4 Tips For Using Your First Credit Card

Getting your first credit card can be extremely exciting.  It means that you have finally taken a huge step in establishing yourself in society.  Without a strong credit score, it can be difficult to do many things.  From renting an apartment to getting approved for contracts, credit can be a huge factor in your future.

It is important, however, to remember that it is not something that you should take for granted. Credit is something that shouldn’t be seen as free money.  It is a luxury and responsibility which should be taken seriously at all times in order to ensure the best possible future for yourself. Otherwise you run the risk of having to pay off large amounts of debt.  Here are the best tips for ensuring that you use your first credit card wisely.

Build Your Credit

credit cardIt is important to use your first credit card as a tool to build your credit.  Building your credit means establishing yourself as a credit card holder ensuring that you have the maximum score possible.

Scores range up to a score of 850 and when you reach this amount you can be sure that you qualify in an excellent range.  Having an excellent score means that you can qualify much easier for further lines of credit, and will have no problem being approved for loans should you ever want to apply for one.

Never Max Out Your Limits

It is crucial to never go to the maximum amount of your credit limits on your card.  This is because a huge factor on your score is credit utilization.  Meaning that the ratio between credit owed vs credit available must be balanced.

Most experts advise staying within 30% maximum of your total credit limit.  This way, you can still keep your credit utilization amount low on your credit score, which plays a large factor in your overall credit report.

Check Your Credit Score Regularly

It is extremely important to keep a close watch on your credit score so that you can know exactly what is happening.  By knowing what is going on you can monitor any changes that occur in your credit report.

Sometimes your score may go up or down depending on what comes up.  Sometimes you may get derogatory marks on your score.  These may be because of something that you have failed to pay or sometimes it is an error.

In order to correct these errors, it is essential to keep an eye on your credit report so that you are aware when they come up.

Always Pay On Time

It is crucial to always pay your debts on time otherwise you run the risk of getting late payments on your credit score which will take points off of your overall score.

Should parents hand over credit cards to their kids?

There are numerous stories about heinous teen spending all over the media. Judging by the recent article in the New York Post, teens have been whipping out their plastics in and around New York City. A 14 year old girl, Rebecca swipes her Chase Visa card twice in a single day to pay for taxi fares and also adds a 20% tip. When she accompanies her friends for dinner at costly restaurants, they split the bill and each of them throws in their credit cards while making payments. Parents, instead of encouraging such financial behavior should limit them in order to help them avoid a financial doom. This gives rise to the question about how wise and intelligent parents should let their kids handle credit cards.

Things to consider before handing over credit cards to your children

As soon as children hit their teens, they soon want to taste financial freedom. From credit cards to trending smartphones, there’s a huge list of things they’ll immediately start wanting. As parents, what kind of responsibility should you show? Let’s find out.

Comprehend the power of your child: Before you give in to the demands of your children and hand over their first credit card, know whether or not your child can get a grip on the complex financial issues related to a credit card. Ensure he’s capable of paying back the balance amount with the pocket money or allowance that he is offered. You as a parent may even boost your child to take on some offbeat passive jobs to earn money for repaying the debt amount.

Find out the actual reason behind his demand: In case you find your child repeatedly demanding a credit card, don’t hand it over without asking him anything. The foremost thing to enquire is the purpose he is going to use it for. Is the demand simply due to peer pressure or for other credible reasons? It’s your responsibility to propagate the basic knowledge with regards to your credit card. If you think he has enough handy money, ask him not to use his card.

Keep a close watch on his activities: Even though you hand over the credit card to your child, keep a close eye on his activities. Try to know the ways in which he is using his card. Keep a record of his credit card statement, advise him to keep all the receipts of the purchases just to recheck it with the statement, ask him to spend an amount which doesn’t exceed his pocket money and restrict him from granting his credit card access to someone else.

Don’t hesitate to share your mistakes: There are many who hesitate to share their mistakes with a fear that they may get a bigger chance to reinstate their own. But this is the wrong approach! You should show them the right path by telling them not to repeat the same mistakes committed by you. If only you share your mistakes with your children will they think hundred times before repeating the same.

