How to Protect Your Rights When the Bills Start Rolling in and Phone Calls from Collection Agencies Start

Falling behind on bills is a common – yet highly concerning – issue that occurs among consumers. This type of situation has the ability to escalate into a situation that brings an immense level of stress, anxiety, and less than favorable run-ins with collection agencies. It does not matter what type of debt it is – credit, medical, vehicle loans, or other types of bills. Each year- in the United States alone – millions of consumers – answer to collection agencies. If you have any type of debt, it is advised that you learn how the collection process works and that you are aware of your legal rights. In doing so, you will be able to navigate the situation with a high level of confidence and you will be able to protect your financial-based future.

In this guide, you will be introduced to the debt-based practices within the United States, the laws set forth by the federal government in regards to debt collections, and what steps that you should take when you are contacted. Furthermore, resolution strategies, and additional considerations such as the impact to your credit score and professional services that are offered. There are many laws and regulations that aid in providing consumer protections, but the circumstances do vary significantly. If you need assistance, it is advised that you consult with an attorney or a credit counselor so that advice may be obtained that is personal to your situation.

How Does Debt Collection Work?

When you fall behind on your payments associated with your debt or debts, the creditor that you originally owed initiates the first of the collection efforts. These initial collections are referred to as “first-party” collections and are not – in any manner – covered by the federal-based collection laws or the Act known as the Fair Debt Collection Practices (FDCPA), or the Federal Reserve.

If the initial collection attempt is unsuccessful, the creditor that is owed will then go through the process of selling the debt to a third-party agency for collections, or to a buyer that purchases outstanding debts. It is at this time that the FDCPA will start the implementation of their regulation, and the Consumer Financial Protection Bureau (CFPB) will start moving on their end through Regulation F. The rules and regulations are over debt buyers, debt collectors, and in some cases, attorneys that specialize in collecting debts for personal, household, and/or family purposes. Examples of these include credit cards, student loans, other types of loans, and medical bills. These may also include vehicle loans and mortgages.

Debt collectors will initially attempt to contact consumers with phone calls and even letters. It is not uncommon – in today’s world – for collectors to reach out with text messages, emails, and on social media platforms. The outstanding debt will typically show up on credit reports and will result in damage to the overall score. In turn, this will negatively impact the consumer’s ability to borrow money, obtaining insurance, and even prevent employment, in some instances.

Validation information will be included. It will provide specific details in regards to the debt, the amount of money that is owed towards the debt, the name of the original creditor, and the rights available to consumers for a dispute. You have some basic core rights under the FDCPA, as well as Regulation F.

The FDCPA was officially enacted in the year of 1977and in 2021, it was updated and in effect under Regulation F. In short, this prohibits consumers from being subjected to abusive, deceptive, or unfair practices by those attempting to collect a debt. It aids in providing clear and specific boundaries in terms of communications and actions taken to obtain monies owed.

The Restrictions on Communication

There are several restrictions imposed on communications from debt collectors. The following outlines the most common:

• Generally, collectors cannot initiate calls until 8am or later each day.
• Collectors must end the calls by 9pm or any time that is considered to be “inconvenient” in your area.
• If your employer does not allow or prohibits personal calls, they may not call you at your workplace.
• If a debt collector calls more than 7 times within a 7consecutive day period, they are presumed to be harassing you.
• If you send a written request or a “cease and desist” letter, they must stop communications. In most instances, these may include a limited exception, such as contacting in regards of legal notices.
• If an electronic communication is sent – such as a text or an email – it should include a mechanism that clearly states that you may opt out.

In addition to rules and regulations, there are a number of prohibited conduct regulations. These are as follows:

• Debt collectors should not engage in any type of harassment or abuse. Examples include threats of violence, using language that is obscene, repeating calls simply to annoy you, and/or public shaming in any type of environment – including online environments such as social media platforms.
• They should not use statements that are false or misleading. The debt amount should not be lied about, they should not pretend to be a lawyer or a government official, they should not threaten lawsuits or arrest, and should not threaten to garnish benefits that are protected under federal law.
• They should never attempt to collect more than they are owed without given the proper and legal authorization.
• They must not deposit checks that are post-dated early.
• They should not contact family members or neighbors more than once. That one time is to locate you. They must not disclose the debt when speaking to someone for the purpose and intent of finding you.
• No debt collector is allowed to speak to any third party about your debt.

Debt Validation and Debt Dispute

Within a period of 5 days, a debt collector must send a communication outlined as a “Validation Information” form. This should include the amount of the debt, the name of the original creditor, and an outline of the fact that you have the right to 30 days to dispute the validity of the debt.

If you do decide to dispute the debt, the collector must then stop all collection activities until they provide you with verification of the debt. This could include proof of the debt, account statements, and/or a judgment against you from the original creditor.

If debts are actually past the statute of limitations, collectors must then state that they cannot legally sue you for the debt. While it is true that some debts could result in wage garnishment, it is also true to note that certain types of incomes such as Social Security, VA Benefits, and other types of benefits from the government are completely protected from these garnishments. The laws of the state where you reside may offer you – the consumer – additional types of protections. You should review updates on a periodic basis, and enforcement actions that may be legally taken against you.

When a Debt Collector Calls

Receiving a call from a debt collector may be very challenging. You should simply stay calm. You should make a point to document as much information as possible – this includes the date and time of the call, the name and/or ID of the person that you speak to, and the details associated with the conversation.

Once you have the conversation, you send a dispute letter that is written by certified mail with a return receipt. This should be sent within 30 days and it should request verification. This places the burden on the debt collector to prove that the debt is, in fact, yours and that it is completely accurate. You may use one of many templates available online or through the CFPB.

If you so desire, you may send a cease and a desist if you want to. This is if you want no further contact from the debt collector. The letter should state that they should completely stop contacting you except for that which is absolutely required by law. This is an effective means of stopping undue and frustrating contact. Once you send this, it must be honored.

When it comes to debts, you may negotiate or even settle. Get a settlement agreement in writing before starting payments. You may want to look into “pay for delete” requests when settling debts.

If the debt is legitimately yours, you should not ignore it. Doing so could result in being sued, having a judgment placed against you, and/or even garnishment on your wages where this type of procedure is allowed.

If you are experiencing significant financial hardship, you may consider the following:

• Debt Settlement Programs
• Credit Counseling
• Bankruptcy – either Chapter 7 or Chapter 13
• Medical debt may have evolving rules

Conclusion

Debt collection is a daunting experience. There are federal laws, though, that provide you with certain safeguards against abuse and harassment. If you would like to learn more, contact us here at Somerville Bank today by visiting one of our many locations: https://somervillebank.net/locations/

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In this guide, you will be presented with a detailed breakdown of each “C” of credit. You will learn how they interact and will be provided with highly practical insights if you are a borrower that wishes to strengthen your credit-based profile. You will learn about the roots of the 5 Cs, the best practices associated with the 5 Cs, and popular emerging trends that are recreating the credit analysis that will occur within the future. The 5 C’s are:

Character
Capacity
Capital
Collateral
Conditions

Character

Character aids underwriters in gaining a quick snapshot of the borrower behind the credit request. It is a qualitive-based assessment of a person’s reliability, their integrity, and their overall intent to repay that which they want to borrow. This started in the earliest days of banking when bankers would base their decision on the moral fiber of the applicant that they were considering extending credit to.

Today, lenders are capable of obtaining extensive data on a credit applicant. Despite this, determining the credit of an applicant is still exceptionally important in the extension of credit. If it is found that the character is a person that is able to pay, but not willing to, they are then considered to be a credit risk and will not typically get approved for the credit that they are seeking.

