Another Reason To Check Your Bank Account Every Day

My wife was out shopping over the weekend and sent a rather alarming text message: Her debit card purchase had been declined.

This instantly sent a terror down my spine as I pictured our bank account having been drawn down to zero with someone else living the good life.

Luckily, I was able to use my Blackberry to log in to our bank’s mobile site.  It told me that our balance was right along the lines of what it should be (having looked yesterday), and I was able to look at the most recent transactions and see only one had appeared since I looked yesterday, which was for buying a pizza the night before.

In other words, absolutely nothing was out of the ordinary.

I was able to tell this because I knew what was ordinary by having kept track of both the balance and the recent transactions.  Had I not, I might not have known what the balance ought to be, and I also wouldn’t have known that recent transactions were all accounted for, as I would have had to go days back to make sure there were no fraudulent charges.

By keeping a close and frequent eye on our bank account, I was able to quickly and easily determine that nobody had gotten into our bank account.  I’d recommend checking your bank and credit card transactions at least three times a week to keep on top of it, so that if anything like this ever happens, you’ll be able to rapidly determine whether or not you have an actual problem.

Thankfully, we didn’t.

(As a follow-up, my wife tried the card at the next store she went to and it worked just fine.  With the store that declined it, she was able to use a backup card (credit card), so everything worked out)

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We Timed That One Pretty Well!

My wife and I recently took a few days to go for a three night vacation to a couple of tourist destinations here in Michigan.  We coordinated it around the time of our anniversary, though it was technically a few days later.

Timing it when we did allowed us to get the cheapest rates of the season.  After Labor Day, the rates fall off a cliff.  In a couple of weeks, they will go back up again, as ‘going up to view the beautiful Michigan change of season’ will pick up in earnest.  Since we fell in between, we got some super awesome deals.  And, on top of that, the crowds were non-existant anywhere we went, where if we had gone even a couple of weeks earlier, we’d have been elbow to elbow.

All in all it was great.

mb-201010creditIn addition to all that, we timed things pretty well with our credit card rewards program.  We each have a Citi Dividends World Perks card.  For years, they offered 2% cash back on categories such as gas, groceries and utilities and 1% on all other charges.  Since we pay our cards off every month, this is a great card for us.

Recently, they changed their rewards program to where the ‘bonus’ rewards are on revolving categories that change every three months.  Since they just implemented it, the first batch was offered at a 5% off bonus!

What were the categories: Hotels, Restaurants, and Rental Cars!  Since we were going on this trip anyways, that meant only one thing:

Ka-ching!

While we didn’t rent a car, we certainly made excellent use of the restaurant and hotel categories.  Since we had planned the trip many months ago and would have incurred all of the costs anyways, the extra 4% we gained on our hotel stays and eating out was just money in our pocket!

This was confirmed when I received our bill.  I knew what all of the charges would be but the extra ‘rewards’ money was a nice surprise.

We timed that one pretty well, don’t you think?

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Do You Select Credit Or Debit?

Yahoo Finance recently discussed the dangers of using a debit card, pointing out that the best alternative may be to select credit if given the option.

Here are some of the reasons that they listed:

  1. Loss limits – Credit cards and debit cards both limit you to $50 of personal obligation in fradulent situations, but you have a much shorter window (2 days) to report this with debit or you’ll start to be on the hook for more.
  2. Pay now / reimburse later – Because debit takes the money from your account immediately, it won’t be there during the time that your fraud claim is being investigated, which could lead to big issues for people who don’t have a cushion or get their accounts cleaned out.
  3. Merchant disputes – Same goes here, you already paid for the item that you are now having a problem with.  With credit, you aren’t on the hook for the money during the dispute process, whereas the merchant has your money during the dispute timeframe if you select debit.
  4. Phantom charges – Some places (like hotels) will put a hold on additional money at the time of purchase.  While they eventually ‘disappear’ once the transaction settles, this could lead to problems if you have a low balance and inadvertently cost you overdraft fees or bounced check fees.
  5. Overdrafts – There’s been a direct correlation to the number of overdraft transactions and the use of debit card transactions.  One, apparently, begets the other.
  6. Skimming-  If someone gets a hold of your account number, your bank account can be cleaned out before you or the bank notices the activity.  The chances of this are a lot lower in credit card transactions.

We always use the ‘credit’ option when we use our debit card.  I’ve noticed that more and more merchants seem to be trying to subtly lead customers to using the debit option by removing the Credit/Debit choice on the pinpad devices, and instead defaulting to the ‘Enter Your PIN’ screen which would make it a debit card purchase.

The dirty little secret here is that merchants pay less to the banks when you use the debit option versus when you select credit, so it makes sense that they want you to use debit.  However, the way I look at it, they’ve already factored the costs of the credit transactions into the cost of their goods or services, and it’s not like they’re going to pass along some of the ‘savings’ along to you that they’d see if you select debit.  It goes right in their pocket.

The bottom line is that consumers take the biggest risk when they select debit, and it’s not a risk I’m often willing to take.  About the only times I ever select debit are when I’m at Costco (they don’t accept ‘credit’) or in the rare event that I want cash back and can save a trip to the ATM, and usually I’ll kill two birds with one stone and just get the cash at Costco.

This article raised some good points, but we were already in the ‘use credit’ boat.  Do you agree or is there any reason where you prefer to use debit?

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Citi Dividends Changing Terms

I’ve been a faithful Citi Dividends cardholder for a few years now.  I signed up a few years ago, enticed by the cashback rewards.    Before Citi, I had used a couple of different rewards cards, but eventually settled with Citi as the cashback rewards made this a great card, especially considering that there was no annual fee and that we don’t pay any interest charges, paying off our balance every month.

Citi recently sent a notification that the terms of the card are changing.  For the past few years, they paid 2% cash back on the ‘bonus’ categories including gas, groceries, and cell phone bills and 1% on everything else.  Beginning July 1st, they will still pay 1% on everything, but the ‘bonus’ percentages will turn into a ‘rotating’ category program where different categories will offer ‘bonus’ money for three month periods.  The first period (July 1st – September 30th) pays 5% on some categories, most notably restaurants.

My dad asked me how this will affect our usage.  At this point, both my wife and I have between $25-35 in rewards on our cards.  Since Citi will only pay you after you reach $50 in rewards, we are going to continue to where we at least get a reward.  After that, I think we will probably keep the card and use it selectively on the ‘bonus’ categories that we spend money on anyways.  I would think we might look for another cash back card that offers higher rewards especially on gas and groceries, as it’s been nice to get those extra rewards for so long.

Does anybody know of any good cash back rewards cards that pay above 1% rewards across the board or on various categories?

Will anybody be cutting up their Citi Dividends card as a result of this announcement?

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