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Consumer Archive

Consumer

New student-loan refinancing program begins today

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NEW YORK (7/1/09)--There’s good news on the student loan front, but the new income-based repayment option isn’t the be-all-end-all for all college graduates (CNNMoney.com June 24). To qualify for the Income-Based Repayment Program (IBRP), you must have a Stafford, Graduate PLUS, or consolidation loan with either the Direct Loan or Federal Family Education Loan (FFEL) programs. Students who carry private student loans or loans taken out by parents to help fund their child’s education through the FFEL or Direct Loan parent PLUS Loan programs don’t qualify. Also, your total debt must exceed 1.5 times gross income. If you qualify, your required monthly payment is based on your income during any period when you have a partial financial hardship, and the amount may be adjusted annually (Credit.com March 20). If you meet other requirements, you may qualify for cancellation of any outstanding balance. There are pitfalls. If you have a high debt-to-income ratio, your balance will increase significantly throughout the life of the loan, and when the term ends, it’s likely the high amount forgiven will be taxable income. And if you already defaulted on loans and incurred fees and interest that inflate the loan to more than the original amount borrowed, the new repayment program won’t help; the tax penalty alone may exceed the amount originally borrowed. To determine whether you’re eligible for the new repayment option, visit finaid.org/calculators/ibr.phtml. To learn how the IBR program works, visit IBRinfo.org. For more information, read “Tough Times Series: Getting Student Loans During the Credit Crunch” in Home & Family Finance Resource Center.

Scammers find lucrative business from funerals foreclosures

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NEW YORK (6/29/09)--While you’re pinching pennies during the recession, scammers keep finding innovative ways to pick your pocket. The foreclosure mess is turning into a lucrative business for crooks who promise to “help people” avoid foreclosure--for a price (nytimes.com June 21). While there are many legitimate nonprofit agencies providing free, confidential help to borrowers, con artists convince desperate homeowners who are behind on their payments to fork over $1,500, $3,000, or even up to $8,000 in fees for services that typically are free. Before you seek help, ask the credit union for advice or for referrals to legitimate counselors. Also, visit www.findaforeclosurecounselor.org, which allows you to enter your zip code to access information about local agencies affiliated with the federal government’s National Foreclosure Mitigation Counseling (NFMC) Program, a collaboration with NeighborWorks America. Be on the lookout for yet another scam source that’s less well-known: online guest books for deceased individuals. This is a site where family and friends can share stories about the deceased, leave messages of support for each other, and upload pictures. But Consumer Reports (June 15) warns that scammers have easy access to the e-mail addresses some visitors post on the guest book site. Crooks then send phony messages, stating that a long-deceased relative owes them money that will be released as soon as fees are paid to an overseas bank account. In some cases, the letter writers claim to be officials of foreign governments. Many people have been fooled--even when they aren’t distracted by grief. Avoid becoming a victim of online guest books:
* Refuse to respond to anyone or any company that requests an advance payment of fees. * Add the e-mail address of the sender to your “block address” list. * Notify your local or state consumer protection office of the scam so they can pass the information on to authorities and warn others. * If you receive a check, take it to your credit union to verify authenticity before you cash it. If you deposit it, you may be liable for repaying any funds you withdraw against it.
For more information, listen to “How to Prevent Foreclosure” in Home & Family Finance Resource Center.

Homebuyer tax credits charity scams travel packages

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WASHINGTON (6/26/09)--Guests on Sunday’s H&FF Radio offer expert advice about taking advantage of the first-time homebuyer tax credit, steering clear of charity scams, and avoiding travel packages with one too many surprises. And one guest explains how the bar code has transformed consumers' shopping experience. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Happy Birthday, Bar Code,” with Tod Marks, senior project editor, Consumers Union, Yonkers, NY; * “First-Time Homebuyers Tax Credit,” with Jerry Howard, president/CEO, National Association of Home Builders, Washington, D.C.; * “Operation False Charity,” with Dave Horn, attorney, Federal Trade Commission Northwest Regional Office, Seattle, Wash.; and * “Surprise Travel Packages: Are Bundled Vacation Deals a Bargain?” with Sue Perry, deputy editor, Shop Smart, New York.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. For more information, listen to “Travel Fraud: Vacation Certificates & Vacation Clubs” in Plan It: Retire Ready Toolkit.