The metrics and signals used to determine the character of an applicant include their credit history, their credit score, FICO score, Vantage Score, and other models that evaluate payment history, any delinquencies, and marks that are derogatory in nature. In addition to this, letters of reference, customer reviews, legal records, and if a business, management assessment may all be used to create a snapshot of the applicant that is requesting credit.

If you are a borrower, there are several tips that may help you establish your character as one that is being creditworthy. These include the following:

1. You should always pay your bills on time, all of the time. If you do this, you will be considered “consistently punctual” – which is ideal in creating a solid creditworthiness as a credit applicant.
2. If you have issues in paying something, you should disclose as soon as possible to avoid more severe consequences. Being proactive is always best.
3. You should focus on creating professional references.
4. You should make certain that you have the ability to pay for any debt that you accumulate.

Capacity

Capacity measures the credit applicant’s cash flow which is relative to any debt-based obligations that are scheduled. In most instances, this depends on the answer to the most common question by lenders. That is, are you able to make the payments comfortably? If the answer to this question is “no”, the application is denied because the lender knows and understands that – eventually – there is a heightened risk of nonpayment.

The key metrics utilized to determine capacity includes the following:

• Debt-to-Income Ratio for Individuals – This is the total monthly payment divided by the gross monthly income. Prime mortgages, for example, usually have a DTI that is below anywhere from 35% all the way up to 43%.
• Debt-Service Coverage Ratio – This is used in businesses. It is the net operating income divided by the total debt service amount. Lenders often set this to 1.30x to create a solid financial cushion.
• Free Cash Flow – This is cash that is generated immediately following capital expenditures. This will show if the borrower has the ability to handle financial shocks that are considered to be “unexpected”.
• EBITDA margins and trends help in determining the sustained profitability so that it shows the borrower is resilient.

What-If Scenarios

Many underwriters on loans will come up with what-if scenarios. Examples include increased interest rates, cost spikes, and even dips in revenue. If the credit applicant is able to prove that they have a cash flow that is able to remain appropriate and adequate under periods of stress are most likely to get approved and have better pricing on loan repayments.

There are many tips for borrowers that will allow them to optimize their capacity. These include those below:

1. To stabilize your cash flow, boost all recurring revenues that your business has.
2. Reduce all of your expenses that are discretionary.
3. Maintain your financial liquidity.
4. Increase your capital

Capital

This is the net worth and/or equity that a credit applicant has. It serves as a type of cushion that aids in absorbing losses prior to the lender suffering. In the corporate world, this could be the equity of a stakeholder. In standard consumer lending, it could be a down payment or a personal savings account. The larger the capital, the lower the risk that the lender has the potential to endure.

There are several key metrics that are analyzed in determining capital by an underwriter. These include the following:

1. Loan-to-Value Ratio – This is the loan amount, divided by the value of the collateral being offered. Lower ratios mean lower equity.
2. Leverage Ratios – In businesses, this most often refers to how aggressively a business is being financed.
3. Tangible-Based Net Worth – These focuses on the hard or touchable assets that the credit applicant or business has when inquiring about credit.

Capital is important for several reasons. These include loss absorptions; the shielding of creditors is the asset value goes through a decline. Incentive alignment means that if a borrower has a high level of equity, they are less likely to default on the credit that they are provided. The market perception is improved. This means that if an applicant has a strong level of capitalization, it attracts investors, enhances the overall ratings of the applicant, and lowers the costs associated with funding. The following outlines some basic tips on capital for borrowers:

1. When attempting to obtain credit, place a significant down payment down. An example would be 20% of the total cost of a mortgage for a home loan.
2. Retain earnings when possible. If you make profits, reinvest those profits. This way, you can accumulate equity and not over-leverage on gains that are only considered to be short-term.
3. Reduce assets that are considered to be intangible.
4. Ensure that you have collateral or assets that will help you in securing the credit that you desire.

Collateral

Collateral is a secondary type of repayment on credit that kicks in if the borrower becomes unable to pay for that which has been borrowed. It could be physical property, financial assets, and that which is similar in nature.

There are many main criteria that one should be aware of as it related to collateral. These include:

1. Valuation – When using real property as collateral, make sure you have a valuation done on a frequent basis so that you have an appropriate picture of how much the property is actually worth.
2. Liquidity – This refers to collateral that is capable of being sold quickly. Examples include Treasury Bills.
3. Legal Enforceability – If it is property, have a clear title, perfect your security interests, and make it easy for lenders to seize and liquidate any assets should you fail to pay as promised.
4. When offering collateral, be sure to consider the concepts of depreciation and obsolescence.

The following outlines some tips for borrowers:

• Maintain all documentation associated with any and all types of collateral that you possess.
• Diversify the types of collateral that you have to offer as this appeases the overall “appetite” of the lender.
• Monitor the condition of your assets on a regular basis.
• Conditions – Pay special attention to the context associated with the loan.

Conditions

These include the industry, the macroeconomic, and the terms of the loan that you are attempting to acquire. It has an influence on the probability that you will successfully repay that which you are applying. The following tips will help in this area:

1. Create a clear and articulate outline on how the credit will be used.
2. Address any risks that may be foreseeable.
3. Request the credit in a strategic manner.

History

The 5 Cs of credit took root in the 19^th-century lending that occurred in mercantilism. It was the general rule of thumb of the time. As time proceeded a need for global standard arose and the 5 Cs of credit were adopted. If you have any inquiries about credit or want to learn more about credit products available, contact us here at Somerville Bank by calling one of our many locations.

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This guide will provide you with actionable and effective financial-based tips that will help you to effectively plan, save money, spend in a wise manner, and maximize monetary value on your trips – it does not matter if you are planning a local getaway for the weekend or an adventure where you will be required to travel internationally. These strategies will allow you to travel on a more frequent basis and will help you travel luxuriously – without completely destroying your long-term goals associated with your finances. 

Why Does Financial Planning During Travel Matter?

It is not at all uncommon for most of us to delay travels that we dream of experiencing due to the belief that it will be quite costly. If you take the time to plan your trip, you will find that traveling does not have to be expensive. You just need to have a strategy in place, and you have to follow that strategy.

If you discipline yourself financially before, during, and immediately after traveling, you will find that your adventure is generally stress-free, it protects your Savings, and it protects your credit score. If you plan poorly, you will find that it is possible to overspend on flights, fees, and/or emergencies that may occur during your travels. A dream vacation can quickly turn into a financial nightmare if not planned appropriately. 

You should initiate the planning process by evaluating your current financial situation. You can start by doing a basic calculation of your income each month, your expenses, and the income that you have that is disposable. This will let you come up with a figure you can use to determine how much money you can allocate to your travels each month or even each year.

Travel savings should be treated like a bill that is non-negotiable. You can do this by transferring these funds to a dedicated high-yield savings account. By doing this, you are taking your travel money and switching it from a type of expense that is impulsive to one that is a planned investment. You can even look at it like an investment in your mental and physical well-being. 

How to Make a Travel Budget That is Realistic

Making a travel budget is considered to be the foundation of affordability. You should make it a goal to create this type of budget. You should start by breaking the budget down into four distinct categories:

1. Accommodation
2. Activities
3. Food
4. Transportation

In addition to this, you should also designate the categories of travel insurance and miscellaneous, which could cover items such as tips, purchasing souvenirs, and cards for electronic devices, etc. The following provides a detailed breakdown of these categories so that you are better able to break down your budget:

1. Activities – You will want to prioritize options that are either low in cost or completely free. 
2. Attractions – You should consider state and national parks and walking tours. 
3. Transportation – This could include flights, rented vehicles, trains, buses, and even fuel costs. You may use online cost calculators to allow you to come up with average costs. One of the best is Google Flights. 
4. Food – With food, you should buy some groceries, including costs from eating out, and include the costs of any associated tips when eating out. 
5. Lodging – Here, you will want to include the costs of hotels, motels, Airbnbs, and similar accommodations. 
6. Extra – In this category, you should add up to approximately 20% extra to handle additional expenses or costs incurred due to inflation. 