If your kid starts incurring debt even after following your advice, you should teach them not to procrastinate and seek immediate debt help from professional companies. Debt when left unattended can soar up to an unmanageable level. Hence, take prompt decisions about getting rid of high interest debt.

Norma Walton: How Much is Enough?

North American society promotes the concept that having money creates happiness.  Certainly having enough wealth to cover your basic needs is important – a roof above your head, sufficient money for food, a clean supply of water, basic clothing and a healthy environment.  A lack of those essentials will create misery.

money happiness

Once you achieve the above, there is value in considering how much more money you need.  Beyond covering your basic needs, below are some reasonable objectives that you may want to consider when you decide how much money you require:

  1. A reasonable spending plan: Charles Dickens proposed the theory that if your income is $100 per day and you’re spending $99, you will be happy.  If your income is $100 per day and you’re spending $101, you will be miserable.  That is wise advice.  If your expenses exceed your income, you will be constantly scrambling to cover your bills and will head into debt, which is stressful.  Focusing on reducing your expenses or increasing your income so that your income is greater than your expenses is time well spent.
  2. A plan to pay off existing debt: My grandparents’ generation saved their money before they would buy a car.  They saved their money to fund their vacation.  They paid off their mortgage as soon as they reasonably could and would have considered it baffling to refinance to pull out wealth from their house.  Debt often causes stress and tension in your life.  Debt sometimes makes you feel out of control of your financial situation.  Hence a focus on paying off debt will permit you to enjoy your money more as you pay the debt down.

    3d people - human character person carrying word "debt" on his back. Debt concept. 3d render
    3d people – human character person carrying word “debt” on his back. Debt concept. 3d render
  3. An emergency fund or line of credit: If you were to lose your job, do you have enough money to survive until you find a new one?  For some this amount will be one year’s worth of income savings; for others this amount will be a month or two.  It is prudent to have some money available if something happens that impacts your ability to earn an income for a period of time.
  4. A retirement fund: The Canadian banks focus on retirement planning.  They sit down with their customers to discuss how much you would need to save to fund a comfortable retirement.  They create charts and objectives for savings to try to get people thinking about where they want to be when they are ready to retire.  This is a good exercise for most people and helps people set goals for savings and calibrates their financial expectations for when they finish working.
  5. An insurance policy to provide for your dependants: If you were hit by a bus today, who would be in trouble without you around?  Think about the financial needs of your dependants and ensure that you have term life insurance in a sufficient amount to cover those needs.  Once you no longer have dependants who need your income to survive, you can reduce or eliminate that insurance.

piggy bank

Once you turn your mind to how much money is enough for you, you can review the above items and create a plan to ensure you have what you need.

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How to Budget

“Lay all your desires out before each other —where do you want to end up?  Set goals and be willing to compromise at times.  Be honest even when it hurts —that’s how you learn to trust each other.  Budget.  Regularly save, no matter how little…”
– Kate Bryant from the Marriage Partnership Magazine article, ‘Holy Matri-Money’

 

Written by Steve Nyvik, BBA, MBA, CIM, CFP, R.F.P.
Financial Planner and Portfolio Manager, Lycos Asset Management Inc.

Statistics Canada no longer collects data on divorce rates.  The 2011 survey concluded that 43.1% of all marriages are expected to end in divorce before a couple reaches their 50th anniversary.  As to reasons why people divorce, depending on the survey you look at, you’ll typically find money issues amongst the top three reasons.

Many arguments over money are related to misunderstandings or miscommunications on spending priorities.  Where two people who love and respect each other sit down and look together over their financial situation and come to an agreement on their spending priorities, many issues can be resolved.  And once these priorities are established, it’s fairly easy to establish a workable money management system.

Should spending later get off-course, it’s then easy to identify what threw things off, confirm or update the budget and spending and saving priorities, and come to an agreement on future spending.

Spenders, Savers and Budgets

I remember when I was an 11 year old boy receiving $1.00 for cutting the front lawn.  That dollar bill burned a hole in my pocket until I had it spent.  My dad would tell me to put away half of it so that I’d have some money to spend some other time.  But within a short time of receiving that dollar it would be spent.  Then when I wanted something special, I never had the money.

