Month: December 2015

What You Need to Know About Lifestyle Inflation and Its Impact in Your Life

Posted on by Will Lipovsky

Buy that Porsche. Buy that dress. Buy that watch. Buy that house. Get it all! Why? Because lifestyle inflation isn’t the end of the world. You may embrace minimalism for reasons other than money. That is great. The planet needs protected and fewer material things can make a person feel better. This type of post is just meant to challenge the notion that lifestyle inflation is always a bad thing.

What most millennials have gone through are two life shocks: 1) Graduating college and kicking hard to get ahead in life (and make new friends); 2) Being tempted by lifestyle inflation

Graduating college and struggling to pay your bills is a relatively contained problem. You signed promissory notes, you find ways to make enough money to repay them. It’s not easy but it is a pretty simple problem. However, lifestyle inflation is ever present.

Lifestyle inflation affects everything in your life. Some people hate the temptation of lifestyle inflation so much that they change their group of friends, move to a different neighborhood, move to a different city or even move to a different country! After all, aren’t you a little discouraged when your friend is spending a lot more money than you are comfortable spending? Things can get awkward.

If you are very involved in the personal finance blogosphere, you’ll find most personal finance bloggers condemn lifestyle inflation. They say it’s a complete waste of money and should be avoided at all cost (pun). I myself drive the same car I owned in high school. I’ll be 26 in a few months. But I’m not against lifestyle inflation. I just love that car. In fact, I encourage others to embrace lifestyle inflation if they are doing so purposefully.

Purposeful lifestyle inflation is saying you will spend money on travel this year because it is a passion. Or, you will use that expensive AM face wash because it makes you feel rejuvenated.

Undeliberate lifestyle inflation is spending money without even realizing it. You eat out every night without thinking about it. You drive a $30,000 car when you would be perfectly happy with a $5,000 car. That’s dangerous. But purposeful lifestyle inflation… it’s okay. Instead of thinking about additional money spent, think about percentages.

How to Safely Inflate Your Lifestyle Using the Percentage Strategy

For an illustration, many budget gurus recommend you never spend more than 25% of your take home pay on housing. For someone making $30,000 per year, that’s $7,500 per year. For someone making $300,000 per year, that’s $75,000 per year. As you see, percentages play a crucial role in determining how much you should spend.

What I’m advocating (and I use this guideline myself) is that you focus on a percentage. Make sure you’re saving a certain percentage of your income. Make sure you’re spending a certain percentage on your vacation, if you enjoy vacationing. This is wise because it won’t get you into financial trouble, but you can still live a more luxurious lifestyle than you did as a broke college student. Also, thinking about percentages is powerfully motivating. Want to drive a nicer car? Instead of putting less into your savings account each month choose to make more money! Then how can you possibly feel guilty about lifestyle inflation? Because you wanted a more expensive lifestyle, you went out and got more money. Without the desire for a better lifestyle, that money would have never entered your life.

A while back, I had $16,600 in student loan debt. I’m now past that stage of my life. But lifestyle inflation is on my mind quite a lot. I remind myself that if I stick with a percentage, it’s not a big deal if I spend more money on things.

Buy that Porsche. Buy that dress. Buy that watch. Buy that house. Get it all! Why? Because lifestyle inflation isn’t the end of the world. Keep the percentage in mind. Instead of looking at your vacation as ‘x’ number of dollars, think of it as a percentage. If you really want that trip to Bali, you’ll increase your income until it becomes no larger a burden than a trip to Pizza Hut used to be in college. But by all means, embrace minimalism if you like. I personally haven’t inflated my lifestyle much since college.

To each his own but being mindful is the key!

 

This article comes from our friends at Phroogal. It was originally published on November 18, 2015, and can be found on their website here.

Another New Repayment Option for Federal Direct Student Loan Borrowers (REPAYE)

Posted on by Amy Larson & Lincy Meraz

Have you heard the news? The Department of Education introduced a new student loan repayment plan in December 2015. The new REPAYE (REvised Pay As You Earn) Plan is meant to make repayment easier for more student borrowers. But how does the new plan work? How do you know if it’s the right plan for you? We can help answer your burning questions with a rundown of all of your federal loan repayment options, followed by a quick 101 on the new REPAYE plan

 

REPAYMENT OPTIONS OVERVIEW

Standard Repayment Plan

When federal student loans enter repayment, most are placed under the “Standard Repayment Plan”. This plan is designed to allow you to pay off your loan in 10 years with the same fixed payment every month. If that payment stays affordable each month, this no-hassle plan will get rid of that loan quickly, and with the least amount of interest.