In addition to the above, depending on where you travel and the activities that you partake in, you should consider conversion fees for currency, costs associated with a Visa, and any medical needs that may eventually become necessary. When traveling, you should always research current reports from travelers. For example, if you are planning an international trip to engage in bucket-list activities, you may need up to $15,000.00. It all depends on the location, the length of your stay, and the activities that you take part in. You may use budgeting apps or even spreadsheets to assist you in tracking all expenses. If you discover that your trip will cost $6,000.00, divide the number of months by your total costs, and that will help you determine your contributions each month. 

Before Your Trip 

Saving money on a consistent basis makes travel a sustainable task. You should open up a savings account that is known as “high-yield” in order to save exclusively for your savings. You should automate regular transfers to this account. Consider the following strategies to achieve success:

1. Stop Unnecessary Spending – You should cut out subscription services, stop eating out, and even sell items that you are not using. 
2. Book your trips during the “off-peak season” in order to save up to 70% on transportation and accommodations.
3. Set up price alerts on sites that compare accommodations and vehicle rentals. 
4. Earn additional money with side gigs or sell your skills online. 
5. When using credit cards that have rewards and provide points, cash them in. 
6. Build an emergency fund first – one that has from three months to six months of expenses – before moving money into a travel fund. This is highly beneficial should a job loss, medical emergency, or trip cancellation occur. 

Smart Booking Strategies 

When it comes to a travel budget, you should know that transportation is often the largest part of a travel budget. You should book your flight up to 3 months in advance for the best deals in domestic travel. If you are traveling internationally, you should book your flight up to eight months in advance so that you are better able to save money. You should also make an effort to be flexible when it comes to the dates that you travel. For example, flights on Tuesdays and Wednesdays are typically cheaper than flights on other days of the week, especially on the weekend. 

When booking flights and other types of accommodations, you should use comparison websites. Examples include Skyscanner and Google Flights. There are many carriers that are known for their low costs. Examples include Frontier Flights and Spirit. Always remember to include baggage fees when planning your flight. If you need to fly internationally, you should opt for what is called “consolidator tickets” to save even more money. 

When booking lodging, it may be best to avoid hotels and opt for vacation rentals, guesthouses, hostels, and if you must select from hotels, use those that will offer you a rewards program or will allow for direct bookings. There are many hotels that will offer many free perks – like a free night or more, breakfast, and other services. The more you get for free, the more you save. 

Money Management During Travels

Once you are on your trip, look for ways to reduce your expenses on a daily basis. For example, it is cheaper to use public transportation than to use Uber or taxis, or even vehicle rentals. In many cities, you can get a day pass or a transit card that offers unlimited usage on public transportation systems. If you have a short distance to go, you may walk or use a bicycle. 

Food is considered to be a major expense while traveling. You should determine where the locals eat, shop at markets, and limit the amount of fancy dinners that you partake in. Street food vendors often offer relatively cheap food, and casual eateries are often the most affordable. You should also consider packing snacks and carrying a refillable water bottle to ensure proper – and inexpensive – hydration. 

When it comes to attractions, you should consider free days at museums, zoos, national parks, free tours, and even city passes. When managing money, take the following steps:

1. Use ATMS and withdraw larger amounts to reduce the amount that you pay on fees. 
2. Carry a credit card that has a “no-foreign transaction fee”.
3. Do not ever exchange money at airports because their rates are often very poor. 
4. Pack light to avoid baggage fees and do not check any bags. 

Conclusion 

It is possible to travel on a budget, but you must practice discipline and make decisions that are smart. It all has to start with setting a budget that is realistic and saving money on a consistent basis. The tips contained in this guide will help empower you to safeguard your finances while traveling. For more financial information, you may contact us here at Somerville Bank today by visiting one of our many locations: https://somervillebank.net/locations/

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A study from the University of Cambridge study made a direct reference to resources in the way of financial education. The study established that early impressions from birth to 7 years of age are very difficult to reverse at a later time. This means that practical-based involvement of the parents is absolutely crucial to a child’s overall financial success as they learn and grow into their teenage years and forward into their adult life.

When starting financial education, it should start in the preschool years. This aids in the development of independence and has been attributed to yielding benefits to the child on a long-term basis. Children that have a high level of financial literacy are known to be a person that saves money on a regular basis and successfully avoids high-interest debt. These children grow into individuals that accumulate emergency funds, and achieve a high level of financial-based well-being as teens and adults.

This particular guide pulls from several literature pieces that focus on how to bestow financial knowledge upon children. The strategies that will be presented in this guide come from White Coat Investor, the FDIC, GoHenry, and Parents.com. The information contained within this guide are strategies that are backed by strategies that have been proven as successful in research studies. Parents and Guardians do not require any type of degree in finances in order to effectively teach their children. The universal habits outlined in this guide are tools and steps that help in making learning about money fun and exciting.

The steps that you take with your child should be integrated into daily life. For example, you can turn trips to the grocery store as learning experiences. Additionally, those bedtime stories that you share with your child can be turned into talks about budgeting and saving money. You, too, must model consistent and sound financial strategies in your life as your influence will be one of the biggest and most solid remodels of all time. Kids are known for copying the attitudes that their parents have towards money. By the time that your child becomes a teenager, they could have investments in a portfolio, may be budgeting as they work, and may be taking the steps to ensure long-term financial success.

Why Money Habits Form Early and Pay Off Later in Life

You may not realize it, but the brains of children are wired to learn rapidly in their early years. By the age of about 3, they are able to grasp certain basic concept like making decisions on whether to spend their money, or save it, as well as making exchanges. These concepts will reflect lifelong patterns. There are certain milestones that must occur in a developmental manner that increases financial aptitude. These milestones will also help in the development of executive function such as financial knowledge, the growth of social skills, and targeted types of interventions may be used in financial affairs.

It has been determined that long-term return on investment (ROI) is highly profound. If a child is educated early in life on financial matters, they will have less amount of debt throughout their life, retirement savings will experience an instant boost, the confidence to make decisions in finances is optimized, too. The early education helps in the progression of building skills in money. This starts with basic coin recognition in preschool to investing details during the high school years. Lower levels of stress will be endured as the child grows in finances, the more that they know. If you start teaching your child now, you will avoid common pitfalls like impulse buying, financial scams, and will be able to teach important values – such as generosity. True money habits are not innately developed. They are taught through the means of repetition.

The Basics and Awareness

The foundation of financial understanding starts with a foundation of the basics and awareness. In the toddler years, it is important to understand that children mostly learn through observation and playing. You need to teach the child that money is a tool that can be exchanged for other items, for counting, and for delayed forms of gratification. Consider integrating the following activities with your child from birth to 6 years old:

• Trace and color coins, play “store” with items around the house, and develop commerce understanding by teaching your child that we exchange money for items such as food.
• Sort coins by their size and their color. Play number games to develop a solid understanding of addition and subtraction.
• Discuss the topics of wants versus needs. Clip coupons, look for special deals in the stores that you visit together, Practice the “wait and save” method for treats and “wants”. Give the child a set amount to shop with so that they may understand the concept of scarcity.
• Start giving the child an allowance. Discuss safe spots to save money, such as the bank or a piggy bank.

The following activities are perfect for kids aged 7 to 12:

• Teach the value of money and review the concepts of wants and needs. Tie in chores that your child is responsible for to pay. For example, taking out the trash each week is $1.00. When shopping, compare prices and set money goals.
• Teach the child to budget with the 50/30/20 rule. Save 50%, Spend 30%, and give 20%. You may want to open a savings account for your child. This will allow them to watch interest grow their money. You should factor in lessons on budgeting, investing, and giving to charity.
• You should teach your child about ads and scams that relate to money and how to recognize them. You should discuss the concepts of smart shopping discount apps, haggling, and similar concepts.
• Be sure to monitor peer pressure. Saving is best when compared to showing off purchases. By the time a child is 12 years old, they should be budgeting the allowance that they receive in an independent manner.

