Online banking and shopping are part of everyone's lives now. Most consumers are completely comfortable entering their credit card information on any site. The vast majority of bank customers don't even receive paper statements anymore. But as with everything else online, there are some security concerns. Here are a few simple ways you can keep your financial information secure while you're shopping and banking online.
1. Use strong passwords
Especially for your bank account, use a very strong password. Having a complicated password will make it harder for anyone to hack or guess your login. You'll want it to be at least 10 characters long, have numbers, upper and lowercase letters and a few special symbols. You can make a pretty strong password that you can still easily remember.
Step your security up by signing up for password manager, like LastPass. These are secure, encrypted services that will generate strong passwords for all of your accounts. And by installing the browser extension, you can sign in with a click of a button.
2. Change your passwords regularly
Having a strong password is great, but it's still good practice to change your password at least once every year. If you haven't changed your password since you set up your account, you should probably go update it right now. As evidenced by Yahoo releasing information about a hack of accounts that took place years ago, changing your password regularly keeps your account secure. Those Yahoo users who changed their passwords after that hack took place in 2013 stopped hackers from maintaining access.
You should be changing your banking password regularly as well as any other accounts that are storing your financial information. This includes any shopping websites or payment services.
3. Avoid entering your credit card information
If you're completing a one-time purchase on a website you don't regularly use, try to avoid entering your credit card information. Most sites will support payment through PayPal, Visa Checkout or, if you have a Mac, Apple Pay. These are secure services that can complete your transaction without having to enter any of your sensitive information.
These services also make paying for items much faster. No need to fill out boxes of information. Just type in your password and you're good to go. Who said you couldn't have security and convenience at the same time?
4. Enroll in transaction alerts
Most banks will let you set up transaction alerts on any or all of your cards. Whenever a purchase is made with your card, you can receive an email, text or push notification telling you about it. This is a great feature to use if you let your family members use your card regularly.
All of these notifications might sound annoying, but it is the fastest way to verify that there aren't any fraudulent purchases. If someone manages to get a hold if your card information and uses it, you'll receive an alert. If you don't recognize the transaction, you'll be able to quickly flag it and inform your bank. Transaction alerts are by far the easiest way to keep tabs on your spending and security.
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When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.