals are much worse for spending out of store. For spending outside of the store, many credit cards offer no rewards or only 1%.

5. You will spend more money than you planned. Yes, you will.

The oldest “trick in the book” is an offer that gives you 10% off in-store spending on the day that you apply for the card. The purpose of the offer is to encourage you to spend more money than you planned. And years of data shows that people will in fact spend more money.

6. Because interest rates are high (and retailers demand it), store cards are willing to accept people with very low credit scores who have a lot of debt.

Retailers sign agreements with banks to issue store cards. These agreements come up for renewal every five or seven years. Retailers force banks to bid on the business, and it is “all or nothing.” If a bank loses a deal, it can be a huge hit. So, the power really sits with the retailer, who owns the customers. Retailers will demand higher bounties (payments when cards are booked), better rewards for consumers and better interchange deals. Retailers want to pay very little interchange for in-store purchases, and they want to collect as much interchange as possible for out of store spend. However, one of the biggest requests is “approval rate.” Retailers want banks to approve as many people as possible, for obvious reasons. As a result, banks will charge very high interest rates and will often approve people through store cards whom they would otherwise reject. There is a real danger that people with bad credit who are already in too much debt will get a line. Some store card programs approve people with FICO scores in the low 500s.

7. You will be pressured by a sales person.

Retailers are most focused on increasing sales. And giving someone a store card with a same day discount will increase sales. So, they will put a lot of pressure on employees to push credit card sales at checkout. The financial incentives for retailers can be sizeable. As a result, you should expect to get this sales pitch constantly and regularly. Stay strong!

Store cards are not all bad. Here are the three reasons why a store card could be a good deal:

  • You are making a big purchase and want to take advantage of the discount offered. You can afford to pay the statement balance in full and on time. And you are not applying for a mortgage or auto loan in the next six to twelve months.
  • You do a lot of shopping with one particular merchant. For example, you live at Target for most of your needs. Getting the big in-store discount would be more rewarding than a traditional 2% cash back credit card. But, this only makes sense (like all cash back cards) if you can afford to pay the statement balance in full and on time every month.
  • You are looking to rebuild credit, and have a lot of discipline. Because store cards approve people with lower credit scores, this can actually be a good tool. A store card with no annual fee is actually a much better deal than most other credit cards targeting people with scores below 650. Just make sure you never spend more than 10% of the available credit limit and you pay your balance in full and on time every month. By doing that, you can increase your score over time without paying an annual fee or interest. But, if you don’t have the discipline, don’t do it.
Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

TAGS: , ,

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: CFPB Dishes Out More Fines

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Fine Print Alert: CFPB Dishes Out More Fines

In our weekly Fine Print Alert we call out news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

 The CFPB is Ordering Two More Banks to Pay Up… 

Last week the CFPB hit Chase and this week Discover and Citibank are both handing over money.

Discover has been ordered to pay 18.5 million dollars for allegedly engaging in illegal practices for the repayment and collection of student loans. Discover is the third largest student-loan lender by origination volume. The CFPB maintains that Discover used illegal debt-collection tactics, overstated the minimum amount borrowers needed to pay each month and did not give borrowers information about how the borrowers could receive federal income tax benefits. Discover will be returning $16 million to more than 100,000 borrowers as well as giving account credit to about 5,200 who overpaid their minimums. Nearly 130,000 borrowers will receive up to $300 or account credit of $75 for each tax year to amend for their 2011 or 2012 tax returns.

Citibank was fined $35 million by the CFPB and is being ordered to reimburse $700 million to the consumers who were victims of deceptive marketing, unfair billing practices and deceptive collection practices. This included over-stating the benefits of add-on insurance products, misrepresenting the cost of a fee to pay by phone and being enrolled in programs without being qualified.

FAVORITE READS FROM AROUND THE WEB

When smart personal finance habits just become stupid When you start getting your finances in order, it’s exciting. You see the basic concepts and rules of personal finance in action, and, after a while, they start to pay off. This makes it easy to become a personal finance devotee. But even the best financial advice can become counterproductive.Sometimes we try to use these rules when they don’t make much sense. Here are a few instances when otherwise smart personal finance concepts become kind of silly. Kristin Wong shares 4 ways that typically smart personal finance moves can result in some stupid behaviors on LifeHacker’s Two Cents blog.