The activities below are appropriate for kids that are 13 years old, plus:

• You should start explaining the cost of living, investing, and teaching your child about household bills. It is important to cover the topics of stock simulators, risks and rewards, earning, spending, borrowing, saving, and protecting.
• Around 15, it is time to learn about jobs, credit cards, secured cards, family contributions, emergency funds, Roth IRA matches.
• By 17, it is time to outline credit reports, loans, credit scores, student loans, and other types of investments.

Universal Financial Strategies

The following outlines strategies that may be used with people of all ages:

• You should model a high level of excellence by paying bills on time and openly. You should avoid purchasing in an impulsive manner. Kids inherit our habits – we need to make sure that they are good habits.
• You should create a “family budget” where everyone chips in and regularly hold family meetings that explains where the account is, what it will be used for, etc. The same holds true for emergency funds for the family.
• You should encourage everyone in the home to give to a charity or to the church. It is advised that you encourage everyone to give a minimum of 10% to 20% to give their share.
• You should encourage everyone in the family to void common pitfalls, no chores for basic pay, and no cash over the use of cards.
• You should take your normal routines and integrate studies pertaining to finances in order to teach your child various concepts.

How to Overcome Financial Roadblocks

When teaching your child about finances, it is important that you educate on the topic of resistance. You may use apps to help with this and then praise the overall efforts of your child. You may use a journal tracking system or an app that tracks spending. Research has confirmed that kids who grow into adults who have been taught finances by their parents have up to a 30% higher savings rate when they become adults than kids who did not have that training.

If you want help teaching your child about finances, we here at Somerville Bank can help you. We offer a wide range of financial services – including savings accounts, mobile banking, and other financial services. Simply meet with us at one of our many locations. You may find them by visiting the following link: https://somervillebank.net/

The post The Building Blocks of Success in Finances for Children appeared first on Somerville Bank.

What is Simple Interest?

Simple interest is an interest calculation method that calculates interest only on the original amount that was either borrowed or invested – also known as the “principal”. It does not include interest that was charged previously. This interest stays fixed as time progresses. It is calculated with a special formula. This is calculated using a special formula. You can use a compund interest calculator, but let’s try to understand it first. This formula is as follows:

Principal x Rate x Time = Simple Interest

In addition to using this formula, you can put the numbers into an online calculator that specializes in calculating simple interest. This is a much quicker method for getting the amount of simple interest there is. As a side note, simple interest is paid and/or received in a fixed percentage of the amount that is designated as the “principal”. This means that the interest typically never changes.

A Simple Interest Example

The following represents an example of simple interest:

Principal: $3000

Interest Rate: 0.075

Time: 5 Years

3000.00 x 0.075 x 5 = $1,125.00

In this example, you would pay a total of $1,125.00 over the course of 5 years with a loan of $3,000.00.

How Does Simple Interest Work?

The interest rate formula that you have been introduced to is used for the most common of debts that consumers take on – vehicle loans, student loans, credit cards, and mortgages. When you borrow, deposit, or lend out money, simple interest may be applied because you have to repay the amount that has been borrowed and pay the cost that the lender charges for borrowing said amount.

All lenders set up an interest rate that is exchanged for borrowing money from, them. Then, there are lenders that allow you to make your own money available to them so that they can make loans for others and these lenders pay you interest.

What is Compound Interest?

If you have ever heard the saying, “Let money work for you”, this is – most often – referring to compound interest. Compound interest is extremely powerful in terms of personal finance. Unfortunately, many people are unsure of what compound interest is and how it works. It is vital that you understand the concept of compound interest. It can make a huge difference when it comes to your investments, your savings, and your overall financial success.

Compound interest is so beneficial that many refer to it as the “eighth wonder of the world”. This is the interest that is possible to earn on your original money – which is referred to as the “principal” and even on the interest that has been added to it. In short, compound interest is actually interest on interest. You earn money on your original money and earn money on the interest that has been added to the original money.

An Example of Compound Interest

To completely understand compound interest, you must compare to it to simple interest. Simple interest – as you learned above – is calculated on only the principal. For example, if you invest $2,000 at 5% of simple interest, you will earn $100 each year. After a decade, you will have earned a total of $1,000. This means that at the end of the 10 years, your investment will grow to $3000.

Now, with compound interest, interest will be added on top of interest. Take the same $2000 at the 5%, compound the interest on an annual basis and at the end of the 10 years, you will have a total of $3,257.79. This is a total of a $1,257.79 surplus – in total.

What is the Rule of 72 in Compound Interest?

There is a very fast way of estimating how long it will actually take for money to double with compound interest. This is the rule of 72. It is a formula that allows you to estimate how much it will double based on the interest rate. You just divide the number 72 by the annual interest rate. For example, if you are earning anywhere from 6% to 10%, it will likely take anywhere from 8 to 12 years.

Real Life Examples of Compound Interest

There are several unique examples of how compound interest works:

1. In savings accounts, banks will often offer compound interest on the account, which means they are a great way to grow your money.
2. Certificates of Deposit or “CDs” are a great way to grow your financial investments.
3. Standard Investments – Many investments, such as bonds, stocks, and other types of investments typically benefit from compounding interest. This is especially true if you take the dividends or the capital gains right back into the account.
4. Credit Card and Loans – When it comes to credit cards and loans, compound interest is typically not good. This interest is often charged on balances that are outstanding – as time progresses, the balance that is unpaid will grow in a significant manner. So, with loans and credit cards, compound interest is not at all good.

The Bad Side of Compound Interest

When you owe money, it is important to remember that compound interest can actually work against you. If compound interest is charged on an unpaid balance, that balance will grow as long as you do not pay off your balance each month. When this happens, the debt is harder and harder to pay off. To avoid the bad side of compound interest, you should consider paying more than the minimum balance on the card. If you have debt that carries high interest, you should consider consolidating that debt into a loan with lower interest.

How to Benefit from Compounding Interest

If you want to benefit from compound interest, consider the following:

1. Early Investments – To make the most of compound interest, you should start investing early. The more time your investment has to grow, the more money that you will make in the long run. Even the smallest investments allowed to grow for an extended period of time can turn into significant earnings.
2. Consistency is Key – You should contribute to your savings account or your investments on a regular basis as consistent as possible can grow your money as time progresses.
3. Account Selection – You should look for accounts that actually offer compound interest. Examples include savings accounts, retirement accounts, and other types of investment accounts. The more often that your account compounds – monthly, quarterly, etc. – the faster your money will grow.
4. Permit Growth – When an account has compounding interest, you should permit it to grow and avoid taking money out of it. If your money remains untouched, it will multiply nicely over time and your will earn a lot of money on that investment or those investments.
5. Dividend Reinvestments – If you have accounts that pay dividends – such as mutual life insurance, stocks, or even mutual funds – you should take those dividends and reinvestment them. This will maximize the compounding interest that you are earnings.

What are Fixed Rates and Variable Rates?

When dealing with interest – be it simple or compounding – it is important to understand that banks will likely charge either a fixed rate or a variable rate as it relates to interest. The following outlines this:

1. A fixed rate will remain the same over the entire course of the loan life. This type of rate is often on vehicle loans, mortgages, and even student loans.
2. A variable rate are associated with the bank’s prime lending rate. The low rates are given to customers that have good credit. Higher variable (changing) rates are often given to those that have subpar credit. Any changes to the prime lending rate will result in the interest rate of the loan changing. In most instances, the prime rate is changed when the Federal Reserve adjusts the “fed rate”. Loans that have variable rates include credit card debt and mortgages that are identified as “adjustable-rate”.
3. If interest rates fall, you may be able to refinance the loan so that you are able to get the best rate possible.
4. If the market is going through normal conditions, the variable rate is typically much lower than that of a loan that is a fixed rate loan. This means that variable rate loans are best if they are short-term loans.
5. If interest rates rise quickly with a variable rate loan or debt, it could negatively impact your financial situation.