Home seller tips in a tough market

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NEW YORK (06/24/09)--Despite a slight upturn in new housing starts, sellers still face an environment of tight credit, low property values and reluctant buyers. Be prepared to offer incentives for buyers to sign on the dotted line (Money July 2009). After plummeting to a post-World War II low in April, construction of new housing units rose 17.2% in May (MarketWatch.com June 16). And yet, the average selling price of existing single-family homes was $169,000 in the first quarter of 2009--an $11,000 drop from fourth quarter 2008, according to the National Association of Realtors. People are still buying, but they may need an added incentive to complete the purchase. If you are trying to make a quick closing on the house you’re selling, be willing to make compromises, spruce up your home, and tune in to the buyer’s needs:
* Undercut the competition. To sell fast, dropping your price 10% to 15% below comparable homes in your neighborhood should help get your listing noticed. Also, if you can afford it, set your home at the lowest end of its price range. A $199,000 price tag is a deal to buyers in the $200,000 to $250,000 range. * Use staging techniques. Focus first on improvements that will get the most buyers to your front door. Worthy fixes: power wash your siding, paint the front door, replace the knocker or handle, and give your garden some serious sprucing. On the inside, applying a fresh coat of paint, eliminating odors, and decluttering can go a long way. But don’t overspend--the cost should be worth the payoff. * Target first-time buyers. Thanks in part to the $8,000 first-time homebuyer tax credit, and in part to super-low mortgage rates, first-timers bought more than half the homes purchased so far in 2009. * Use the Internet. Establish an online presence and spread the word through social networks such as Facebook and Twitter. Sprinkle your description with desirable, accurate keywords and amenities--deck, pool, granite counters or fireplace, for example. Also, consider posting pictures taken with a wide-angle lens--this view makes rooms appear larger. * Offer extras. Another way to reach first-time buyers: Offer add-ons. Many people are leaving the renter’s life, in which landlords tend to the maintenance issues, and they might appreciate a home warranty that provides some coverage when major problems arise. Offering help with closing costs or mortgage protection can also trigger potential buyers’ interest (MarketWatch.com June 15). * Stress a speedy deal. It can take months to close on a short sale or a foreclosed property, but if you’re a traditional seller, stress to buyers that you can close the deal in just a few weeks. This could strike a “buy now” mentality among those who fear another buyer might come along and snatch the deal.
For related information, read “Consider Pros, Cons of Rent-to-Own Your Home” in Home & Family Finance Resource Center.

New-car tax credit now applies in all states

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BOSTON (6/22/09)--That new-car smell just got better, thanks to legislation that provides tax incentives to new-car buyers. The U.S. Department of Treasury recently announced that the American Recovery and Reinvestment Act of 2009’s new-car tax deduction now extends to consumers in states without a sales or excise tax (boston.com June 17). These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon. If you live in any of the other 44 states, you’re still able to deduct state or local sales or excise taxes paid on the qualifying vehicle purchase (ustreas.gov June 11). Here’s what you need to know to qualify for this special tax deduction:
* Purchase deadline.The new car, light truck, motor home or motorcycle must be purchased after Feb. 16, and before January 1, 2010. * When to file.The deduction applies only to your 2009 federal tax return, which you’ll file in 2010. * Itemized or not.You can claim the special deduction regardless of whether you itemize deductions on your federal tax return. * Price limit.Your deduction is limited to fees or taxes you paid on up to $49,500 of the vehicle’s purchase price. * Phase-out.The deduction begins to get smaller if your modified adjusted gross income is at $125,000, and the deduction is exhausted at $135,000 for individual filers. For joint filers, the special tax deduction is phased out at between $250,000 and $260,000 of your modified adjusted gross income.
For more information, read “Hybrid Vehicles: Benefits Beyond Gas Savings” in Home & Family Finance Resource Center.