A choice you make for your money today could cost you as much as $100,000 by the time you retire Erickson and Madland pinpoint two overarching problems with the fee structure of the investment options offered to most Americans through their retirement accounts: First of all, the fees are difficult to understand, and second, they “are often simply too high.” They point out that the better Americans understand the fees, the more likely they are to choose low-cost investments for their savings. Libby Kane shares details of the study from the Center for American Progress on Business Insider.

 

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS:

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: What Happens If the Fed Raises Interest Rates

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

fineprintalert-full

In our weekly Fine Print Alert we call out news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

Could interest rates be changing soon…?

Those who regularly follow financial news might have seen recent articles wondering if the Federal Reserve will be changing benchmark interest rates by the end of the year. There is no need to panic, but those with a variable interest rate should understand the implications of a rate hike. This would be the first rate increase in nearly a decade. The initial increases would likely be small, but the Fed could raise rates several times over the course of a few years. Those with a variable interest rate linked to the “prime rate” (ie: credit cards or adjustable rate mortgages) should prepare to see an increase in interest rates.

MAGNIFYMONEY IN THE NEWS

FAVORITE READS FROM AROUND THE WEB

  • Why millennials may be risking their retirements with this investment I can’t help but wonder, however, whether those young investors would have been less enthusiastic if they were aware of some of the less appealing aspects of fixed indexed annuities, such as the fact that many levy steep surrender charges, which I’ve seen go as high as 18%, if you withdraw your money soon after investing. Walter Updegrave shares why fixed indexed annuities may not be the best choice for young investors on Money.
  •  Is 50 Cent really broke? Why a millionaire would file for bankruptcy. So, is 50 Cent suddenly broke? Not necessarily. It is rare for individuals to file for Chapter 11 bankruptcy, a measure usually reserved for corporations that need to be restructured. But people looking to reorganize their debts might also use Chapter 11, bankruptcy experts say. For Jackson, the filing might give him more time to pay his debts and give him a chance to come up with a payment plan, an option he might not have without Chapter 11. Jonelle Marte from Business Insider shares the details of why Curtis James Jackson III would file for bankruptcy without actually being broke.
Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS:

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: Ally Bank Changes It’s Fees & JP Morgan Chase Fined by CFPB

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

fineprintalert-full

FINE PRINT ALERT

Ally Bank Increases Checking Account Fees…

We’ve long big huge fans of Ally Bank and its low fee checking account + high interest savings accounts, but unfortunately the good times are coming to an end. An Ally Bank representative recently notified us about the following changes:

  • Unlimited reimbursement of ATM fees is gone: Ally Bank will now reimburse up to a maximum of $10 per billing cycle. Ally is joining the Allpoint ATM Network, and use of those ATMs will remain free.
  • NSF and Overdraft fees are increasing: Ally Bank used to charge a maximum of $9 per day for overdrafts. That charge is increasing to $25.
  • All other features remain the same. If you link your Ally savings account, you will continue to receive unlimited overdraft transfers. There remains no monthly fee with no minimum balance and no direct deposit requirements.

Click here to find out how Ally Bank now stacks up against its competition.

JPMorgan Chase & Co Fined $125 Million by CFPB…

JPMorgan Chase & Co will pay at least $125 million after U.S. state and federal authorities accused the bank of improperly collecting and selling consumer credit card debt. The bank is believed to have used robo-signing, which resulted in going after consumers for debts they might not have owed or providing inaccurate information on debt.

$50 million of the $125 million will be in restitution.

OUR FAVORITE READS FROM AROUND THE WEB

  •  The 11 Worst Money Mistakes to Make In Your 30s – We consulted the experts and found out that money mistakes still run rampant after the roaring 20s, especially as major life changes are coming around, such as raising kids and purchasing a home. Here are 11 of the worst… Kathleen Elkins shares the roundup on Business Insider.
  • Here’s How Much $100 is Really Worth in Your State – There are major disparities between regions. For instance, a person who earns $50,000 in Mississippi would have to get a pay raise of $18,000 if he or she moved to Washington, D.C., and wanted to maintain the same standard of living. See how much $100 buys in your state over on Fortune.
  • We Didn’t Default On Our Student Loans (And We’re Stronger For It)After graduation, when he chose to go to a state law school, as young newlyweds we were encouraged to borrow the full amount, even though it wasn’t necessary to pay the bills. Student loans were “good debt” and his starting salary would be more than enough to pay for what we’d borrow within just a few years. Except it didn’t. Read Cherie Lowe’s story on Thought Catalog.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS: ,