If you would like to learn more about making the most of your finances, contact us here at Somerville Bank at one of our many locations: https://somervillebank.net/locations/

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1. Get Your Free Credit Report

The first step to recovering from bad or no credit is to get your free credit report. This will outline all of the loans that you have, all of the credit cards that you have had, how long those accounts have been open, and how much is still owed. It will also include information about loans and credit cards that you have defaulted on, court judgments that have been placed against you, and any debt collections that have been utilized in an attempt to collect a debt from you.

You may obtain this free report from AnnualCreditReport.com. Once you receive yours from the three reporting bureaus, you should review all of the information on it, including your credit score. The three reporting agencies are TransUnion, Experian, and Equifax. These agencies use the information contained within your report with them to generate a specific credit score. This score is typically used by lenders, potential employers, and landlords to determine your creditworthiness.

You must evaluate the credit reports from all reporting agencies to make certain that all of the information on your report is correct. If an error is present, it could have a detrimental impact on your quality of life. If you see an error, you have the right to dispute that error and any other inaccuracies that you stumble upon. If left on your report, it could impact your ability to do just about everything – get a job, rent or buy a home, get approved for a loan, buy a vehicle, or even open a checking or a savings account.

2. Improve Credit History

The next step to going from poor or no credit to good credit is to improve your credit history. This is a step that involves many additional steps. Below, we will outline these:

• First, always make certain that you pay your bills on time. This will strengthen your credit score. Many banks offer online bill pay services that you may use to set up automatic payments. This type of service may be used to pay loans, credit cards, utility bills, mortgage, rent, and bills that are similar in nature.
• If you have current debt – such as loans and credit card bills – you should pay down those balances and make sure they are not at their limits. If you allow the balances to go towards the limits or over the limits, it could quickly negatively impact your credit score. You should pay off the dent with the lowest balance first and then pay the next debt with the lowest balance after and so on and so forth. Many elect to pay off the debt that has the highest interest rate first. This will allow you to have your money pay down the actual debt first and not just the interest.
• The third bit of advice that is productive is helping paying down your credit is to keep your credit card accounts open and active even if you have paid off the balance. This will help increase the amount of time that you have a credit history. By having a longer credit history, you will have a better credit score.
• You should always avoid submitting many applications for credit at once. This pings the credit reporting agencies and will have a negative impact on your overall credit score.
• If – for some reason – you have issues paying your creditor, you should contact them right away. There may be some sort of solution that they are able to offer before the missed payment affects your credit score. It is always better to reach out to a creditor than to try to ignore them.

3. Don’t Fall for Credit Repair Scams

There are many credit repair companies out there that are scamming consumers. They provide a promise that they can remove the accounts from your credit report that are resulting in a bad credit score in a fast manner. It must be understood that no solution for bad credit is quick and fast. It took time to cause bad credit and it will take a while to fix the bad credit. There are companies out there that do offer solid credit repair services. One such example is Green Path.

4. Keep Balance Utilization Down

If you are trying to improve your credit score, it is important that you keep your credit card balances down. It is best to keep utilization below 30%. For maximum scoring benefits, keep your utilization down to 9% or lower. You may keep it lower by paying the balance that you carry on it earlier than the closing date of the associated statement. You may also make several payments a month, or request your line of credit to be increased. Additionally, you can keep cards opened that you are not using. All of the free space opened on each balance will play a role in averaging your utilization.

• To help boost your credit score, you should place paying on time a priority. This accounts for approximately 35% of your total FICO score. You may set up reminders in order to pay your bills on time or set up the payments on automatic payment. This way, you will never forget to pay any of your creditors.
• Diversify Credit Products – If you have an interest in improving your credit score, you should diversify the credit products that you have. For example, if you have a mortgage, a car payment, an installment loan, and credit cards, that variety will actually improve your credit score.
• Another way to boost up your credit score is to become an authorized user. If you have a family member that has a credit history that includes a good payment history, becoming an authorized user on that account could help you experience a boost to your own credit score.

What Does the Credit Score Mean?

A credit score is a numeric value from 300-850. It represents the risk that you pose to lenders. It also helps in predicting just how likely you are to repay the debt that they extend to you on time. Higher scores – those above 700 – indicate that you are low risk. This type of score results in ease in getting approved for loans, the best of the best when it comes to interest rates, and even higher limits being given on credit. The credit score is calculated by the payment history, the credit age, and the level of debt that is currently displayed/present in the credit report.

What Do the Numbers of a Credit Score Mean?

As mentioned previously, the credit score goes from 300 to 850. The following outlines what each group of numbers mean as it pertains to your credit report:

• 300-649 – This is high risk and the person with this score will have issues getting credit.
• 650-699 – This is average credit and the person with this score will often find that they have higher interest rates IF they get approved for any type of credit.
• 700-749 – This is considered to be good credit. In most instances, the person seeking credit products will be approved.
• 750-850 – This is considered to be excellent credit and the person with these scores are easily approved and usually get the best rates.

What Factors Influence the Credit Score and What Percentage Do They Influence?

While we have touched on factors that impact the credit score through this guide, in this section, we are going to pinpoint those factors exactly and put the percentage at which they influence, too. These are as follows:

• Amount Owed – 30% If you lower the amount used on your credit card or decrease your debt to limit rate, your score will increase.
• Credit Mix – 10% It is ideal to have a mx of credit products on your credit report – such as loans and credit cards.
• Length of Credit History – 15% If you have a longer credit history, it indicates that you have a lot more experience with credit.
• New Credit – 10% if you have a lot of inquiries on your report in a short amount of time, it can hurt your credit report.
• Payment History – 35% If you have a good payment history, it will contribute to a good credit score.

Why Does a Good Credit Score Matter?

Lenders, landlord, insurance companies, utility companies, employers, and more may use your score to determine eligibility and if you are eligible for a credit product, they will be able to determine the rates that they will have you pay. Your credit report must be accurate and reflect in a positive manner on your in order for you to maintain a healthy financial reputation. If you would like assistance with your finances, visit us here at Somerville Bank today at one of our many locations: https://somervillebank.net/locations/

The post How to Go from Bad or No Credit to Good Credit appeared first on Somerville Bank.

Preparation Tips

The following outlines a list of tips that are highly beneficial in total preparation for tax season:

1. Go to IRS.gov – The website, IRS.gov is available 24 hours a day, 7 days a week. If you need help figuring out how to get ready for tax season or have any questions or just want to look up information. Millions of people in the United States utilize this website to learn more about tax solutions and the website even allows you to file your taxes and pay any due taxes.
2. Gather up All Records – It is important to keep up on all associated records because it helps make a tax return much easier to complete. Having good, solid records and being organized can help in finding deductions and credits that you may qualify for.
3. Online Tools – When getting your taxes together, there are many online tools that you can use to help you gather up everything that you need, and teach you how to complete your taxes without the assistance of a professional.
4. Highly Reputable Preparer – There are many tax preparers out there today. Not all of them have the same level of experience, though. When preparing for your taxes, you should use the IRS Directory of Federal Tax Return Preparers in order to find a highly reputable preparer. This database will help you find a preparer in or around your area that have professional credentials and participate in the IRS program for filing season.
5. Electronic Filing – In today’s world, the IRS encourages its citizens to file tax returns on an electronic basis. It is recommended that you choose direct deposit for any refunds that are due to you.
6. Direct Deposit – When you file your taxes, you should choose to have your refund direct deposited. This is easier, faster, and a reliable and a highly secure way to actually receive a refund. You may elect to have the money deposited up to three accounts. According to the IRS, it is much more likely to experience issues with a tax refund check than a direct deposit. It could be lost, stolen, uncashed, or even misdirected.
7. Report Unemployment – If you drew unemployment during the year, you should make certain that you report that income when you file your taxes.
8. Report ALL Income – You are legally required to report all income from every source – including gig economy jobs, 1099s, and W-2, and Wage Statements and Tax Statements.
9. Accuracy is Key – When you submit your tax return, you should make sure that your bookkeeper and you review the return for accuracy. If your return is accurate, you can avoid delays in it being delayed. Check your name, Social Security numbers, account numbers, routing numbers, and other information.
10. Review Publication 17 – You should review this publication because it gives you the rules for filing a return to the federal government. There is a new format that helps to make the publication easy to understand and download.