What happens when 401k collides with pink slip

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WASHINGTON (6/19/09)--With the nation’s unemployment rate hovering close to 10% coupled with a scarcity of job openings, more workers are experiencing a head-on collision between their 401(k) and job loss. One of this week’s H&FF Radio show guests explains what this “head-on crash” means for your retirement plans. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Keep Your Credit Card and Personal Information Safe on Vacation,” with Lyn Chitow Oakes, chief marketing officer, Trusted ID, Redwood City, Calif.; * “Credit Card Repayment Relief: New Terms Offer Better Options for Consumers,” with Gail Cunningham, vice president of public relations, National Foundation for Credit Counseling, Silver Spring, Md.; * “Job Loss and What It Means to Your 401(k),” with Jordan Amin, American Institute of Certified Public Accountants, New York, N.Y.; * “21st Century Transportation for a 21st Century America,” with David Goldberg, Transportation for America, Washington, D.C.; and * Listener Q & A.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU, also known as WesCorp, and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read “Job-Hunting Tactics for This Recession” in Plan It: Retire Ready Toolkit.

Consider pros cons of rent-to-own your home

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ATLANTA (06/17/09)--In an environment of poor credit and tight financing, some home sellers are offering rent-to-own options. While this approach may seem appealing, buyers need to understand both the advantages and disadvantages (CNNMoney.com June 4). In a rent-to-own, also called lease-option, the renter pays an upfront fee--typically 5% of the home’s purchase price--for the option to eventually own. The renter and seller draw up a contract detailing the monthly rental payments and expiration date, typically 12 months to 36 months. A portion of each month’s rent is income for the seller, while the other part is a “credit” toward the potential buyer’s down payment. When the contract terminates, the buyer can either put the option fee and rental credits toward the purchase of the house, or opt out and lose what’s been paid in. Before signing on the dotted line, buyers should understand the pros and cons (Forbes.com March 2): Pros:
* No need for loan approval. With lending standards tight, many consumers may find their current credit score doesn’t qualify them for a mortgage, making rent-to-own a viable option. * Buys time to boost credit score. A lease option allows hopeful owners to develop a good bill-paying history, build equity and position themselves for securing a loan in a few years. * Builds up down payment. Down payments of 20% to 30% required by lenders can be daunting to potential buyers. With rent-to-own, down-payment contributions compound monthly. *Locks in price. Even if a buyer with a higher offer comes along, your price is locked in to the contract. And, if property values rise, your lower price becomes a deal. Read the fine print. Be sure the seller cannot terminate or renegotiate the arrangement; if home prices increase, the seller will want more money, or an out.
Cons:
* Mortgage rates may increase. Mortgage rates haven’t been this low since the 1950s. If you opt for the rent-to-own option, you may face higher interest rates at the end of your contract. * Fees may get expensive. If you don’t buy at the end of your contract, you lose your option fee and all the money you paid in rent--possibly thousands of dollars. * Late payments not forgiving. In most rent-to-own contracts, late rental payments void the rent credits for that month. Sellers pocket the money that otherwise goes toward the down payment. * Home values may fall. If property values decrease, a renter paying a rate based on the original list price ends up being overcharged.
Rent-to-own options may help those serious about buying a home, but it can be a money trap for others. Before agreeing to a rent-to-own, do your homework. Ask for a title report to make sure the property is free of liens, get an appraisal and an inspection, and seek legal help to avoid contract mishaps. You will have to pay for these services. For more information, read “Use Home Value Search Engines” in Plan It: Retire Ready Toolkit.

Research You can teach preschoolers about money

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MADISON, Wis. (06/15/09)--When it comes to money, your preschooler is learning something every day, even if only by watching you at the store. If you want to send a particular message about money’s proper use and importance, start now. A research study released earlier this month by the University of Wisconsin-Madison revealed that very young children--as young as three years of age--are capable of learning key money concepts that help them become financially literate adults. These skills can be developed from social interaction and observation, and parents play a key role. Take time to teach the basics of sharing, saving and spending. Experts at the Credit Union National Association's Center for Personal Finance offer these tips for introducing money as a topic of discussion with your little one:
* Look for the teachable moment. You don’t need a classroom to teach. A “teachable moment” is any time that your child is ready for new ideas. For example, getting cash from an ATM is a good time to explain that you put money into the credit union or bank earlier. The machine gives you your money back when you need it. * Let children make mistakes. Losing money and being unhappy with poor spending decisions are more effective lessons than a lecture. * Watch TV together. Preschoolers cannot understand the difference between TV programs and commercials. Choose TV shows to watch with your child. Talk about the ads and what they are selling. Explain that choosing what to buy is like choosing what TV shows to watch.
For more information, watch “Thrive by Five: Teaching Your Preschooler About Money” in Home & Family Finance Resource Center.