 

Income-Driven Repayment Plans

If the Standard payment starts to put a dent in your wallet, no need to stress – you could potentially set up lower payments based on your annual income and family size, under one of the “Income-Driven Repayment Plans”.

There are a lot of acronyms when it comes to Income-Driven Repayment Plans (IBR, IBR for New Borrowers, PAYE, REPAYE, and ICR). So to keep it simple, we can talk about them as a group. All “Income-Driven Repayment Plans” have some great features in common:

  • Built-in forgiveness after 20-25 years
  • Payments that count toward Public Service Loan Forgiveness (PSLF) requirements
  • Minimum payments that adjust annually as your income or family size changes
  • $0 minimum payments for some borrowers

With Income Driven Repayment Plans, you must submit an application every year to calculate your new minimum monthly payment. The Federal Student Aid Repayment Calculator can help estimate your monthly payment under these plans, or you can contact your loan servicer for more information.

 

NEW REPAYE PLAN

Let’s get to nitty gritty: the brand new “REPAYE” plan, or REvised Pay as You Earn. The big deal about REPAYE is that it will make Income Driven Plans available to more people by removing some restrictions, including:

  • Cutoff date restrictions: Some older plans (PAYE and IBR for New Borrowers) had specific dates that limited access for some borrowers. REPAYE is available to all Direct Loan borrowers. So even if you’ve previously been unable to enroll in an Income Driven Plan, you may be eligible for the REPAYE plan!

 

  • Partial Financial Hardship restrictions: Some older plans (PAYE, IBR, and IBR for New Borrowers) only apply to borrowers whose new payment is less than they what would pay under the Standard repayment plan. REPAYE, on the other hand, welcomes borrowers of any income level, even if the REPAYE payment would be higher than their Standard payment.

 

Major Benefit of REPAYE: Help With Interest

The biggest benefit of the REPAYE plan is a larger interest subsidy when a borrower’s monthly payment doesn’t cover the interest accruing on the loan (this is called “reverse or negative amortization”). Ask your loan servicer how much interest accrues on your loan(s) each month. If your minimum payment on an Income-Driven plan is lower than the interest amount, reverse amortization is causing your balance to keep growing – even though you’re making payments each month. REPAYE may be the most helpful option to minimize the effects of negative amortization.

**Remember, with Income Driven Plans, there’s a light at the end of the tunnel even if your balance won’t decrease with payments. Your monthly payments count toward your built-in forgiveness after 20-25 years, or your Public Service Loan Forgiveness Program (PSLF) forgiveness after 10 years.

 

When REPAYE may not be a good option

  • Your loans are Parent PLUS. The only Income-Driven Plan available for Parent Plus loans is ICR, and it will require you to consolidate the Parent Plus loans first.

 

  • Your loans are Grad PLUS. You may use REPAYE with Grad PLUS loans, but the forgiveness term will be 25 years, instead of the 20 year term associated with the PAYE or IBR for New Borrowers plans. But if you’re planning to qualify for Public Service Loan Forgiveness (PSLF) after 10 years, then the REPAYE plan may still be a strong choice for you.

 

  • Your loans are FFEL. FFEL loans are not Direct Loans, and FFEL loans only work with the more expensive IBR plan. You could consolidate your FFEL loans into the Direct Loan program to make your loans eligible for REPAYE and Public Service Loan Forgiveness (PSLF). Not sure if you have FFEL loans? Check with your servicer or the National Student Loan Data System (NSLDS).

 

  • You struggle to submit updates on time. REPAYE has strict annual requirements for updating your information, and missing the deadline will cause complications with both your payment amount and your progress toward forgiveness.

 

  • You file taxes separately from your spouse. REPAYE is the only Income-Driven Plan that will include your spouse’s income and federal loans in the calculation, even if you file taxes separately. Other Income-Driven Plans exclude your spouse’s information if taxes are not filed jointly. But depending on the numbers, REPAYE might still be your best option. Learn more and compare payment estimates with the Federal Student Loan Repayment Calculator.