Need Someone to Help You Prepare Your Tax Return?

If you need to have help preparing your tax return, you will quickly find that there many different types of preparers out there. You may choose from certified public accountants, enrolled agents, several types of attorneys, and others who are not professionally credential or other type of credential. Your information is highly sensitive. It will include information about your marital status, your kids, all of your Social Security numbers, and other financial information. It is best to opt for a reputable tax preparer.

How to Pick a Reputable Tax Preparer

There are many steps that you may take that will allow you to choose a tax preparer that is reputable. The following outlines these steps:

1. First, you should elect to not work with preparers that state that they can get you larger refunds than other preparers are able to get you.
2. You should never work with a preparer that bases fees on the percentage on the refund you are entitled to or who provide the offer to deposit parts of your money from your refund into their accounts.
3. Make sure that the preparer that you use includes their unique PTIN on the business transactions that they engage in.
4. Make sure that the tax preparer provides you with a copy of your return when it is finished.
5. Tax preparers that are on top of their game will ask to see receipts, records, and other types of documents.
6. You should never sign a tax form that is blank.
7. Ask the Better Business Bureau (BBB) about the tax preparer that you want to use to learn more about them.
8. You should always review the credentials.

What to Do with Your Tax Return?

Most people just spend their tax return when they receive it. In fact, most people have done this at least once. It is a perfectly acceptable option; however, it is best to try to avoid spending the return and pay yourself. On average, most taxpayers receive high and sizeable refunds. The average is $2,800 and higher. In a recent survey, many people were asked what they did with the money that they received. The following outlines the findings:

• 31% Invested
• 27% Purchased Food
• 28% Paid Down Debts
• 6% Spent it on Shopping Sprees or Going on Vacation

This means that six people out of every ten who receive a refund will use it to try to improve their finances. Honestly, we should all strive to do this. The following outlines tips on how you can use your tax refund in a productive manner:

1. When you get your tax return back, you should place a priority on paying off your high interest debts. If any of your debts carry interest of 16% or more, that is considered to be high.
2. You should take your tax return and create an emergency fund. This can be used to make up for lost time at work, unexpected mechanical issues with your vehicle, and even household emergencies. It is ideal to have an emergency fund that includes about the same amount of money that you would make within 6 months at your job.
3. If you have a mortgage, you can use your tax return in order to make an additional payment or add to the principal of the account.
4. You can place the refund in a high yield savings account so that your money makes money, over time.
5. If you have an annual retirement plan, you can use the refund that you receive in order to max out your plan contribution. You may also put the money in some other type of investment account. If either account is tax-advantaged, you will have the ability to make that money grow even larger, over time.
6. In addition to the above, you can invest your tax refund into an indirect investment. These include business endeavors, making purchases that you may sell for a profit.
7. The earnings that you accumulate throughout the year are held back by a certain percentage. This is in case you owe taxes in the future. If you get a refund yearly, you should have your W-4 withholding this will allow you to have larger paychecks throughout the year.
8. Invest in yourself. Do things like buy a new home, sign up for a bank account, use some of it to build your credit through a secured credit type of credit product.

How Long Should You Keep Your IRS and Associated Records?

You should keep your tax returns and all of your associated tax records for a period of up to three years. If you are self-employed or have served as a guardian or a Rep Payee to another individual, you should keep the returns and associated for up to seven years. If you file a claim from a loss such as a bad debt deduction or any worthless securities. If you have any other questions about how long to keep your tax returns and associated records, you should contact your tax preparer.

Conclusion

If you need assistance with your tax returns, you may contact one of our financial associated here at Somerville Bank. In addition to standard financial advice, we offer savings accounts, checking accounts, and other types of financial products that can help you maximize your tax return. For more information, you may visit one of our locations at: https://somervillebank.net/locations/

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The Main Objectives

When saving money, the main objectives include knowing where the money that you have is going, to set goals that are clear and may be realistically accomplished, and to automate the entire process of saving. Actionable steps are imperative. The following outline some basic steps to help in getting started with your money saving endeavor:

1. Track Spending – To start with, you will want to record every single expense that you have. It does not matter if it is something small like a coffee purchase or something larger like a smart television. You may use a spreadsheet, go simple and use a notebook, or go digital and use an app. The goal is to see where your money goes each month and help you to identify areas that you may cut back on spending.
2. Budget Creation – The next step is to create a budget. This is a specially-designed spending plan that aids in the allocation of your income towards both your spendings and your savings. In most instances, financial advisors recommend what is called the “50/30/20 Rule”, that is, spend a total of 50% of the take home pay that you have on your needs, spend only 30% on your wants, and then focus on savings and the repayment of your debts with the last 20%.
3. Set Specific Goals – If you have a desire to save money, you should have a specific goal or even several specific goals. You may want to create an emergency fund that includes up to 6 months of earnings so if something happens to your main earnings, you can have an account to fall back on. Another goal may be to save up for a down payment on a home or save up for a down payment on a vehicle. Another goal includes planning for your retirement.
4. Pay off Debt with High Interest Rates – When you want to make the most of your money, it is important that you pay off any debt that you have that carries a high interest rate. Examples include credit card balances. The money that is saved can then be directed to your savings account – where it can earn interest.
5. Pay Yourself First – You should have both a checking account and a savings account. Set up an automatic transfer from the checking account to the savings that you have each payday. This will allow you to invest the money into your savings rather than in your checking account where you can easily spend it.
6. Acquire a High Yield Savings Account – The next step to meeting your financial objectives is to open up a high-yield savings account. These types of accounts earn a higher interest rate than the traditional savings accounts that are available for consumers. Because of the higher interest paid on the balance, your money will grow quickly.
7. Separate the Bank Accounts – Many financial advisors recommend keeping your checking account and your savings account at two different banks. The reason being is that you will be less tempted to take money from your savings account to make purchases on impulse.
8. Windfalls Should Be Saved – If you have unexpected windfalls – such as a bonus from work, gift money, or an unexpected tax refund, you should save them by placing them in your savings account. It is not like you will miss the money because you weren’t expecting it to begin with.