Eventually, I took my dad’s advice and developed the habit of saving and I began to appreciate having cash in the bank.  I was able to look at my spending as a decision on how I could get the greatest satisfaction from my money through time.  I learned to think about what I really needed (‘the necessities’) and what things I could live without.  And I learned to spend on things that would last (and hopefully go up in value) versus instant gratification.

In many respects, a ‘saver’ is basically someone who has learned to budget for their needs through time and routinely sets aside a portion of their earnings for savings.  The routine eventually becomes a habit.  And the money one took from the paycheque isn’t even felt as missed spending.

When I think of a ‘spender’ I think of the character of “Carrie Bradshaw” on the television show, “Sex and the City”.  She’d get such gratification on buying a pair of Manolo shoes even though she had a closet full.  But when it came to something important, like buying her apartment, she didn’t have any cash in her bank account nor could she qualify for a loan.

I think had Carrie examined the big picture of her life and the importance of owning your own home, she might have been able to set aside money for a down payment instead of putting it toward shoes that she didn’t need.  In other words, I think many spenders can become savers.

The union of two people to become one family should by definition include a union of spending and saving goals.  To begin the process, a budget is a helpful tool (see template below) to see where the family money goes and what’s leftover.  Then over a few glasses of wine, the couple can think of their future and decide together on goals and then how to fund them.  Included within the budget should be some “mad money” for some fun.  If the budget is too tight, it is more likely than not that the budget will get broken.

My wife can tell you that she detests the idea of having a budget, but you know, once you have separated out the budget necessaries and savings from the “mad money”, it becomes relatively easy to manage.  And where a spender knows how much they have to spend for fun and non-necessities and that’s all for the month, the system can work out.  But the spender has to know that a credit card shouldn’t be used if there is no money in the “mad money bank account”.

Should a person consider ‘violating’ the budget, ideally that person has first talked with their spouse to agree on such spending to avoid conflict.  A slip can happen, but if it is more than occasional, you then don’t have a workable budget.  Alternatively, the slipper might not be in agreement with the budget, the goals, or maybe the slipper might need to get away from credit cards and just spend cash for awhile and learn to live at the living standard.

 

BUDGET CASHFLOW
NAME:
DATE:
    AMOUNT / MONTH TOTAL
INCOME SOURCE HUSBAND WIFE / MONTH
Employment Income
Company Dividends
Company Shareholder Loan Draws
Company After-Tax Retained Funds
Allowance to Non-Working Spouse
  TOTAL >>>      
    AMOUNT / MONTH TOTAL
EXPENSE ALLOCATION HUSBAND WIFE / MONTH
LIVING EXPENSES:
    Groceries
    Eating Out
    Clothing
    Beauty (Cosmetics, Haircuts, etc.)
    Medical (treatments)
    Prescriptions
    Dental
    Fitness
    Help (lawn service, gardener, housekeeper)
    Senior’s Care
    Miscellaneous (Dry cleaning, gifts, etc.)
HOUSING EXPENSES:
    Rent / Mortgage Payments (Principal & Interest)
    Property Taxes
    Property Insurance
    Gas, Hydro, Water & Sewage
    Phone, Cable, Internet
    Maintenance & Repairs / Strata
    Major Appliances / Furniture
    Home Renovation
LEISURE EXPENSES:
    Vacations (incl. Travel Insurance)
    Health Club Memberships
    Golf, Boat, Other
    Recreational Property:
        Property Insurace
        Property Tax
        Maintenance & Repairs
        Major Appliances / Furniture
    Other: ___________________________
TRANSPORTATION:
    Auto Insurance
    Gas & Oil
    Maintenance & Repair
    Parking
    Replacement Fund
    Other (taxi, bus, plane, trains, boats)
PAYROLL
    Income Tax withholdings
    CPP
    EI
    MSP
    Extended Healthcare & Dental
    Short Term Disability
    Long Term Disability Insurance
    Dental
    Other: ___________________________
BUSINESS / PROFESSIONAL
    Professional Liability Insurance
    Professional / Union Dues
    Convention
MISCELLANEOUS:
    Income Tax Instalments
    Accountant Fees (eg. Tax Preparation)
    Bank Service Charges
    Support (Alimony, Child Support, Parental Assistance)
    Private Insurance (Life, Disability Critical Illness, Long Term Care)
    Children College Education / Assistance
    Grandchildren College Education / Assistance
    Donations
TOTAL EXPENSES  
SAVINGS:
    Company Savings
    RRSP Contributions
    TFSA Contributions
    Pension Plan Contributions
    Company After-Tax Retained Funds
    Unallocated Savings
  TOTAL >>>      

