'Identity theft abroad'
August 30, 2007 at 9:41 am
Identity theft is recognised as a serious threat by the vast majority of people. However, although we are more vulnerable when abroad, that is the very time that we drop our guard. According to research carried out in 2005 by the UK’s Fraud Prevention Service, it takes an average of 201 hours to unravel the damage done by identity thieves. Add to that the stress and inconvenience when it happens and you will see that it is well worth taking a few simple precautions.
As an example of the risks we consciously or unconsciously take, Capital One discovered that approximately 45% of us do not bother using the hotel safe. Instead, we leave our passport and personal documents lying around, oblivious to the fact that not all hotel staff are scrupulously honest. Alternatively, many carry them around, leaving themselves vulnerable to pickpockets.
The risks are real and palpable. Last year, almost 300,000 of us lost or had our passport stolen abroad. Indeed, many criminals would much prefer our personal details to our cash or other personal belongings. After all, with someone’s personal details, they can apply for credit cards, take out mobile phone contracts and operate our bank account, to say nothing of the various illegal activities which could be carried out in our name – all while we are sunning ourselves in blissful ignorance.
The places with the highest risk of identity theft are:
- America
- Africa (especially Nigeria)
- Eastern Europe
- Malaysia
- Indonesia
As well as the obvious security measure of travellers’ cheques instead of credit cards, other tips to avoid falling prey to identity theft include:
- Notifying your bank if you are spending any significant time abroad.
- Having your post looked after by a neighbour or using the Royal Mail Keepsafe service.
- Using the hotel safe even if there is a charge – it is money well spent, after all.
- Using a money belt or concealed pouch if you have to carry your documents with you – for instance, when travelling.
- Keeping an eye on your credit card at all times.
- Not leaving important documents on the car seat beside you and keeping the car locked at all times and windows closed.
- Being aware of people asking to see your passport in the street – there are many scams in various parts of the world and many people are fooled.
- Using your business address and phone number when checking into hotels.
- Checking your credit card and bank statements carefully on your return home and acting immediately if there are any suspicious transactions.
If the worst comes to the worst and your passport is stolen, report it to the police and contact the British Embassy to make arrangements for an emergency replacement to be obtained. This will be easier if you have a copy of your passport with you (kept separate from the original of course) or one left at home with a friend.
'Snowball your way out of debt'
August 10, 2007 at 9:43 am
Debt advice is everywhere: “helpful” consolidators for debt management, government-funded financial support, independent advice centres; there seems to be no shortage of people telling you what to do, whether you’re paying off your credit card each month with little problem, or dealing with debts comparable to your average Third World country.
However, for those of us who fall between these two camps, and are trying to pay off large sums in the most economic way possible, there’s a great online tool, curioustly titled the Snowball. This clever little calculator on whatsthecost.com, a website set up to help consumers wrest back control of their finances with free money management tools, helps debtors prioritise and track their debts as they, hopefully, dwindle.
The concept of snowballing debt is fairly simple – target the card (or loan) which is costing you most, and focus on repaying that first. Once that debt is cleared, you can move on to the next most expensive debt, and so on. As an example, let’s say you have £2,000 outstanding on a credit card charging 14.9% APR and a further £3,500 for which you are being charged 6.9%. With £400 per month to put towards the debt, you could simply split the money between the two cards. At this rate, it would take you 11 months to pay off the first debt, and a further four months to clear the second debt. You would pay a total of around £285 in interest. By snowballing the debt, you would still need 15 months to make the full repayments, but would save yourself £35 in interest charges. With a fairly simple example like this, the best course of action is fairly obvious. The more debts and interest rates involved, the more you will be grateful for the snowball calculator!
Another thing which makes a simple snowball a headache in practice is the fact that most lenders will require a minimum monthly repayment, whether that’s a fixed sum or a percentage of the outstanding debt. Introductory interest-free periods and subsequent rate hikes all complicate the issue. This is where the snowball comes in handy. You enter all your debt details (the snowball can handle up to 20 debts), including the balance, rate, minimum repayment and other conditions, as well as the sum of money you have available each month for debt repayment. A click of the mouse then brings up your personal repayment plan, showing you which debt to target first and how long it will take until you are debt free. You can play around with the figures, as increasing the monthly repayments can have a dramatic effect on the speed with which you can clear your debt, not to mention the interest you will save.
Consumers with several debtors may be drawn to debt consolidation – one lump sum and a single monthly repayment can seem a simpler, more affordable solution. Use the snowball to calculate how much you would end up paying in the long run, however, and you may get a nasty shock. Affordability and improved cash flow in the short term come at a price. In the end, the most effective way to tackle credit card debt is not to put off the evil day of repayment, but to manage the debt more effectively over a period.
The snowball helps you achieve the first three steps which the Citizens’ Advice Bureau suggests for those needing to tackle debt:
- Step One – make a list of your debts
- Step Two – work out your budget
- Step Three – sort out your priority debts
Start the snowball rolling now and, in conjunction with responsible spending and realistic budgeting, you might find yourself debt free sooner than you thought.
'Use your credit card and save
August 1, 2007 at 3:48 am
Price comparison website, Moneysupermarket.com, has calculated that an average household could make £270 by performing a simple, and entirely legitimate, credit card trick.
Many credit card providers, who are voraciously competing with each other for market share, are offering 0 per cent interest on balance transfers and purchases, often for a period of up to 12 months.
The trick involves using the cards for spending on everyday items such as food, petrol, clothes and recreation. The consumer website has estimated that the average household spends £1,930 a month on these expenses. If you were to use a 0 per cent credit card to pay these bills, and put the money you would normally spend in a competitive savings account, you could make an extra bit of cash out of your bank!
The figure of £270 is arrived at by investing the usual maximum credit limit of £6000 (or £1930 over a three month period) into a high interest bank account yielding 6 per cent. After 12 months, the customer can withdraw the £6000 to pay off their credit card bill (having accrued no interest on the amount) and pocket the interest that the cash has earned sitting in a savings account. Many current accounts are paying high interest rates on amounts up to £2500). (see www.banking-guide.org.uk for more information).
This trick is only worth contemplating if, like two thirds of people, you can pay your credit bills regularly at the end of the month. The benefits of this scheme would be completely negated if you were caught out and started paying interest on the £6000 because you were unable to pay the amount off after 12 months.
You could extend the duration of this profitable consumer enterprise by changing your credit card provider after the 12 month interest fee period has elapsed, and repeating the procedure elsewhere. However, many of the major underlying operators, such as MBNA, don’t allow this type of transfer.
Consumers should constantly be on the look out for ways to get the best value out of banks’ willingness to compete. Rob Kenley, head of credit cards at Moneysupermarket.com commented: “Using a credit card with a 0% purchase offer and investing the equivalent amount of money in a savings or current account is an extreme case of banks paying us for our business”.
There are currently 8 different credit cards which offer 0 per cent interest on purchases (before applying for them be sure to check the other particulars like typical APR, balance transfer rate and how long they are offering the 0 per cent on purchases):
