Personal Finance Advice

Do you pay attention to the fees your financial institution charges you for using an ATM? It doesn’t matter if you’re pulling cash out of your account, checking your balance, or making a deposit with an envelope…some banks and credit unions will try to get some money out of you for the transaction.  If you rarely use an ATM then fees probably aren’t a big deal to you, but if you stop to get cash every couple of days then the fees can really add up.

Do you want to use your money to buy the things you need and to pad your account, or do you want to hand a portion of your money over to your financial institution for the privilege of using an ATM?

Not all financial institutions charge fees for using an ATM.  Most banks and credit unions charge no fees for using ATMs that belong to them.  For example, if you have a checking account with Wells Fargo and you use a Wells Fargo ATM at the mall to get money, you probably won’t encounter a fee for the transaction.  The fees start piling up when you use foreign ATMs.  These are automated teller machines that aren’t owned by - or affiliated with - your bank or credit union.  Suddenly you’re hit with two different fees: a fee from the owner of the ATM and a fee from your financial institution for using someone else’s ATM.

You might think these fees don’t really add up to much, but if you frequently utilize foreign ATMs then there is a good chance you’re paying quite a bit of money in fees.  Even if your bank only charges you a $1 fee every time you use a foreign ATM and the owner of the ATM only charges you $2, that’s already $3 just to access your own money.  If you stop at the ATM a few times a week, that’s $9 a week which translates into over $35 a month. 

In other words, you’re losing out on a dinner out every month because of the fees you’re charged for using the ATM.

So how can you avoid paying these fees? If you can stick to ATMs owed by your financial institution then you might wind up not paying any ATM fees at all.  If you have no choice in the matter - and really don’t want to switch financial institutions - then try to plan out your ATM visits to minimize how many times you stop to pull out cash.  If you know you’ll need $120 in cash to get through to the end of the week, don’t stop for $60 today and then another $60 in a few days; pull it all out at once and save on the costly fees.

You might also consider shopping around for a bank or credit union that not only doesn’t charge fees for using foreign ATMs, but also reimburses you for fees charged by the owner of the ATM.  Don’t waste your money paying fees just to access your funds.

You might do some of your holiday shopping online, and if so you’ll find that it may be a lot easier than heading to the mall and sifting through sales bins while dealing with other shoppers who are looking for the very same deals you are.  While there are some people who still prefer to head to the stores in order to do their shopping, plenty of shoppers are turning to Internet shopping for some - or all - of their shopping.

How do you make sure that your personal financial information stays safe while you’re shopping online? Cyber-fraud is a viable fear, and if you’re not careful you might find your accounts hacked into and your identity stolen.  The key to keeping your information safe is to not give your information out to questionable sources just because you’re making an effort to find the best deal.

Here are some tips for protecting your financial information online while shopping:

Use trusted websites.  There are some websites that you know are safe because you have used them before and they are well-known retailers.  Many websites also have guarantees that transactions are protected and safe, and in the event of a breech of security the retailer will reimburse you.  Always read the security information on a website before providing any account information for a purchase.

Don’t shop at websites you’re unfamiliar with.  It doesn’t take a lot to create a website that looks a lot like a viable retailer.  Websites might be created with the distinct intention of luring in bargain shoppers and grabbing their account information.  Instead of receiving your ordered merchandise, you’ll wind up losing money and encountering big hassles.  Remember: If the price looks too good to be true, it probably is.

Use your credit card.  This doesn’t mean that you should use your credit card and pile up a bunch of debt.  Instead, the advice to use your credit card for online purchases is to protect you from having your checking account drained of the balance if you use your debit card and a thief intercepts the account information.  Even though it’s a hassle to have your information stolen, recovering from a credit card number stolen can be initially much easier than recovering from a debit card number getting stolen because if your checking account suddenly has no money in it you might encounter other problems, like bounced checks and rejected automatic payments.

If something doesn’t seem right, don’t make the purchase.  Your intuition can tell you more than you might realize.  If you’re shopping on a website and something just seems off, close out the browser and try a different website.  If you get the feeling that something is wrong after you make the purchase, immediately check your accounts to make sure that only the amount you authorized was deducted. 

If you know for sure that something is wrong, contact your financial institution and consider placing a fraud alert on your credit reports through all three bureaus: Experian, Equifax and TransUnion.

You have probably heard the term subprime to describe some of the mortgages that went into foreclosure.  This isn’t a new term within the financial sector, but it has taken on new meaning recently as people start attributing varying definitions to the word. Subprime doesn’t necessarily refer to a loan or credit card that is extended to people with absolutely horrible credit, although these people do fall into this category.  Subprime can also refer to someone who has good credit but may not have an adequate job history or documentation of income.  In other words, you can fall into the subprime category even though you have an admirable credit history. 

What makes an application fall into the subprime category?

Bad credit.  When you don’t pay your bills, or you overextend yourself, you can expect to fall into the category of subprime.  You’ll pay higher interest rates and higher fees because you’re a bigger credit risk than someone who has demonstrated the ability to stay on top of monthly bills. 

Sporadic employment history.  This comes up when applying for mortgage loans and other substantial credit accounts.  Creditors want to know that you will stay employed long enough to pay off your bills, and the only way to predict that is to look at your employment history.  Some lenders go so far as to require that the last two years of your employment have either been with one employer or at least within the same field.

Self-employment.  By itself, self-employment does not immediately force you into the category of subprime.  Problems arise when you haven’t been in business for very long or if your tax returns don’t demonstrate some form of profit.  Creditors know that a lot of small businesses fold within the first couple of years, so if you don’t have more than a year or two under your belt as self-employed, don’t be surprised if your lender treats your application as subprime.

Insufficient income documentation.  Maybe you made a nice profit for the past four years from your business, but you don’t have copies of your tax returns.  Perhaps you work on a freelance or cash basis but have only been doing it for less than a year and you don’t have the tax returns to back up your income claim.  You may still be able to get a loan or credit card, but you’ll be considered subprime.

You don’t have to worry that there will be no lenders willing to approve your application just because you fall into the subprime category.  There is a huge market for subprime lending, so chances are you can find an approval somewhere.  Just be prepared to pay higher interest rates and plenty of fees.