Master of Money Management

Credit cards Give yourself credit

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Credit Cards are a not-negotiable item in your banking portfolio. They are convenient, safer than cash, virtually cost free and are an accepted form of payment all over the world. You can use them to buy things on line, pay for air tickets and buy just about anything you can think of. They are also an instant source of credit when you are running low on cash.

A credit card gives you two sources of extra cash. One is a revolving facility for everyday purchases, and the other is a budget facility for higher ticket items. You can choose to pay for an item over a period between 6 and 60 months.

If you pay your credit card off each month there is no interest charged. If you chose to pay the minimum payment each month you will be charged the prevailing interest rate. You will also be charged interest on the budget purchases. Credit cards can be one of our biggest allies in financial planning but if we use them to regularly treat our friends to movies and dinner or shop for shopping’s sake, then they can lead to over indebtedness, we need to use them  responsibly.

Debit Cards

A debit card looks very much like a credit card, but that’s where the similarity ends. A debit card is a convenient and safe payment tool. When you use it to pay for goods, the money will be deducted, from your cheque or savings account immediately, it’s just like writing a cheque.

A debit card relies on an online system so if a merchant is offline, or there is no power you will be prevented from using the card. A cheque card on the other hand is linked to a cheque account only and it can also be used offline. Some merchants will allow you to ask for balance details and to draw cash. Debit cards are a great alternative to cash. If you lose the card it cannot be used because a pin is required to activate it.

You can also use your debit card for travel, however be advised that many hotels and car rental companies will no longer accept them because they cannot be pre-authorised. Hotels may concede if you tell them to debit the card up front and to add a refundable ‘extras fee’. However, car rental companies are totally inflexible; you will need a credit card to hire a car.

Garage Card.

If you have a credit card or a cheque account you can also qualify for a Garage card. This card can be used for easy payment of fuel, oil, parts, service and tollgates. A Garage Card can be linked to your credit card account or your cheque account, or function as a “stand alone” card with its own account. It’s a great way to keep tabs on your fuel bills, especially with today’s high prices. When linked to your credit card, the Garage Card shares the same limit. Transactions are included in the minimum payment due, and paid together with the credit card.

A “stand alone” Garage Card functions separately on its own credit card account, with its own limit. It is paid separately, like a credit card, and can be linked electronically. A  Garage card will function as a debit card and transactions will be debited from your account immediately. You pay no interest, unless your cheque account goes into overdraft. Cards are available to secondary cardholders, which is convenient for a spouse and children. These members share the same limit with the primary cardholder

Travel  Cards.

A prepaid Travel Wallet card offers you the security of travellers’ cheques with the convenience of an ATM and payment card. It also has the advantage pegging your exchange rate. In other words the exchange rate is set when you purchase you foreign currency. This allows you to budget more effectively. If you lose a travel card it can be replaced within 24 hours and it can also be topped up from a bank account in South Africa. This is an extremely useful tool if you have children who are travelling overseas. You can deposit funds into the card if they run short of cash but make sure you have signed the correct paper work to do this.

Automatic Telling Machines

There is no need to tell you about the use and convenience of an ATM. Perhaps the most useful information on this service is around security. There are many scams that happen around these machines, the newest of which involves skimming devices that copy your card. They are places over the original entry slot of the ATM card receiver and they extract information from the magnetic strip on the card and a small camera films the keypad to get your pin. Check the slot that your card goes into. If it looks bulky or it looks like it’s been tampered with look for another machine. Look for anything that might look like a hidden camera, a tell tale pin hole in the device can be a give-away. If in doubt, call a bank official. The next time you go to the ATM study it so you know what a legitimate machine looks like. Your greatest risk is at night when there are no officials and people around to raise the alarm. If possible only withdraw money during the day.

Internet Banking

There are many benefits associated with online banking. You no longer have to wait in queues and you can do your transactions at midnight without having to look over your shoulder, you can also manage your money from anywhere in the world. Generally costs are incurred when you make transactions but bank balances, login and statements are free. The costs per transaction are a lot less than using your ATM card or a teller. Paying your bills electronically is definitely the way to go. No more lost, stolen or fraudulent cheques. The electronic register also provides you with irrefutable proof of payment Another bonus (especially for business owners) is the fact that you can down load your bank statements directly into money management software doing away with the need for the manual reconciliation of accounts. It is a great tool for couples who both need access to a shared account.

Useful Banking Services

One of the most useful bank services is a debit order. A debit order is an authorisation given to the intended beneficiary (like a cell phone company) to deduct an amount from your account on a regular basis. So instead of braving the crowds at the end of the month to pay our accounts, we can automate this tiresome process. It is particularly beneficial to use debit orders for saving.  It ensures that you stay committed.

One important thing you need to know is that the bank does not check the debit orders going through to customers’ accounts. For example, if you authorise a vendor to debit your account each month with R100, but the vendor debits your account with R200, the bank will not be able to detect this error. So ensure that you check all your debit orders each month. If you cancel a debit order ensure that the vendor confirms in writing that they have cancelled it and check your bank statement, companies that are the beneficiaries of debit orders tend to be a little slow with their administration.