Spare Change

Consumer debt has become a huge and growing problem in our society today. Access to credit cards, the use of debit cards and the constant media push of buy now and pay later has enslaved the average North American household. I’m a major fan of having fun and enjoying the good things in life and the results of our hard work. But in order to achieve the healthy balance of enjoying life now and looking after the future and our responsibilities we need to try something different.

The first step is to set a goal for something you want. A new, big, flat screen TV; a winter vacation; a makeover for a room in your house; work on the car, etc. Whatever that you want.

The second is to put yourself on a cash diet for all your incidentals like coffee, eating out, gas, and any other small purchases. At the beginning of the week go to the ‘instabroke’ machine aka ATM or even go into the bank and speak to a real live teller, and take out your weekly allotment of cash. After that leave your plastic, debit, and credit cards in your wallet, or better yet, leave them at home. You can’t use them if they aren’t easily accessible.

Third, pay for everything using only bills. At the end of the day put all your change into a jar you have labeled with a picture of your future purchase. If your dream is to go to Hawaii, get a 52 inch plasma TV, get a new mountain bike or anything else that puts your heart all a flutter. Put a picture on the jar and let the spare change add up. Twoonies, Loonies, Quarters, Dimes, and Nickels add up very quickly when we aren’t paying attention.

Once a month add up the money in the jar and see just how much you are putting away. If you wish, you can then deposit this money back into a separate bank savings account (one that doesn’t charge you fees and pays you at least a small amount of interest and doesn’t have a minimal balance required in order to earn interest) so that your money is safe and growing at least a teeny bit.

In a very short period of time you will find this very simple, painless act of saving fun and enjoyable. For added motivation you might want to create a chart (example: a thermometer) that shows your financial progress towards your goal. It is amazing how excited you can get just seeing yourself getting closer to your reward.

Start today and see how quickly you can go from squirreling spare change away to enjoying the fruits of efforts.

“If saving money is wrong, I don’t want to be right.”
William Shatner

How can I recognise a SCAM?

A very good question and here are some tips including information from the Canadian Anti-Fraud Centre. www.antifraudcentre.ca

1. If it sounds too good to be true – guess what?!
You’ve won a big prize in a contest that you don’t recall entering. You are offered a once-in-a-lifetime investment that offers a huge return. You are told that you can buy into a lottery ticket pool that cannot lose. Oh really?
2. You must pay or you can’t play.
“You’re a winner!” BUT, you must agree to send money to the caller in order to pay for delivery, processing, taxes, duties or some other fee in order to receive your prize. Sometimes the caller will even send a courier to pick up your money. No legitimate lotteries use this process!
3. You must give them your private financial information – I think not!
The caller asks for all your confidential banking and/or credit card information. Honest businesses do not require these details. If you are placing an over-the-phone order, be extremely careful when providing credit card information – get the name of the person and an order number and record it to compare with your monthly statement.
4. Will that be cash… or cash?
Often criminal telemarketers ask you to send cash or a money order, rather than a cheque or credit card. The reason is simple – cash is untraceable and can’t be cancelled. Crooks (obviously) have difficulty in establishing themselves as merchants with legitimate credit card companies.
5. The caller is more excited than are you – oh joy, oh rapture!
The crooks want to get you very excited about this “opportunity” so you won’t think clearly. Lottery, “free” vacation, stock tip – the gimmick doesn’t matter. Act in haste, repent at leisure!
6. The manager is calling – don’t we wish.
The person claims to be a government official, tax officer, banking official, lawyer or some other person in authority. The person calls you by your first name and asks you a lot of personal or lifestyle questions (such as “how often do your grown children visit you”). They are trying to get enough information to steal your identity or have another crook try to scam you as a parent/grandparent.
7. The stranger calling wants to become your best friend – so you need more?
Criminals love finding out if you’re lonely and willing to talk. Once they know that, they’ll try to convince you that they are your friend – after all, we don’t normally suspect our friends of being crooks. Hang up and ignore them – HONEST people don’t try to become best friends over the phone or internet or in chat rooms or dating sites.
8. It’s a limited opportunity and you’re going to miss out – good, miss out.
If you are pressured to make a big purchase decision immediately, it’s probably not legitimate. Real businesses or charities will give you a chance to check them out or think about it.