 

  • Your income and family size don’t qualify you for a reduced payment. REPAYE allows you to join the program even if your calculated payment would be higher than the Standard plan payment. There is no cap on potential payments you may need to make under REPAYE. So you need to decide: do you prefer a fixed payment (Standard repayment plan), or a payment that increases along with your income (REPAYE)?

 

Even if REPAYE doesn’t sound like the right fit for you, it’s smart to be aware of all your options, including the other Income-Driven Plans, or other traditional plans (like Graduated or Extended). And don’t hesitate to call your loan servicer for a personalized review of the options that will help you achieve successful loan repayment. They’re here to help, too.

 

For more information: studentaid.ed.gov

To compare payment estimates: https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

To apply for a repayment plan change or consolidation: studentloans.gov

 

 

Fed Rate Hike: What It Means, And What to Do

Posted on by Money Knowl

Last week, the Federal Reserve raised its key interest rate to a range of 0.25% to 0.5%. This move didn’t come as a big surprise, though it is a good sign of economic recovery; essentially, experts believe the U.S. economy has healed enough since the 2008 Great Recession to warrant an increase, the first in nearly ten years.

The rate hike may seem minor, but the ramifications of the increase will affect millions of U.S. investors, home buyers and student loan borrowers in coming years. But you’re probably wondering, “Okay, but what does this mean for me?”

Here are a few ways in which these economic changes will trickle down to your wallet, either through credit card use, personal savings, student loans or big spending. We’ve even shared some ideas to get you thinking about how to stay financially balanced through this development – and how you may even benefit!

Pay off and consolidate credit
Paying down credit debt is always a good move. But since most credit debt is tied to variable interest rates, the rate hike means you’ll soon begin paying more on your credit card balances. That makes this is a good time to take a peek at your accounts to see where you can make a smart shuffle. Transfer high-interest credit card balances to cards with lower rates, or see if you can negotiate a lower APR. Remember that the Fed plans on increasing rates a few more times in the next year, so tackling this sooner rather than later is a smart idea.

Put a little more aside
There once was a time when you could earn 3-5% interest on your savings accounts. Well, while those numbers aren’t likely to happen again any time soon, banks are likely to boost rates on money market accounts within the next 8-12 months. So if you can, beef up your savings account a little at a time, and you may start to reap the benefits of increased savings interest by 2017.

Watch those loans

For most student borrowers, your federal student loans have a fixed interest rate. This means the news this week probably won’t affect you much. But if you have private loans, or a federal loan granted before July 1, 2006, it’s likely that your loan has a variable interest rate. This means that a federal interest rate hike will gradually start to effect (increase) your payments. If you’ve been a smart spender and have a healthy credit rating, it’s the ideal time to consider consolidating any private student loans into one fixed-rate loan.

Don’t rush big ticket purchases

Most millennials may not be ready to purchase a home, but some older Gen Y-ers are starting to test out the market. If you’re considering the house hunt, don’t feel too much pressure, yet. While this announcement will cause mortgage rates to gradually rise, experts advise that homebuyers have at least a few years before the rate hike makes a larger impact. It’s good to get organized, but with mortgage rates still sitting at historic lows (around 3.9%), you have time to find that perfect home.

The biggest takeaway from this new federal rate hike is making the connection between the health of the nation’s economy and how that trickles down to all of us as consumers. Despite those inevitable large-scale changes, taking the time to understand how our individual financial decisions can beneficially work with economic shifts is time well spent. With just a bit of foresight and planning you’ll be able to protect your wallet, and hopefully find smart ways to prosper through this and future changes.

Should You Help Your Significant Other Pay Off Student Loans?

Posted on by Cat Alford

Money is often a major source of strife between couples. The burden of student loan debt in a relationship certainly doesn’t help long-term partners build wealth together. Perhaps you’ve even considered helping your partner pay off student loan debt so you can enjoy a debt-free future together.

There is some disagreement about whether it’s smart for significant others to help each other pay back their student loans. It’s not uncommon for couples to want to combine finances with their partners, which might mean helping them pay off their debt once and for all. Others believe in keeping finances separate — if their partner got into debt, it’s his or her own responsibility to get out.

Why You Should Help Your Significant Other Pay Back Student Loans

As someone with $33,000 in student loan debt, I know how burdensome the numbers can feel. My husband does too, since he has more than $300,000 in student loan debt, much of it from medical school.

