Category: Protecting Your Identity

It’s a new year and that means everyone is off to an inspiring start on their new years resolutions. You may already have your plan in effect to lose weight, get fit, and aim for that new promotion, but what are you doing about the pile of debt you racked up over the holidays? It’s well worth noting that only 8% of the population will be successful in their new years resolutions (according to the trivia flip calendar on my desk.)

While you pay the minimum balance on your credit card accounts, that debt is going to continue accruing interest and take you years to pay off. Wouldn’t it be nice if you started to take control of it today before it controls you? (And if it already does, I can help.) Here are a few tips to live by to get your mountain of debt in order.

Find out what is on your credit report

You would be surprised at the amount of people who have not a clue as to what is reporting on their credit report. Most people aren’t even sure how much debt they are actually in. They may say its one number when it’s actually much more. Your first step towards paying off your debt is to find out how much of it you have. You’re going to need to get a credit report. You can obtain one by visiting www.annualcreditreport.com. They will give you one free FICO credit report every calendar year. You may also go with free online sites like Credit Karma or Credit Sesame. However, the free online sites only pull from one bureau and their scores are not FICO. (For more on FICO vs FAKO, read our past blog here.)

Once you get your credit report make note of all of your debt. Write it down and add it up so that you know just exactly how much debt you are in. For some of you this may be devastating, but don’t worry, look at it more like a goal to obtain and keep you mind focused on the end result.

Make a budget

Now that you can see how much debt you are in and how many bills you have to pay, it’s time to make a budget. Study your past bills and bank statements and write down all your necessary living expenses. This includes: Rent or mortgage, utility and credit card bills, car payments, ect. Make sure you’re paying everything on your credit report on time so that your accounts don’t fall into the negative.

Be realistic with yourself and cut out any unneeded expenses. Goodbyes are never easy, you may have to start making some sacrifices. Cook meals at home and bring lunch to work instead or dining or ordering out. It may be a good time to cut Netflix, HBO, or any of those other premium channels out of your life (you’ve already watched everything good on there anyway.) Once you get rid of all your unused subscriptions and services, you may find yourself with much more money than expected. Those $8/month subscriptions really add up when you have  a bunch of them.

Try for better rates

Most of the population today takes whatever is given to them without asking any questions. I’ve found that you can actually go far and get more out of life by simply calling and asking for it. If you get denied, you’re in the same position you were in before. Some of your credit cards may be impossible to pay off simply because their rates are too damn high! If you can get a better rate on the card, then why pay more money if you don’t have to? Try calling up each of your credit card accounts and asking them to lower your rates. Just make sure you prep yourself and do your research. You may want to find out what the prime rates are for that card. If you’re unsure of how to ask, try doing what Sally from creditcards.com did here

Apply for 0% balance transfer cards.

As stated before, the interest rates may be too close to the minimum payment on your card. This will take forever to pay the account off if only making minimum payments. Most large credit card companies will offer 0% balance transfer cards, interest rates worst enemy. 0% balance transfer cards are the secret play in your playbook to get out of credit card debt. These cards will allow you to transfer your balance to a new card with 0% interest for a period of time. Making it perfect people who are trying to pay off debt! Your balance will drop surprisingly faster if you are not paying interest. Transfer your debt to a 0% balance transfer card and make it your goal to pay off the balance before the interest rate kicks in.

It is vital to note you should NOT CHARGE THE CARD as you will only make your debt situation worse. These cards should only be used to pay off the debt, not add to it. You will need to get approved for the card as they may only issue them to people with good credit. Shop around, and choose the right card for you.

Pay off the large accounts first

So now you’re ready to start paying off your accounts, but which ones do I take care of first? The best method would be to flood your extra cash into the largest accounts with the highest interest rates, while making minimum payments on all others. This will ensure that you are paying less in the long run. The higher the interest rates, the more money you will have to spend paying off the account. Once you finish with your biggest baddest account, flood your extra cash into the next biggest baddest account until that one is paid off. Continue this process and you’ll be out of debt much sooner than you think.

Some people may suggest the opposite. Take care of the smaller accounts and work your way up to the big ones. While this is still not a bad idea, in the long run you will be paying more due to the accruing interest on the big accounts.

Don’t use your credit cards

The whole point of this process is to pay off your debt. If you continue to use your cards while attempting to get out of debt you’re going to get nowhere. Do not close your credit card accounts as doing so will drop your credit score. Start paying for items in cash rather than credit. You’ll find cash is a much cheaper and safer means of currency.

Don’t apply for new lines of credit

This one should be a no-brainer. Applying for any new lines of credit such as new credit cards or loans will only hurt your process towards a debt free life. New lines of credit means new debt and a new bill for you. Hold off on applying for any new credit until your debt is gone.

If you start utilizing these methods, you’ll find getting out of debt isn’t as hard as you may have thought. It can be a timely process but the end result is very rewarding. Living a debt free life will take a heavy burden off your back and will result in a happier less stressed you! Once you are out of debt, remember to always pay your bills on time, and don’t rack up your credit cards as you once did before.

Target’s response to its recent breach is a good lesson in what not to do after a company experiences a security incident. Other corporations facing the growing risk of data breaches can learn from the many missteps, if not foolish errors, taken by one of the nation’s largest retailers.

The company’s first mistake was bad timing. Hackers stole confidential data of up to 110 million Target customers who shopped at stores from Nov. 27 to Dec. 15. But instead of proactively announcing the breach, Target got scooped by respected security blogger Brian Krebs.
Krebs broke the story on Dec. 18. On the same day, Target CEO Gregg Steinhafel issued the statement that “we are pleased with Target’s holiday performance.” The company confirmed the breach only after the U.S. Secret Service and American Express released their own investigations.