What can you do to protect yourself?
Remember, legitimate telemarketers have nothing to hide, however….
• criminals will say anything to part you from your hard-earned money.
• be cautious. You have the right to check out any caller by requesting written
information, a call back number, references and time to think over the offer. Legitimate business people will be happy to provide you with that information. They want the “bad guys” out of business too. Always be careful about providing confidential personal information, especially banking or credit card details, unless you are certain the company is legitimate. And, if you have doubts about a caller, your best defence is to simply hang up. It’s not rude – it’s smart.

If you’re in doubt, it’s wise to ask the advice of a close friend or relative or contact the Canadian Anti-Fraud Centre, local law enforcement or the Better Business Bureau. Rely on people you can trust. Remember, you can Stop Phone Fraud – Just Hang Up!

What if I suspect that a relative or friend is being targeted by unscrupulous telemarketers?
Watch for any of these warning signs:
• a marked increase in the amount of mail with too-good-to-be-true offers;
• frequent calls offering get-rich-quick schemes or valuable awards or numerous calls for
donations to unfamiliar charities;
• a sudden inability to pay normal bills;
• requests for loans or cash;
• banking records that show cheques or withdrawals made to unfamiliar companies; or
• secretive behaviour regarding phone calls.

If you suspect that someone you know has fallen prey to a deceptive telemarketer, don’t criticize them for being naïve. Encourage that person to share their concerns with you about unsolicited calls or any new business or charitable dealings. Assure them that it is not rude to hang up on suspicious calls. Keep in mind that criminal telemarketers are relentless in hounding people – some victims report receiving 5 or more calls a day, wearing down their resistance. And once a person has succumbed to this ruthless fraud, their name and number will likely go on a “sucker list”, which is sold from one crook to another.

Also, make sure the details are reported to local law enforcement, the Better Business Bureau and the Canadian Anti-Fraud Centre. In addition, add your phone numbers (including your cell and fax) to the Do Not Call List – at www.dncl.gc.ca. It isn’t perfect but it does help.

Internet and E-mail Safety (and security)

In this blog, let’s look more closely at internet and e-mail scams and security.

Internet
Knowledge is power – and never truer than when surfing the net. The most common risks are viruses, key-stroke recordings, miscellaneous malware and Trojan horses.

Viruses do the same thing to your computer as they do to us – they make it sick; they can even kill it. Key-stroke recording software is installed by hackers and allows them to record all of your keystrokes with particular attention to usernames and passwords – they love banking, credit card and email access the most. Malware is also malicious as it can take many forms: from tracking your internet use patterns to copying files to a remote computer to erasing key pieces of software. Trojan horses get uploaded and then sit in wait – silently for a triggering date or event and then allow the hackers to take control of your computer and use it for attacking other computers.

The only 100% protection against these threats is don’t surf the net! Now let’s get into reality – hardware and/or software firewalls together with anti-virus and anti-malware software.

Hardware firewalls are called routers and they act as a first line of defence between the internet and your computer and are relatively inexpensive to acquire and are not very complicated to install. Software firewalls are generally a second layer of protection after the hardware firewall. Most reputable commercial ISPs (Internet Service Providers) provide this as part of their customer offering and may reside either on their servers or on your computer.