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: LendingClub Makes an Interesting Partnership

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Fine Print Alert: Lending Club Makes an Interesting Partnership

 FINE PRINT ALERT

LendingClub teams up with smaller banks…

More than 200 community banks have signed a deal with LendingClub for helping pitching consumer loans. Even though LendingClub should be considered a rival, these banks are looking for help getting back into the unsecured consumer loans business after losing customers to bigger banks. LendingClub will send direct mail with a co-branded partnership to community bank customers and then share in some of the revenue from any converted loans. The community banks hope customers will remain loyal to the branches for other products like mortgages and small business loans.

Read more about the deal on the Wall Street Journal. 

 Fifth Third Bancorp to close approximately 100 branches…

Fifth Third Bancorp will be closing about 100 branches and 30 other properties. Not surprisingly, this move comes as the popularity of online bank continues to rise. Reducing branches is expected to save about $60 million a year.

FAVORITE READS FROM AROUND THE WEB

  • Can I Really Negotiate My Doctor’s Bills? Every procedure has a unique billing code (a unique five-number code you’d find on your doctor’s or hospital bill next to the service). Once you’ve got the right code, that makes it easier to call around to compare rates. Mandi Woodruff offers other ways to negotiate a doctor’s bill on Yahoo! Finance.
  • The Short Stories We Tell Ourselves About Everyday Spending I love a good story. In fact, I used to tell myself at least one new story every time I opened my credit card statement. “Oh,” I’d say to myself, “I was so busy last month, it makes perfect sense that I ate out a dozen times. I’ll just eat out less next month.” Carl Richards explains how we all make up stories when the credit card statement gets opened in this week’s New York Times Your Money column.
  • Three Retirement Loopholes Seen Likely to Close There are plenty of tips and tricks to maximizing your retirement benefits, and more than a few are considered “loopholes” that taxpayers have been able to use to circumvent the letter of the law in order to pay less to the government. But as often happens when too many people make use of such shortcuts, the government may move to close three retirement loopholes that have become increasingly popular as financial advisers have learned how to exploit kinks in the law. Liz Weston details 3 retirement loopholes we may be saying good-bye to soon on Reuters.

 

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS:

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: How to Crush Credit Card Debt

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Fine Print Alert: How to Crush Credit Card Debt

BIG NEWS FROM MAGNIFYMONEY

Co-founder Nick Clements is now a published author and part of the Forbes Signature Series. If you feel trapped in credit card debt, and want help building a plan to become debt-free, this book is for you. “Secrets from An Ex-Banker: How To Crush Credit Card Debt” is now on sale at Amazon and iBooks.

Web

OUR FAVORITE READS FROM AROUND THE WEB

  • The Pros and Cons of Sharing Your Money Goals After Matthew Robinson heard about Linkagoal, a social networking site for people who want to share their goals, he decided to join. He posted that he wanted to start a clothing brand, and soon afterward, heard from a friend on the site who said he could help him with that. He began sharing more goals, from taking his dad to a San Francisco Giants game to getting an A on a final exam, and felt motivated by the encouragement from others on the platform.  Learn more about sharing your money goals from Kimberly Palmer on US News.
  • Odd Couples: Why Partners Do Not Talk About Salaries When Kristi Sullivan quizzed her husband about how much money she made last year, the Denver financial planner was shocked to discover he was off by a wide margin. Although they have been married for 18 years, with two kids, her hubby missed the mark by $8,000. Chris Taylor of Reuters shares findings about just how many couples don’t know about their partners’ salaries.
  • Why Affluent Parents Clam Up About Their IncomesThe survey offers six possible reasons (and “other”) why people may not want to discuss their income with their children. Far and away the most popular response was “It’s none of their business,” with 32 percent. An identical number responded the same way to the question about why they may not be disclosing their net worth. This most popular of responses may also be the worst possible one. Ron Lieber of the New York Times shares why parents of all socioeconomic levels should be talking to their children about the family finances.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS:

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: Abusive Overdraft Fees

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

fineprintalert-full

FINE PRINT ALERT

Banks generate $30 billion in abusive overdraft fees… 

This isn’t the first time we’ve harped on overdraft fees and it certainly won’t be the last. Despite the increased regulation and attempts from the CFPB to crack down on overdraft fees, banks managed to rake in $7.65 billion in the first three months of 2015. Overdraft fees have been reduced by 4% compared to 2014, but are still expected to bring in $30.6 billion in 2015.