Even though he owes nearly 10 times more than I do, I still feel it is our debt to tackle together. We plan on helping each other pay it off in full. After all, we decided together that he would go to medical school. I know that if we also work together to pay it off, we’ll be debt-free that much quicker.

In fact, helping your significant other pay off his or her student loans has bothfinancial and emotional benefits:

1. You Achieve Your Goals Faster

When one or both partners in a couple have debt, it holds them back from accomplishing what they really want to do together in life. Whether it’s going on afamily vacation or saving for retirement, working together to overcome debt can help you achieve your goals as a couple faster, especially if one person earns significantly more income.

It can be a complete win-win: both partners are able to do what they enjoy, reach mutual financial goals quickly, and move on to new stages in the relationship, such as buying a house or having children.

2. You Can Strengthen Your Relationship

When two people enter a long-term relationship, the expectation is that they will work together toward reaching common goals. Yet money troubles are a chief cause of tension for many couples and often go unaddressed. Sitting down to have the difficult conversation about how you will pay off debt together can bring money-related issues to the surface and urge you to work together.

It’s also empowering to reach difficult goals together. By paying attention to spending, putting extra income toward loan payoff, and concentrating on maintaining a budget, a couple can generate the spirit of cooperation and learn what two people can accomplish together.

When Helping Your Partner Pay Off Student Loans Is a Bad Idea

Of course, every relationship is different and not all couples will find that helping each other pay off student loan debt is the best choice. There are a couple of instances when you’re better off letting your significant other tackle student loan debt solo:

1. You Maintain Separate Finances

According to a survey by TD Bank , 42% of couples who have joint bank accounts also maintain separate, individual accounts. The biggest reason for doing so? Couples wanted independence and the ability to make autonomous personal spending decisions.

There’s nothing wrong with keeping separate finances in a relationship. Some people feel restricted when they have to maintain a shared budget with a significant other, or as thought they can’t spend their own money as they please. It’s relatively common for couples to have separate accounts in addition to a joint account for shared expenses, such as mortgage payments and groceries.

If you’re part of a couple that likes to keep things separate, student loan debt should be no different. If you don’t expect your significant other to help pay your credit card bills or everyday expenses, you shouldn’t ask for help paying down student loan debt, either (and neither should they).

2. Your Partner Manages Money Poorly

A history of money problems is good reason to let your significant other handle student loan debt without your help. Poor financial decisions or a lack of money management skills won’t improve if you’re there to bail your partner out.

Instead, act as his or her biggest supporter and only give advice when asked. When it comes to reaching goals — especially money-related ones — it’s sometimes best to let a poor money manager learn the hard way and hone some personal finance skills in the process.

There are plenty of good reasons to help your significant other with pay off student loan debt, as well as to stay out of it. Your decision should be based on how well your partner manages money, what you’ve agreed to as a couple, and how significantly that student loan debt is impacting your lives.

Remember, the goal of any long-term relationship is to live a happy, prosperous, and pleasant life together. So decide what will best contribute to reaching that goal, whether it’s by helping with debt repayment or by allowing your partner to handle it independently.

“This article, Should You Help Your Significant Other Pay Off Student Loans?, was originally published on studentloanhero.com.”

How to Organize Your Finances Like an Adult

Posted on by Anum Yoon

One of the biggest challenges facing anyone who’s reached adulthood is managing finances. That’s because the effort cuts across specialties. A good financial manager is part secretary, part mathematician, part accountant, part forecaster, and part stress manager.

It all seems a bit overwhelming for those of us who want to have a life.

However, managing your finances doesn’t have to be a frustrating, hair-pulling, see-you-at-the-ABC-store ordeal. With a little advanced planning, some of the right equipment, and a bit of scheduling, you can get a grip on your finances even without a degree in accounting.

Here are some tips to organizing your finances like an adult.

Pick up a Filing Cabinet

A filing cabinet is indispensable if you want to manage your personal finances. Although this is the 21st century and much of what we do is online, we still live in a paper-driven world. Just get involved in some legal issues and you’ll learn about that very quickly.

A filing cabinet will help you organize your financial documents so that you can refer to them from time to time. For example, sometimes you might need to grab a credit card statement to double-check how much you were charged. On another occasion, you might want to check to see how much you paid for a contracting service in the past so that you can make sure that you don’t get overcharged for a similar service in the future.