Anti-virus and anti-malware software is sold by several companies (Norton, AVG, Kasperski, F-secure and MalwareBytes to name but a few). Most suppliers offer free versions of their protection suites but remember if it is free, there is a reason! They are in business to make money and the free versions are teasers only. They do help of course, but don’t provide complete protection, so beware of freebies! Running “in the background” on your computer, they analyse every attempt at both inbound and outbound communication over the internet for suspicious software code and either block or delete access to outsiders. You can control all of these functions through a “control panel” that is installed with this software.

Be very selective on the websites that you visit. Some categories are higher risk for spreading these problems than others – dating sites, erotic picture and video sites together social media are the greatest sources of problems – avoid them!

E-mail
Rule No. 1 – if you don’t know the sender or you didn’t sign up for any e-mail notifications from stores or websites, DON’T OPEN IT! The “Nigeria” scams and grandchild scams are run constantly on e-mail as are Lottery scams of various types.
Rule No. 2 – see Rule No. 1.
Rule No. 3 – ensure you have a full-version of both anti-virus and anti-malware software installed on your computer that gets automatic signature updates – preferably daily – to stop evolving threats. If you follow these 3 rules, you are going to be safe 98% of the time.

The final 2% is chain-mail – the electronic version of old chain-letters – if you get one, regardless of the identity of the sender, do not forward it – even if it is from a close relative or friend – don’t!

General
A great reference book on scams is from the Competition Bureau of Canada – The Little Black Book of Scams – click here to get there immediately. The Canadian Anti-Fraud Centre has a website that is all about various scams and identity theft. Click here – Canadian Anti-Fraud Centre Home Page.

Fraud and Identity theft – a common glossary

Unfortunately, identity theft and fraud are among the fastest growing crimes in the world. In 2012, more than 120,000 calls were received and more than 40,000 e-mail messages each month were reported to the Canadian Anti-Fraud Centre! In 2011, credit card fraud alone exceeded $436 million! By contrast, in 2007, TOTAL fraud losses were $14 million. There are many more unreported incidents.

Phishing – An e-mail message that appears to have been sent by a financial institution with which you have business dealings asking for verification of various pieces of information. When you follow the hotlink and answer the questions, the thieves get enough information about you and your accounts to steal your money and perhaps your identity. The financial institutions you deal with do not need to “verify” the information they already have on you. Immediately delete all such emails. Report it immediately to the Canadian Anti-Fraud Centrehttps://www.antifraudcentre.ca, by phone to 1.888.495.8501 or by email to info@antifraudcentre.ca (CAFC) and your local law enforcement department.

Vishing – Similar to phishing above, but the fraudsters call you directly and pose as an employee of a financial institution or direct you by e-mail to call a number. They can even disguise call display so that it looks like the call may be legitimate. Your financial institution does not make calls like these. Ignore the call, hang up and report it to the CAFC and law enforcement.

Pharming – This is a term used to describe what a fraudster or hacker does to redirect traffic from a legitimate website to a fraudulent website without the victim knowing it. The scammer then harvests the data entered by the victim, thus the play on words – farming. Report such items to the CAFC and law enforcement.

Spoofing – This is the term used when a fraudster uses software or some other internet tool that allows the fraudster to mask their real identity by displaying a fake e-mail address or name and telephone number on your computer or telephone. It is meant to both hide who they really are and to trick you into thinking you are either dealing with a reputable business or person but also to give you the impression the call or message is coming from somewhere other than the actual location. Your telephone or Internet service provider have the ability to determine the true IP (Internet Protocol) address or telephone number but they must be informed quickly. They usually only provide this information to law enforcement in the course of an official investigation. Report to the CAFC and local law enforcement.

Shoulder Surfing – Someone hovering nearby while you are entering the PIN for your bank or credit card. If they get your PIN and skim your card (phoney machines used to steal your digital information) or pick your pocket or purse, they can clean out your bank account in no time. They may even use the digital camera feature of a cell phone. Beware of people around you that may be able to view your PIN as you enter it on a keypad. Shield the keypad with your other hand or your body. If someone is aiming a cell phone in your direction when using your cards, block the view of your card and stop the transaction until they’re gone.