Read more about when overdraft fees are considered predatory. 

MAGNIFYMONEY IN THE NEWS

OUR FAVORITE READS FROM AROUND THE WEB

[Student Loans Edition]

  • Paying off student debt or saving for retirement — which comes first? – Your student loan bills may be overwhelming, but don’t give up on saving for retirement quite yet. First, do what you can to reduce your loan payments. Lots of people don’t realize that they can qualify for an income-based repayment plan. Mandi Woodruff shares the steps to paying down debt and saving for the future in Yahoo Finance’s Money Minute.

  • Lost your job? Don’t panic about your student loans – When Jesse Lambert lost his job last December, he was about a level seven for panic. After paying rent in Arlington, Virginia, the 33-year-old’s student loans for his undergraduate degree and masters in international commerce were the next biggest expense at around $450 per month. Beth Pinsker of Reuters shares the steps to take in order to keep your student loans out of default, even if you’ve lost a job.
  • Taking on student debt, and refusing to pay – Still, the ramifications of defaulting and remaining in debt deliberately are usually real and lasting. After all, the federal government spends over $1 billion annually on collection agencies to get its money back on behalf of the taxpayers who pay for the loan programs. The New York Times’ Ron Lieber overviews the consequences of defaulting on student loans.

 

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS: ,

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: Corinthian Colleges Students to Be Bailed Out

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

fineprintalert-full

In our weekly Fine Print Alert we call out news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

Government to offer debt-relief to Corinthian College students and graduates…

The for-profit school Corinthian College, which ran Everest Institute, Wyotech and Heald College, filed bankruptcy leaving tens-of-thousands of students and graduates in debt and without the degree they paid to complete. After significant lobbying for the government to provide debt assistance, their voices have been heard. The Washington Post reported:

On Monday, the Education Department said it will allow more students to apply to have their loans forgiven if they attended Corinthian in the last year. Instead of only letting students who attended a Corinthian school within 120 days of it closing request loan forgiveness, the department has extended the window to June 20, 2014–when the government cut off Cortinthian’s access to federal funds. The expansion would make a total of 15,000 students with about $200 million in loans immediately eligible to have their loans forgiven.

This offer currently does not apply for students who transferred credits to other institutions and continued on with their educations.

MAGNIFYMONEY IN THE NEWS

OUR FAVORITE READS FROM AROUND THE WEB

Consumers will be losers as more businesses hang up on voice mail Chase says it won’t rush to shut down voice mail for many of its workers who deal directly with consumers, so it may be months before bank customers experience a recording that says your only way of making contact is online. But that day almost certainly will come. The LA Times’ David Lazarus explains why eliminating voice mail will be a big problem for consumers.

9 part-time jobs with better perks than yours For most workers, the perks at hourly, part-time jobs are the pits — no paid vacation, health insurance, tuition reimbursement or sick pay. But some companies are bucking that trend by offering perks to hourly and part-time employees that office workers might envy. Catey Hill of Market Watch shares the new benefits being rolled out for various part-time employees.

An unprecedented number of borrowers could soon qualify for student debt forgiveness The Obama administration’s plan to forgive the federal loans of Corinthian Colleges students could usher in an unprecedented number of debt forgiveness requests from borrowers at other for-profit schools and cost taxpayers hundreds of millions of dollars. The Washington Post’s Danielle Douglas-Gabriel shares the other side of student loan debt forgiveness.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS:

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: Watch Out for Student Loan Debt Relief Scams

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Fine Print Alert: Watch Out for Student Loan Debt Relief Scams

In our weekly Fine Print Alert we call out news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

 FINE PRINT ALERT

Student loan debt relief scams on the rise… 

In last week’s Consumer Watchdog, we highlighted some of the issues around student loan debt scams. These scams often come in the form of a promise (with no real guarantee) to cut down student loan payments or get borrowers out of default, in exchange for a fee of course. So borrowers end up paying for a service that can be done entirely for free by the borrower connecting directly with his or her student loan provider or researching and applying for forgiveness and income-based repayment programs.