How to Reduce Spending

There are several unique strategies that you may indulge in that will aid in the reduction of spending. The following outlines these ideas:

1. The 30-Day Rule – If you want to buy something that is considered to be “non-essential”, you should wait 30 days before officially making the purchase. This will ensure that you are not impulse buying. Additionally, it gives you the opportunity to think more about the purchase. If you do not want to do the 30-Day Rule, you could make it any time frame that you want – 24 hours, 72 hours, two weeks – the choice is yours. Just make sure that once you make the choice that you stick to it.
2. Shopping Lists – When the time comes to buy groceries and other household staples, it is important that you make it a habit to create a shopping list. When creating the list, be sure to see if you can obtain any coupons for what you need, and/or look up any loyalty program benefits. Go through the pantry, fridge, and the freezer and only put items that you truly need on the shopping list. Once you get to the store, be sure to stick to the list and do not indulge in any impulse purchases.
3. Eliminate Subscriptions – In this day and age, it is quite likely that you have at least one monthly streaming or gaming subscription. Look at your bank statement and see if you are being charged for memberships and other charges that you no longer want. If the answer is “yes”, you may cancel those subscriptions and/or services. If you have phone and internet bills, it is possible to call and negotiate a lower rate on your services.
4. Cook at Home – As simple as it is to run out to grab a bite to eat, it may prove to be extremely costly. If you want to save money, prepare and cook the food that you eat at home. This includes your lunches that you take to work. While there are many delivery services that make eating out a simple option, those, too, come with fees.
5. Cut Down on Energy Costs – Energy costs are often among the highest of expenses for people. You should unplug items when not in use to prevent the accumulation of phantom power. You should use thermostats, update your home’s insulation, lower the temperature on your water heater, reduce the amount of laundry that you do each week and pay attention to other activities that could have a detrimental impact on the amount of money that you may for energy. You may even consider the integration and usage of solar panels.
6. Use Retirement Accounts That Offer Benefits – You should make use of retirement accounts offered by your employer. Typically, these come with tac advantages and they may even include matching funds. If you allocate part of your income, you will not miss the money too much. The sooner that you start taking advantage of this type of account, the sooner you can take advantage of compound interest on the account. If your job does not offer these types of accounts, you should set up an Individual Retirement Account. You may do this with a financial institution. Just remember to make regular transfers into it so you reap the highest level of rewards.
7. The 52-Week Reward – This particular award is often referred to as the “Savings Challenge”. Basically, with each week in the year, you put that mount of money into your savings account to accumulate interest. For example, the first week of the year, you would put in $1.00, the second week, $2.00 and so on and so forth until you put in $52 on week 52.

How Many Americans Have at Least $100,000 in savings?

According to studies, up to 26% of all Americans have at least $100,000 or more saved. Many households have achieved this goal, especially those that include older people. Young adults account for only about 2.1%.

Contact Us Today

If you are interested in saving money, we here at Somerville Bank are standing by to assist you. We offer a wide range of unique services and plans across several locations – for your convenience. You will find that we offer services and features for both consumers and for businesses. We also offer credit cards, identity theft services, online banking, Zelle, and more!

Our bank was officially established in the year of 1910 in the Southwestern region of the State of Ohio. All the way to the year of 1989, our establishment was the smallest of nationally chartered banks in the United States. It has now grown to a total of seven full-service branch banks. April 2010 celebrated its 100^th anniversary!

We were once called Somerville National Bank; however, we recently changed to Somerville Bank. We pride ourselves in having over 30 + years of banking experience. All of our current management team has been with us for 20+ years. If you would like to learn more about savings or products that will render you successful in your savings goals, contact us at one of our branches today: https://somervillebank.net/locations/

The post Save Money with These Easy Tips This Year appeared first on Somerville Bank.

The United States Postal Service has fully committed to helping its customers avoid scams that are currently trending due to the holidays. The Postal Service believes that acquiring basic knowledge and equipping yourself with knowledge can help you avoid getting snowed over this holiday season by scammers whose hearts are two sizes too small.

Counterfeit Postage Scams

According to many studies, there are large amounts of counterfeit stamps that are being created and sold on the internet. The quality of the stamps is often high, which makes unsuspecting victims more willing to purchase the stamps. Many of these stamps are sold for lower costs than real stamps. If you purchase these stamps, it may seem as if you are saving money. Before too long, you will find that you will directly face additional postage costs, and you may even face legal consequences associated with using counterfeit postage stamps. You should only ever get stamps from the Post Office, or from the USPS online website – nowhere else.

Avoid Phishing and Smishing Scams

Phishing and smishing scams are those committed by fraudsters that want to steal personally identifiable Information. Examples include your Social Security Number and/or your debit or credit card numbers. If you experience this type of scam, it is likely that you will receive either a text or an email that provides you with a fake URL or a file that, when opened, could activate a virus or even hijack the electronic device that you are using at the time. Never click on a link that is provided to you by an unknown source. In fact, it is a good practice to just not click on any link at all in text messages or emails.

If a fraudster with hearts two sizes too small succeed in their phishing and their smishing scams, they will be able to successfully be able to carry out a wide assortment of crimes like financial fraud. These types of crimes can be very difficult to fix. In short, frauds are committing a form of “financial DNA”. In addition to the fraudsters using your information, they may sell it to impostors who will commit crimes with the information.

Protecting Your Mail

Each year, there are literally thousands of arrests made for mail theft and other types of postal-related crimes. These crimes typically involve regular people stealing mail out of mailboxes and taking packages left at the recipient’s home. This is a very common situation around the holidays. The good news is that there are some steps that may be taken that will help you in protecting any mail and/or packages that you receive. These steps include the following:

1. Pickup Mail – If you know that you have mail and packages, you should retrieve it as quickly as you are able to so that no one else has the chance to take it.
2. Overdue Mail – If you are expecting mail and it is overdue, you should inquire about it immediately. This is especially true if you are expecting a credit card, gift card, money, or another valuable.
3. Avoid Sending Cash – You should err on the side of caution as to what you send and it is advised that you never risk sending straight cash in the mail.
4. Prompt Arrangements – If you are unable to directly receive a package, you should promptly make arrangements with the United States Postal Service to make another delivery arrangement or use the “Hold Mail Service”.
5. Hold for Pickup – If you are shipping packages, you should use the “Hold for Pick-up” option that is available at the USPS. This will let the recipient to pick up the package at the local Post Office.
6. Signature Confirmation – If you are mailing something that is considered to be “important”, request a signature confirmation.
7. Moving – If you are moving, you should file a change of address and other financial institutions to file a change of address.

Protect Your Mail Carrier

During the holidays, mail carriers are often targeted by criminals in order to steal mail and/or packages. If you see anything suspicious with your mail carrier, you should definitely contact the authorities immediately.

Holiday Bank Scams

In addition to postal scams, there are bank scams that occur around the holidays, too, and you definitely do not want to get snowed over this holiday season by fraudsters with a heart two sizes too small. The following outlines the most common bank schemes that pertain to banking:

• Fake Notifications – You may find that you receive notifications that are related to package problems. In most instances, these notifications include a link that you are supposed to click on. If you click on that link, it will typically be a form of malware or clickbait to get you to enter your information.
• Charity Fraud – Many scammers will send requests for fake donations in a text or in an email. This is especially true if a disaster or another type of high-profile cause has occurred.
• Social Media Advertisements – If you see popular or high-value items, services, or products offered at a price on social media that is just “too good to be true”, it probably is a scam. There are many fake stores that take payments from customers, but they never ship the products out.
• Fake Jobs – There are fake job ads out there that encourage you to pay to be trained and/or to share the bank details of your bank.
• Gift Card -Some scammers will impersonate different companies or other types of officials who insist on payment through the means of gift cards and/or cryptocurrency. These are fake. If you have a payment coming, you should not have to pay for the payment.
• AI Scams – There are deepfake models and cloned models and/or voices make impersonations of people or brands.