HandFF Radio How credit card rule changes affect you

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WASHINGTON (6/12/09)--This week’s H&FF Radio show is all about credit: how to get out of credit card debt, what’s in--and not in--the new credit card legislation, and how the new rules affect you. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Power Through Credit Card Debt,” with Susan Tiffany, director of personal finance information for adults, CUNA, Madison, Wis.; * “1,001 Things They Won’t Tell You: An Insider’s Guide to Spending, Saving and Living Wisely,” with Jonathan Dahl, editor-in-chief, SmartMoney magazine, Wall Street Journal, New York City; * Provisions of the Credit Card Act of 2009,” with Pamela Banks, policy counsel, Consumers Union, Washington, D.C.; and * “Sweeping Change in Credit Card Rules: How They Affect You,” with Adam Levin, founder and chairman, Credit.com, New York City.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, listen to “Credit Card Reform” in Home & Family Finance Resource Center.

Get linked to power up your job search

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NEW YORK (6/10/09)--Nothing beats face-to-face networking to build your career. But do you know how to use professional networking sites to find a new job? Reviewing new technologies to see which ones are worth keeping up with may seem like a full-time job, but it’s worth the effort (MarketWatch.com May 27). Recruiters are taking advantage of professional networking sites like LinkedIn to recruit and accept applications from candidates. John Walker, co-founder of Talent Evolution, a career education and training company based in southern California, says that recruiters follow status updates in search of keywords related to the industry in which they are seeking candidates (Secrets of the Job Hunt.com June 2). The benefits of posting frequently and using common keywords include increasing your visibility, getting found by search engines, building your network, and being able to search for employment via sites with robust job-listing portals. Consider starting with LinkedIn. Its more-than-41 million members come from 200 countries worldwide. They include executives from all of the Fortune 500 companies and 170 different industries. Your profile is the most important part of professional networking. Walker has used LinkedIn for years, as both a job seeker and a recruiter. Take your profile seriously--it could make or break your job search:
* Complete your profile. Don’t leave any sections incomplete. This will improve the likelihood of your profile being found in search results. * Use a flattering photo. Make sure it is sized no larger than 80 x 80 pixels. * Use common keywords. Name your skills in a way that makes your profile easy to read and easy to find. * Post recommendations. Get them from people you work with or from those who know your work personally. Posting recommendations turns your profile into a living document with power behind it. * Join LinkedIn groups. They help you connect with professionals in your area of expertise and facilitate your job search. Use groups to get leads on possible employers, and connect with people who might be looking for employees now or in the future.
For more information, read “Job-Hunting Tactics for This Recession,” in Plan It: Retire Ready Toolkit.

Simplify your finances

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WASHINGTON (6/8/09)--The recession has many consumers looking at their personal finances through a microscope to uncover even the smallest speck of savings. The best approach, though, may be to take advantage of a few smart moves and tools to help simplify certain tasks (Kiplinger.com June 2009). Make some smart moves now for a brighter financial picture later:
* Sign up at a personal budgeting website. Consider these free online tools: mint.com, quicken.intuit.com, and wesabe.com. After set-up, you’ll see how much you’re spending and where it’s going. Some sites show spending in multi-colored pie charts, and some let you interact with other users for support and budgeting advice. Check privacy policies and use strong passwords. Another tool is the Budget Blueprint calculator on the Home & Family Finance Resource Center site, for subscribing credit unions. * Sign up for online bill-pay. You’ll avoid costly late payment fees and eliminate envelopes and stamps. Have your bills e-mailed to you to reduce paper clutter. And with online banking, your balances and outstanding checks are immediately available. * Streamline retirement savings. Sign up for your company’s automatic 401(k) enrollment plan if you’re not participating now. Consider a target-date fund that adjusts your savings to less risky investments as you approach retirement. And consider consolidating your retirement accounts from previous jobs into an individual retirement account (IRA) for easier management later. * Use shopping bots to compare prices. Sort retailer listings by price, and set alerts so you’ll be notified when prices drop. Consider BizRate, Shopzilla, Google Product Search, MySimon, PriceGrabber, Shopping.com, and Yahoo Shopping (Consumer Reports Money Adviser June).
Here’s a tip: Reserve several hours one weekend for a budget boot camp (Money June). Review your credit union and credit card statements for the past three months and identify recurring expenses and amounts. Then identify one or two line items to cut so you can balance your budget and meet your short-term and long-term goals. Making a sacrifice now--such as getting rid of a second vehicle and the associated gasoline, maintenance, and insurance expenses--may be necessary to get through these difficult times and position you and your family for better times ahead. For more information, read “Keep Passwords Strong, Secret, and Safe” in Home & Family Finance Resource Center.