This week, the Washington Post reported that Illinois Attorney General Lisa Madigan is on the hunt to take down scammers and demanding the Education Department get involved as well.

To be fair, the scams are not actual illegal. Debt consulting is perfectly legitimate (when certain protocols are followed). The issue is more with the predatory, high fees are for a service that involves mailing a letter or making a phone call. Something an empowered, educated borrower could do himself.

Read more here in the Washington Post. 

FAVORITE READS FROM AROUND THE WEB

‘Canceled’: When It Makes Sense to Close a Credit Card – Establishing credit can be tough, as many recent college grads are bound to discover. That makes many consumers reluctant to give up any financial flexibility. And it’s true that closing out a credit card account that you’ve had for years can temporarily hurt your credit score. As a result, many consumers often hang on to older accounts, even if the terms on those cards carry a higher interest on balances or an annual fee. But such worries can be overblown. Alex Veiga provides advice on how and when to close a credit card for the Associated Press.

Staying Out of Your Neighbor’s BusinessBut there are a few problems with this approach. We don’t have access to our neighbors’ balance sheets, so we’re relying on the consumption we see, not true net worth. So we only think we know how they’re doing, and what we think we know can get us in trouble. Carl Richards shares some sage advice in the New York Times.

That Post-College Bartender Job Could Stunt Your Career for Decades Those choices put them at a lower rung of the career ladder at a critical moment in their careers, said the EPI’s Elise Gould, Alyssa Davis, and Will Kimball in the report. While young workers will likely move up the company hierarchy or move to more lucrative careers over time, erasing that initial wage disparity could take well more than a decade, they say. Akane Otani explains why for BloombergBusiness.

 

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS:

Advertiser Disclosure

Fine Print Alert

Fine Print Alert: Hackers Hit the IRS

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

fineprintalert-full

In our weekly Fine Print Alert we call out news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

Hackers hit the IRS…

Keep an eye on your credit reports folks. The IRS announced that over 100,000 people’s data was compromised in a recent breech by hackers. The thieves took taxpayers’ past returns, which means access to Social Security numbers, addresses and birth dates. That’s the information needed to steal someone’s identity and cause quite a financial headache.

The IRS will be notifying people who may have been affected via mail. The IRS will also provide free credit monitoring services to those who had their data compromised. You can also be proactive by pulling your credit reports to look for any recent activity.

MAGNIFYMONEY IN THE NEWS

Nooga.com: New graduates, read this to avoid financial mistakes of predecessors 

FAVORITE READS FROM AROUND THE WEB

How This Woman Tracked Down Her Identity Thief – When Jessamyn Lovell’s wallet went missing at an art gallery in 2009, she took all the right precautions. She canceled all of her credit cards and put a fraud alert on her credit report to prevent anyone taking out new lines of credit under her name. Despite these efforts, a year and a half later, Lovell, 38, received a phone call from a police officer who had strange news: A woman in San Francisco had been arrested for using Lovell’s driver’s license to check into a swanky hotel. Mandi Woodruff shares the story on Yahoo! Finance.

Why You’re Thinking About Your Budget All Wrong – In our conversation (which you can watch in full, above), Washington noted that living according to a budget can actually enhance our lives, because it gives us a sense of exactly what we have on hand to spend, and how we can plan for the future. Think of it as a guideline for getting what you want — and not a rigid set of rules that’s preventing you from buying coffee or spending a night on the town. Maggie McGrath covers how to budget on Forbes.

More Graduates are Repaying Their Parents for College – It’s fairly often you hear about parents making their children pay their own way through school. Some parents don’t save for college, while others want their children to simply pay their own way. However, a trend has emerged with parents offering to pay for college, but with the caveat that the student has to repay the debt. Robert Farrington explains the rationale behind this new trend on Forbes. 

 

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

TAGS: ,