Steps To Protect Yourself from Holiday Bank Scams

1. Skeptical – When approaching potential scams, you should be very skeptical. If something is too good to be true, it probably is.
2. Verify – If you get notifications from shipping providers such as USPS/FEDEX/UPS directly – do not click on any links.
3. Charities – If you want to donate money to a charity, you should do it through a reputable source and/or their website directly.
4. Secure Accounts – When creating online accounts, be sure to create and use very strong passwords. This is also important when it comes to the use of multi-factor authentication. You should always set up as many bank account alerts and/or notifications as possible.
5. Pause – Before you share or send money, you should pause and really think about what you are doing.
6. Sensitive Information – Never share your usernames, passwords or codes with anyone.
7. Verification – If any business that you work with any financial company, credit card company, or bank and you receive any type of snail mail, email, or texts from them, call them directly to verify that the correspondence is from them.
8. Wiring Money – If you make an online purchase, you should never wire the money. You should use alternate payment methods that protect your purchase.
9. No Gift Cards – you should avoid paying for items with pre-paid gift cards. The seller will ask you to use a gift card and then they will ask you for the number of the card and the PIN. You will never get what you purchased. Once they receive the money on the gift card, they will use it for something else.
10. Credit Cards – If you use a credit card online and/or to make purchases, you should check the statement out on a regular to make sure there are no unusual or unknown charges.
11. Shipping Process – When you purchase something online, you should get a tracking number so that you may monitor the shipping process. If you are unable to get a tracking number, you should not make the purchase.

Conclusion

As you can see, there are many types of holiday scams that could snow you over that are done by criminals whose hearts are two sizes too small. If you need any support to protect yourself, you may contact us here at Somerville Bank. We offer a wide selection of services – including identity theft services. We offer checking accounts, savings accounts, and more. If you would like to learn more the services that will protect you from getting snowed in from holiday scams by people with hearts two sizes too small. Click on the following link to find a location now: https://somervillebank.net/locations/

The post How to Avoid Getting Snowed Over This Holiday Season by Scammers Whose Hearts are Two Sizes Too Small appeared first on Somerville Bank.

Scammers know and understand that grandparents only want a close, loving relationship with their grandchildren. As a result, sometimes this requires keeping secrets from their grandchild’s parents. Scammers know and understand this fact, so they exploit that very special bond. Thankfully, this elderly man did not fall for this scam. Unfortunately, there have been numerous people who have.

The Rise of the Digital Age Has Increased Scams

It is a known fact that there have always been a variety of scams, but the rise of the digital age has resulted in an increase in scams. Actually, it has been established that most adults within the United States have been targeted by a scam attempt or attack online. According to statistics, most people who are targeted are the elderly. This is because, simply put, that is who usually has the most money.

Those who are 55 years old and older own most of the wealth throughout the nation. Additionally, approximately one out of every nine senior Citizens has Alzheimer’s disease or another type of dementia. When you combine these two facts, it is really no wonder that older Americans are being targeted the most in scams.

What Makes it So Easy to Get Scammed?

Those who scam people are quite opportunistic. They are also getting more sophisticated in their schemes. Personal information is being more exposed than it ever has before. As a result of this fact, there are more opportunities for scammers to engage in activities that are illegal, like scams and identity theft. There have been numerous advancements in the following:

• Artificial Intelligence (AI)
• Deepfake Technology
• Websites
• Social Media
• Audio Clips
• Video Clips

Many scammers have even engaged in the creation of websites that look very similar to trusted companies and/or brands, loved ones, and government agencies.

Then, there are scams that are created that are designed to trigger very strong emotional reactions. Examples include those that instill fear, push for sympathy, and/or result in a strong sense of urgency. The following outlines a few of the ways that scammers use the emotions of their potential victims to succeed in their endeavor:

1. Scams for Digital Payments – Let’s say your mom received an email from PayPal serving as a receipt for amusement park tickets she never purchased. She calls the number listed in the email for assistance. An agent who is fake answers the calls, lets her know that they will work it all out. Immediately thereafter, they ask for her name, email, and bank details. Then, they use the bank information to transfer money from her account to their account, where they will have direct access to her money.
2. Fake URL/QR Scams – Ella scans a QR code on a flyer that is advertising free spa sessions in her area. It looks official as it is posted in her doctor’s office. Unfortunately, when she scans the URL or the QR code, it immediately obtains her personal information illegally and instantly installs malware on her cell phone. Many days later, she sees suspicious and unauthorized activity in both her email and her bank account.
3. Government Imposter – James received a call from a person claiming that they were from Medicare. They inform him that the benefits that he currently has will be stopped or cut unless he is able to confirm his Social Security number. He immediately provides the caller, and within minutes, his identity is stolen, and he ends up battling a disaster full of financial chaos for many years to come.

Anyone May Fall for Any Type of Scam

Scammers do not focus on what you may or may not know. They place an emphasis on what you are feeling in a specific time period. The tactics that they use are designed to cloud your judgment and make an impulsive-like decision, or many impulsive decisions. Experiencing the right conditions and under the right level of distress can cause anyone to be vulnerable. Continue reading to learn about many of the most common methods that scammers use to scam people:

1. Scare Tactics That Involve Tech or Digital Products – Scammers are good at letting you know that you must act very quickly. Many may get pop-ups on their PC or mobile device that make them believe that the device is infected with a virus. Someone from “Social Security” (not really, but they state that they are) will request that you confirm your Social Security number, or else it will be suspended.
2. Strange Emails or Sender Names – Many scammers will send emails from weird email addresses and will include very odd sender names. You should always check the sender’s name and/or email address. If something looks suspicious, trust your gut. You should close the email, do not click on anything in the email, and you should block and report the sender immediately to your email provider.
3. Language Complications – If you receive any type of communication that displays language issues such as misspellings, improper grammar, weird wording, or even odd symbols, it is likely a scam. Close, block, and report.
4. Requests for Personal or Financial Information – If you get any messages that ask for your personal or financial information, never give it away. If you know the company, give them a call yourself and inquire as to whether or not they have attempted to contact you. In most cases, you will find that they did not.
5. Threats and Messages from Authority Figures – If you receive any threats or messages that seem unusual from authority figures – such as cops, lawyers, and/or political figures- it is likely a scam. You may delete the message. The caller may claim that you owe a speeding ticket, that you failed to arrive for jury duty, and/or that you owe toll fees that have not been paid and that you must pay them immediately. If an agency or authority figure has legitimate business with you, they will contact you – typically – through snail mail or through the USPS.
6. Strange Friend Requests or Messages on social media – many scammers will create a fake profile to impersonate someone that you may have known. They may send you a friend request that is out of the blue or may send an odd message. These profiles may impersonate a friend, a previous romantic interest, or someone you work with or live near. In the end, they will attempt to ask for money, personal-based information, or will encourage you to click on links that are malicious.
7. Suspicious Phone Calls from Unknown or Unverified Phone Numbers – These scammers will often call and attempt to impersonate people that you know or people from financial institutions – such as your bank, health insurance company, or your loan company. They then record your voice when you speak so that it may be duplicated in order to make more suspicious phone calls to people that you know.

Key Features Associated with Scams

The following outlines many key features that are typically associated with preventing yourself from becoming a victim of a scam:

1. You should monitor your entire financial picture. This includes your checking account, saving account, any investments that you have made, credit card statements, and/or your retirement accounts.
2. You may set up alerts with your finances that may be set up with a designated relative, neighbor, or friend, without allowing them the ability to move or manage funds.
3. You should get your annual credit bureau reports from all three bureaus, ensure that the dark web is under surveillance for your personal information, and all holdings associated with any real estate that you own.
4. You should make sure that your email is monitored for suspicious activity.
5. If you become the victim of identity theft or any type of fraud, you should get support through recovery resources, remediation programs, and other types of support services.

Contact Us

We here at Somerville Bank offer numerous programs and features for our clients. These include safety monitoring, identity theft services, mobile banking, and online banking, and we are backed by over a century. If you want a bank with massive features, but hometown friendliness, check us out here at Somerville Bank. We have a total of 8 locations within the State of Ohio. We pride ourselves on being local, loyal, and a lifetime bank that is perfect for any customer – young or old- and from any walk of life. If you are interested in checking us out, click on the following link to find a location near you: https://somervillebank.net/locations/

The post Simple Strategies for Protecting Both Your Finances and Your Identity Online appeared first on Somerville Bank.