Of course, a filing cabinet is all but useless without manila folders. Make sure that you grab plenty of those and label them accurately. Feel free to make copies of your financial documents and keep them in more than one file if they can be filed under multiple categories. For example, a credit card statement might be filed under the name of the credit card company as well as a generic “Credit Card Statements” file.

Redundancy is good in engineering and finance.

Keep Electronic Copies

Yes, our environmentally hateful world still thrives on paper. However, you can also keep electronic copies of your financial records as well. There are a couple of ways to go about doing this.

One way you can keep digital records is to scan your paper statements and save them as PDF files. Since hard drive space is cheap these days, you can store multiple months of many statements on one drive.

Of course, you’re going to want your hard drive backed up because Murphy’s Law applies to technology more than it applies anywhere else. Grab yourself a Dropbox account or some other online backup service (Google Drive is another option that has the benefit of being free) so that you have backups of your important financial documents in the event that your hard drive crashes.

The other option you have to keep electronic records is to contact the companies that send you bills every month and discuss the possibility of electronic statements as opposed to paper statements. That’s a lot easier than making digital records yourself, and the companies will be responsible for the backups.

Set Up Auto-Pay

Why spend time poring over bills and writing checks when information systems exist to do that for you? Instead of taking time out of your schedule to pay bills, put those payments on auto-pay and go play golf while your bills are handled for you with the aid of modern technology.

Most companies will let you set up a system that automatically pays your bills on a monthly basis. In the event that you can’t set something up with your company, you can almost certainly set it up with your bank. However, setting it up with your bank works best if the bill is a fixed amount every month (a mortgage, for example) and not a variable amount (such as an electric bill).

Consolidate and Lessen Your Workload

The more paperwork you have to manage, the more overwhelming it all becomes. That’s why it’s best to limit your accounts to what is absolutely necessary.

If you’re managing multiple credit cards, for example, see if you can consolidate those credit accounts into one master account for easier management. If you have multiple checking accounts, and you really don’t need that many, combine those accounts into one and make your life a little bit easier.

Use Apps

There is an app for everything, including managing your finances. In fact, there are several appsthat will help you manage your finances.

One of those apps, Mint, is an excellent option if you’re serious about managing your money. You can connect it with your primary checking account and it will track your spending, categorize your expenses, and alert you if you’re approaching a budget limit. Mint will even offer advice about savings tips.

Take the Time to Do It

Finally, be sure to carve out a little bit of time from your busy schedule to file your paperwork, balance your checking account, and review your records for inconsistencies. All of the advice dispensed above won’t matter if you don’t put it into action.

You’ve worked hard for your money. Now, manage it like an adult and enjoy the wealth that you create.

 

This article comes from our friends at Phroogal. It was originally published on November 18, 2015, and can be found on their website here.

What You Need To Know About Lowering Your Student Loan Payment

Posted on by Carissa Uhlman

If you’re anything like Acacia Squires, you may have no idea that there are federal loan repayment options that can cap your payments at ten percent of your income. That’s right – ten percent, with the potential to have your loans forgiven after so many years in repayment. In this article, Acacia shares her surprise at not only finding out that such programs exist, but that she actually qualified for them. Hear her story of discovery and exploration of what works – and doesn’t – when it comes to your loan servicer.

To read “Did You Know You Can Lower Your Student Loan Payments? I Didn’t” by Acacia Squires, click here.

And don’t forget to check back in a few weeks when we share more information about the new REPAYE option, which will allow even more borrowers to qualify for loan forgiveness and a ten percent payment cap.

How to Give Your Holiday Budget a Boost

Posted on by Anum Yoon

As the holidays march steadily closer, you may start to think you could use a little more money to make your holiday dreams come true. Why not try part-time work?

Any one of these nine options might get you over the seasonal money hump many consumers face:

Mall Markets

American retailers want to add about 700 thousand seasonal workers in 2015. Why shouldn’t one of them be you? In addition to working the cash register, these stores’ seasonal employees must wrap presents, greet customers and stock shelves.

Local stores post signs and advertise openings. You can also check out what’s available atCareerbuilder and Monster.

Delivery Dividends

Delivery companies often add employees during the holiday rush. FedEx, UPS, DHL and even the U.S. Postal Service hire seasonal help.

The work can be brisk and physically demanding. However, if you like to move, it’s not a bad way to earn extra bucks.