Dumpster Diving – An information thief goes through garbage or recycling bins looking for account information. With an old bank or credit card statement, cancelled cheques, discarded junk mail credit card offers and some over-the-counter technology, a thief can open an account in your name and make off with the money. It may take you years to clear your good name. Shred all old bank and credit card statements and any pre-approved credit card offers you receive in the mail. It’s a good idea to do this for any papers you have that contain any information about you other than name and address.

Pump and Dump – A fraudster buys a block of low priced penny stocks and sends out millions of spam e-mails. The e-mails can be quite compelling and look like a hot tip. Those that fall for this actually fuel a demand for the stocks that the fraudster sells at an inflated price, sticking the new buyer with a loss. Ignore all such emails. A good spam filter should block most for you. In addition, always report such incidents to the CAFC, local law enforcement and your provincial securities commission.

If you are a victim of fraud or identity theft, always notify law enforcement immediately and then notify credit bureaus and card issuers as appropriate.

My next blog will go through some other common scams that use fraud and identity theft – sometimes together, sometimes separately, but the damages can be horrendous.

With courtesy to Wikipedia, the Canadian Anti-Fraud Centre, the Canadian Competition Bureau and the Globe & Mail.

Protect yourself from Identity Thieves!

Andrea told her husband Jack that she had noticed a young person going through their condo paper-recycling bins. At first, she thought they were just looking for recyclables which could be turned into cash, but later realized the person was rummaging through all of the containers that were paper-products only.

These bins often contain bank statements, cancelled cheques, private letters, other important documents, credit card statements and envelopes. If the information is from a business office, old client files and related data can often be found. There have been stories in the news about scavengers going through people’s waste and recyclables specifically looking for these items. The information that can be obtained is very valuable to information thieves and can be potentially damaging to you.

Credit Card Statements – Just how valuable is your credit card number to a thief? One couple was vacationing in Montreal when their credit card information got into the hands of an organized crime group in Mexico. Overnight their card had been maxed out. How would you like your next vacation to start this way?

Bank Statements – With an old bank statement, a cancelled cheque and a little bit of today’s technology, anyone can easily print up cheques drawn on your account and forge your signature. You can imagine the havoc this can create.

Envelopes and Magazines – Check your name and address on the magazines to which you subscribe and the notices you receive and you will often find your account or membership number is displayed. With that number, anyone can gain access to your member or account information and re-direct your mail. In some cases, this can be done on the Internet. If someone can re-direct your mail, would you wonder what else they might be able to accomplish?

Office Waste – The information that can be found in discarded office material is very valuable. It can contain confidential information on your customers, correspondence from companies with which you deal, statements of account, customers’ account data, quotations, billing information, purchase orders, etc. Would you like a competitor to get their hands on any of this information? What about your customer’s own identities – could they be stolen from information you discard?

Andrea and Jack decided to foil the information thieves by buying a personal paper shredder for less than $100. They now shred all papers containing anything other than their names and addresses. Though a determined thief might piece the shredder’s output back together, stirring it up should make this practically impossible.

The Canadian Anti-Fraud Centre (www.antifraudcentre.ca) is an excellent resource regarding all types of fraud including Identity Theft. Here are some quick tips from their website.
1. Before you reveal any personally identifying information, find out how it will be used and if it will be shared, and with whom.
2. Pay attention to your billing cycles. Follow up with creditors if your bills don’t arrive on time.
3. Use passwords on your credit cards, bank and phone accounts. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SIN or your phone number.
4. Minimize the identification information and number of cards you carry in your wallet or purse.
5. Do not give out personal information on the phone, through the mail or over the internet unless you have initiated the contact or know with whom you are dealing.
6. Keep items with personal information in a safe place. An identity thief will pick through your garbage or recycling bins. Be sure to shred receipts, copies of credit applications, insurance forms, Physicians’ statements and credit offers you get in the mail.
7. Give your SIN only when absolutely necessary. Ask to use other types of identity proof when possible.
8. Don’t carry your SIN card; leave it in a secure place.

In my next post, I will share some thoughts on other types of fraud and identity theft – including the internet, your telephone and RFID scanners!