From there, Target made two more egregious errors that sent the wrong message to customers and may jeopardize its financial security.

The first was an email that notified customers of the breach and offered them one year of free credit monitoring through Experian. Here are the problems with that approach:

• The email included a suspicious sender with the address: TargetNews@target.bfi0.com instead of @target.com. Plus, it directed users to click on a link for additional details on the monitoring. The bizarre “bfi0” in the subdomain suggested nothing official to differentiate it from phishing and malware-laden emails sent by scammers following such corporate data breaches; scammers often make subtle tweaks.

• Target should have known that customers are conditioned to not click on links in email messages, especially after a headline-grabbing security breach and with a questionable sender address.

• Many people who received that email—myself included—didn’t actually shop at Target during the compromised dates, which made the email appear even more like a scam.

• Because the notice was delivered via email and probably due to the fact that it originated from a suspicious email address the original message ended up in junk mail boxes. I only looked at the Target email because I was looking for a good example of a phishing email following a data breach.

But the gravest error by Target was to offer free credit monitoring. It may seem counterintuitive, but it has become a routine mistake companies make in the aftermath of a security breach that involves payment cards rather than Social Security numbers (SSNs). Though offering credit monitoring is usually an attempt to reassure consumers, this may instead give them a false sense of security and lead to more consumer blowback. Here’s why:

• Credit monitoring won’t help people impacted by a payment card breach. Credit monitoring is a service that is limited to looking at changes to your credit file. It looks for new creditors, credit accounts and key account changes, such as an address change, that have been reported to Experian, Equifax, or TransUnion. What credit monitoring does not do is monitor your existing credit accounts. So, if a Target customer enrolls in the credit monitoring solution provided by Target, that customer would not be alerted if an existing account—in this case credit cards and payment cards—was used fraudulently. The only way for Target customers to find out if an existing credit or payment card is misused is by monitoring their payment card accounts for suspicous activity. All suspicious activity should immediately be reported to their payment card issuer. While banks and card companies are aware of this incident, some customers of smaller financial institutions may think they are safe when they enroll in the credit monitoring only to find that their card has been maxed out at the end of the month.

• Were SSNs stolen? By most accounts, including Target’s, no SSN’s were exposed in this breach. Based on the nature of the breach and the very limited cicumstances that Target would have needed to collect SSNs, it is unlikley that the exposure of SSNs was part of the fact pattern here. This is important because without the exposure of a SSN, the creation of new credit lines and accounts, which creditors report to the credit bureaus and which then show up on an individual’s credit file(s), is incredible unlikely. So again, it begs the question: Why was a tool that doesn’t monitor the actual risk here offered when no SSNs were exposed and it simply won’t help? (See point 1)

• Even if credit monitoring were effective or called for here, one year of free credit monitoring often isn’t long enough. Even if SSNs were exposed in this breach, which they weren’t, organized thefts of information by criminal rings, as is likely the case here, create exposures that surpass one year. Organized rings often will know that a breach of information was disclosed. They are aware that people may place 90-day fraud alerts or be enrolled in a year of monitoring as a result. So what do they do? Well, they simply hold on to the information for a year. Since there is no expiration date on an SSN (until you expire, that is) customers may initially breathe a bit easier with a year of credit monitoring. But they shouldn’t assume that stolen information can’t be abused afterward. Identity thieves can simply sit on collected data until 2015 or later.

• The sign-up process for the monitoring offered is not consumer friendly by nature. Some providers of credit monitoring have a one-step process: You simply enroll and once you have been authenticated and signed up, your monitoring is active and no further steps are required. But the Target/Experian process involves a two-step enrollment process. So once you have been authenticated and signed up, you are then sent a verification email to enroll. Enrollment is only completed and active when you click on a link in the verification email, which often either a) winds up in a Spam folder and/or b) is forgotten by the consumer. The e-mail is then never clicked for activation and the consumer is left thinking they are enrolled in monitoring when, in fact, they are not. Regulators do not like this two-step sign-on proces for the very reason that so many consumers do not, by no fault of their own, end up getting enrolled. In fact even the Consumer Financial Protection Bureau director Richard Cordray mentioned this in a recent appearance on The Daily Show with Jon Stewart. While he was referencing monitoring and other services paid for by the consumer, he said, “What they don’t tell you is maybe there’s an extra step or two to actually get the product. Months later when you go to seek the protection, they say, ‘Oh you didn’t have it.’ That’s wrong. That’s totally unfair.” And when it comes to consumer protection by the Federal Trade Commission, CFPB, or even state offices of the Attorney General, the last thing you want to hear is the word “unfair” in relation to treatment of a consumer.

The bottom line: Credit monitoring can be useful when it’s an ongoing service and not presented as an easy fix to a problem it will not solve, which is the case with the Target breach. It shouldn’t be used as a replacement for careful consumer vigilance. This means regularly looking over your existing accounts and cards for suspicious activity and charges in addition to monitoring your actual credit files.

While Target management was likely following the advice of its counsel, business units, compliance folks and potentially even regulators, this breach is a good opportunity for companies large and small to rethink their ‘boilerplate’ approach to breach remediation in exchange for solutions and advice to consumers that fit the actual risks. It is also a good lesson in how communicate with the public and impacted consumers, or in the least, a lesson in how not to communicate and respond to a breach.

Eduard Goodman is chief privacy officer at IDentity Theft 911.
– See more at: http://www.idt911blog.com/2014/02/target-breach-how-to-lose-friends-and-alienate-customers/#sthash.kWn4cMFp.dpuf