Errand Operations

Everyone is busy at holiday time. Some people have more money than time and are willing to pay others to take care of shopping chores. Presents, food and decorations: If you like to shop anyway, this could be the perfect part-time gig.

Advertise locally in places where potential clients might see your notice. You know your area best: What spots would get the most — and the intended — eyes?

Tidying Trade

Busy and well-off folks might also need help getting their homes ready for the holidays. A thorough cleaning is called for when people are entertaining.

Offer a one-shot deep cleaning service rather than a weekly visit — you won’t be tied down to a routine when you’ve reached your monetary goal.

On a related note, you might be hired to set out homeowners’ holiday decorations after you’ve tidied their houses.

Stay-at-Home Stint

If you can’t or don’t want to leave the house to earn some extra cash, a micro job might be for you. Online companies or busy professionals pay small amounts for small tasks like data entry, writing, research and translating.

You won’t make a lot with these, but the work is convenient. It fits whatever schedule you have. If you’re an accurate and quick worker, the pay adds up.

Purging Proceeds

Check your closets, attics, basements and crawl spaces: What’s around your house that you don’t want or need, but others might? High-quality clothing, electronics, sporting equipment… the list goes on.

You can try to sell your treasures locally on Craigslist. The website is a free service, and the transaction can be quick.

Consignment shops in your area take gently used brand-name clothing and pay you when it sells — eBay promotes your merchandise to a wider audience, but sellers typically pay small fees in return.

Electronics are hot items. Sell smart phones, tablets and Apple products at Gazelle’s website.Gamestop, Networth and uSell also handle electronics.

Metal merchants might purchase outdated or unloved silver or gold jewelry for scrap. To get the best deal, check a variety of local and online buyers.

Skillful Sales

If you are artistic or crafty, you may be able to sell your work at holiday time. What’s your specialty? Soap, decorations, knit or crocheted goods, specialty foods, baby or pet items: Use your imagination and your skills.

Bazaars, craft shows and church fetes pop up during the season. Some participation fees are low or even non-existent. Set up a table and sell your stuff.

Online, Etsy and eBay offer opportunities for arts and crafters. You’ll have to post your wares and mail them out when (hopefully) they sell like hotcakes.

Kid Connections

If you like kids (and don’t go for this unless you do), babysitting can be profitable. Many parents are looking for reliable childcare so they can go to parties, finish up shopping or just have some couples’ time.

Craigslist, houses of worship, kids’ dance and sports centers and community bulletin boards — such as those at the library — are good places to post ads. Check for parenting groups in your area as well, and touch base with them.

Consider sitting for several kids at once to maximize your potential earnings. Publicize a specific afternoon or evening and let local parents know that you’ll entertain several kids in your home — and you only have a certain number of spots available. This is the perfect opportunity for parents to have some time to themselves while the kids are safely entertained.

If you’re going to host several children, hire an older sibling or fellow parent to help out. You might split the profit, but you’ll still make more.

Pet Posts

Do you like animals better than kids? Use similar outlets to advertise dog-walking and pet-sitting services.

During the holidays, some people might be too busy to do right by Fido. Also, folks who will be away visiting family might prefer in-home services over boarding kennels.

What to Do?

If you’re serious about making money for the holidays, consider how much time you have to spend and what you’re willing to do. In a best-case scenario, you’ll find a way to do something you like and also pull in extra cash.

 

This article comes from our friends at Phroogal. It was originally published on December 2, 2015, and can be found on their website here.

7 Ways to Protect Yourself From Holiday Identity Theft

Posted on by Caroline Banton

The holidays are a great time for buying gifts — and also a prime time for thieves. But having your purse or wallet stolen in a busy mall might be the least of your worries this year when it comes to holiday shopping and identity theft.

Here are the best ways to protect yourself from different types of identity theft this holiday season.

Read: 5 Signs You’re the Victim of Identity Theft

1. Stick With Familiar Retailers and Brands

Popular holiday products are often similarly priced among reputable companies. Big brands monitor their competitors so that their prices are not undercut. Some immoral companies might advertise a product at an amazingly low price to attract your attention, but any deal that looks too good to be true probably is.

Cleveland 19 News reported that one consumer bought an RCA tablet from Walmart as part of a very cheap Black Friday deal. She was later disappointed because the product didn’t function well. She sent the products back, but only one was returned — and that tablet still malfunctioned. RCA is a name licensed to several Chinese electronics makers.