You may reverse a disputed debit order from your account within 40 days of it having been debited to your account, by instructing your bank to do so. The bank will then immediately reverse the debit.

If more than 40 days pass after an unauthorized debt order you may have apply to your bank to have it reversed. The bank will query the validity of the transaction with the company that debited your account. If it is found to be invalid the transaction will be cancelled. If there are not enough funds in your account to meet a debit order, the company can re-submit the debit order the next month. It cannot adjust the value of subsequent transactions to recover arrears. Separate debit orders must be submitted for the current and arrears payments.

Stop orders

If you are not comfortable with the idea of giving control to the vendor you nay prefer a stop order. A stop order enables you to change or cancel the instruction whenever you feel the need to. While a stop order or scheduled payment may seem more attractive to you some companies may not accept them. The risk of contracts being cancelled soon after being taken out because of non-payment is too great, so most companies prefer to have control over the collection of payments. Stop orders can be used effectively for scheduled payments like rent, school fees, paying back a loan to a relative, or pay a domestic worker’s salary.

How to prevent fraud.

There has been considerable fraud involving cheques, credit cards, ATM’s and internet banking. Much of fraudulent activity can be prevented if you stick to the following rules.

Cheques and Cheque Books.

  1. When you receive your cheque book it should come in a plastic sealed pocket. Make sure that it has not been opened.
  2. If the seal is broken make sure all the cheques are in the book.
  3. Always cross your cheques and avoid writing cash cheques where possible.
  4. Never leave your cheque book where other people can have access to it.
  5. Reconcile your cheques every month.
  6. Never accept faxed copies of cheques as proof of payment, they can be altered, or the cheque could be stolen which would result in a reversal. It may show in your account as a deposit but as soon as the bank processes it the transaction will be reversed. . Wait for the funds to be cleared in your account before you acknowledge payment.

Credit Cards.

It is estimated that the annual losses incurred by credit card fraud, exceeds R 50-million per annum in South Africa.  Credit Cards or credit card information is usually fraudulently obtained through methods such as card swapping at ATM’s, theft from smash and grabs, house and car break-ins, robberies, skimming, pick-pocketing, ‘phishing  (solicitation of banking details purporting to come from the credit card service provider and fake websites).

  • To protect yourself you should treat your cards like cash.
  •  Never leave your cards unattended. Cut up expired cards.
  • Sign new cards immediately and make sure your signature is visible (it sometimes fades).
  • Report lost or stolen cards immediately.
  • Memorise your pin never write it down and keep it near the card.
  • Be careful when giving your personal and credit card information to unknown persons.
  •  Destroy all financial information (i.e. account numbers, bank statements, ATM and sales receipts etc.) before throwing them away criminals often go through trash cans.
  • Check your statements each month.
  • Ensure that you get your card back after every transaction and the vendor does not take it out of your sight.
  • Keep a record of the card account number, expiration date and the toll-free number to call.
  •  Never sign a blank credit card slip.

 

Your personal information is a licence to print money for a fraudster. If they have al your personal details they could phone your Credit Card Company or Financial Institution and change your address information. They can then report your card as lost and request that a new card be issued. The card will then be sent to the new address or they will receive information on where to collect the new credit card. Your statements will also be sent to the new address so it could take months for you to realise that a fraud has been committed. If you find that your statements are not arriving contact your Card Company immediately and ask them to check your address.  If your card has expired or will expire soon and you haven’t received notification to collect a new card, follow up.

Internet Banking.

Despite the sensationalism about internet fraud it is rare occurrence and generally the consumer is protected from the consequences of fraud if they were genuinely victims. A lot of internet banking fraud is committed by people known to the individuals. To protect yourself you should:

  • Ensure that no one has unauthorised access to your PC and if you are getting software installed make sure that they are from a reputable organisation or have been approved by your employer. It is also a good idea to put a password on your PC.
  •  Make sure that your anti-virus software is updated regularly on your engine and signature files.
  •  Do not open suspicious or unfamiliar e-mails.
  •  If possible, install desktop firewall for spyware detection,
  • Ensure that you have control over the shared folders on your PC as a shared folder could make your PC vulnerable to unauthorised installation of suspicious software.
  •  Never give out your internet banking PIN and Password. Even bank employees do not know these details and they should never ask you for them.
  • Make use of the anti-Phising software that your bank offers when you log into your account, it can flag you when you enter your details on a fraudulent site.
  • Never use someone else’s computer to log onto your internet banking especially in an internet café. If it’s unavoidable change your password as soon as possible after the transaction. The PC may have Key log software that can record all of your details.

Summary

Take the time to sit down with a bank consultant to design a perfect suite of products that suits your needs. By doing this you will save on bank fees and have access to a range of products that help you manage your money more effectively. Always be aware of the threat of fraud and be vigilant when it comes to your banking activities.


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