Energy expert shares summer road-trip tips

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WASHINGTON (6/5/09)--Planning a summer road trip? This week’s H&FF Radio show lineup of guests includes an energy expert with timely vacation tips to boost your fuel efficiency—just as gasoline prices are starting to soar again. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Fuel Efficiency Tips for Your Summer Road Trip,” with Kateri Callahan, president, Alliance to Save Energy, Washington, D.C.; * “Making the Golden Years Golden: Sources of Information to Guide You In Making the Right Decisions for Living Better, Healthier, Independently, and Stress Free,” with Dr. Eva Mor, epidemiologist and specialist in gerontology and health-care management, New York; * “Recession Puts You at Increased Risk of Being Duped by Pyramid/Ponzi Schemes,” with Sally Greenberg, executive director, National Consumers League, Washington, D.C.; and * Your Questions Answered: Roof-top luggage carriers and gas mileage; income tax and your 401(k) contributions; and Fannie or Freddie--do they hold your mortgage?
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read “How You Drive = What You Spend on Gas,” and listen to “Investment Scams Targeting Baby Boomers' Retirement Savings” in Home & Family Finance Resource Center.

Survey Women at higher risk for ID theft

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NEW YORK (6/3/09)--Women are more likely to be a victim of identity theft--and lose more money--than men, according to national survey results released by Norwalk, Conn.-based Affinion Security Center (eMarketer.com May 19). The good news is that women are more likely to change behavior after the experience. Twenty-eight percent of women surveyed had their identity stolen, compared with 21% of men. And 17% of women surveyed lost $1,000 or more that they never recovered, compared with only 10% of men reporting losses that high. Survey respondents were asked if they changed behavior to protect themselves. Responses revealed that women are more likely to take aggressive action--such as subscribing to a credit-monitoring service, traveling with limited personal information and shredding documents before disposing of them--to avoid becoming a victim twice. An identity fraud survey report released in February by Javelin Strategy & Research revealed that fraud attacks involving women occurred most often in person, such as in restaurants and stores, rather than online. Lin Standke, Credit Union National Association’s manager of youth programs and a victim of identify fraud, offers these suggestions for protection:
* Zip it up. The No. 1 method for stealing your personal information is through lost or stolen wallets, so keep your plastic safe. Use a purse with a zipper rather than an open bag. Don’t hang your purse on the back of a chair at a restaurant. Instead, keep it between your feet or on your lap. * Be consistent. Keep your plastic in the same place and put it back there every time you use it. That way you’ll notice immediately if a card is missing. Better yet, carry only the card you plan to use and your driver’s license. * Keep it in sight. Ask to see a manager if a store employee steps into a back room to swipe your credit card when there is a machine at the cash register. This is not a typical procedure (except in restaurants), and the clerk may be copying your information. * Take online precautions. Keep your virus protection programs up to date, install a firewall, and don’t click on links within e-mail messages. * Check account activity frequently—online. Most credit and debit cards have online access so you can review your purchases. If you find a charge you didn’t make, report it immediately. * Lock it up. Keep personal information such as account numbers, passwords, and Social Security numbers in a safe, locked place at home.
For more information, read, “Identity Theft: Getting Back to Square One” in Home & Family Finance Resource Center.