Robert Siciliano, an identity theft prevention expert with BestIDTheftCompanys.com, said to avoid any seller who appears to offer a vastly different product or price. He advised choosing brand names that you know rather than choosing the cheapest provider. “Stick with familiar retailers,” he said. “Unbelievably low prices are a red flag because competitors are always checking each other’s prices.”

2. Beware of Customer Reviews

Online shopping and Google searches increase exponentially during the holiday season. In 2014, Think With Google reported that over 92 percent of holiday shoppers intended to research gifts or make purchases online. But you shouldn’t always believe what you read online.

Online customer reviews can be written by anyone and might not be genuine. Siciliano says, “An unscrupulous seller may hire people to write favorable reviews. Although one clue is that the same reviewer has reviewed tons of products, other reviews are crafted more cleverly. Identical reviews on different sites are suspicious.”

Rather than trust online reviews, ask your friends for recommendations on products. You can use your own social network to find more trustworthy information.

Related: 5 Ways Millennials Are In Danger of Bank Fraud

3. Watch Out for Phishing

Scammers will be more active this holiday season, and email traffic confirming online orders and deliveries will exponentially increase. Never give out personal information online unless you initiated contact. For example, ordering online from a reputable store is typically safe, but if you receive an email asking you to go to another site to input personal information, you’re probably being scammed.

“The crook sends you the bait: an e-mail that looks like it’s from a reputable company with a malicious link to a site that looks like the company’s requesting you turn over your username, password or credit card number,” said Siciliano. “Do this and the thieves will spend your money.”

Avoid scams by watching for emails that appear to be from a shipper or retailer. Check the email address and domain name of any sites and make sure they match that of the shipper or retailer exactly. Remember that no established company will require an email or password to be divulged by email or over the phone. Finally, don’t donate to charities until you have checked their legitimacy on sites like CharityNavigator.

4. Watch Your Credit and Debit Cards in Crowded Malls

Even if your transaction takes place in a store, it’s processed online. Therefore, your information is accessible to hackers, and your credit card number can be used by hackers for purchases. Always check your statements for any unauthorized purchases.

Philip Lee, chief financial planning officer with Modera Wealth Management, recommended freezing your credit reports with the three bureaus Equifax, Experian and Transunion. “No company — other than who you deal with — can look at your credit report,” said Lee. “Creditors will not open new accounts, so this is the best protection against someone opening an account in your name.” Lee added that there is a small fee to freeze or unfreeze credit reports.

Not using a debit card at all during the holiday period could be another smart option, explained Elle Kaplan, CEO of LexION Capital Management. “Thieves can do everything from stealing your card information online to … creating a duplicate at a retail store,” said Kaplan. “[Y]ou have legal rights that defend you from being liable for these fraudulent charges [with credit cards], which is something you won’t see with a debit card. Also, the credit card provider will frequently refund your money quickly, and then dispute the fraudulent charges on your behalf.”

5. Understand the New Chip Cards

The new EMV chip cards introduced in October 2015 will be used heavily this holiday season. These cards use a personal identification number (PIN) instead of a signature. “While this makes EMV-equipped cards less susceptible to the hacking of transactional data between point of sale … they are still not fully secure and open the door to online fraud and identity theft,” said Srii Srinivasan, co-founder of Chargeback Gurus and a certified e-commerce fraud prevention specialist.

“Chip cards can be counterfeited using information obtained on the black market, and the chips are especially unlikely to stop the use of such counterfeited or stolen cards in purchases where a card is not physically present, such as over the phone or internet,” explained Srinivasan. Sign and activate your credit cards as soon as you get them and make sure the package hasn’t been tampered with in any way. If so, contact the bank immediately.

6. Be Cautious With Craigslist Sellers and Buyers

Buyers and sellers on Craigslist are an unknown entity and can present particular risk when it comes to holiday shopping. Avoid carrying cash when you arrange a potential face-to-face transaction. “Meet only in safe, public places,” Siciliano advised. “Inform the seller you’ll first meet without any cash, just to inspect the sale item. If you want to buy it, get your money from an ATM.”

There is also no guarantee that what you buy on Craigslist is genuine or even functioning. “Similarly, don’t purchase stolen products,” added Siciliano. “Request proof of ownership. Or request the serial number and see if your state keeps a database of stolen items.”

Related: What Are You Doing to Keep Scammers Out of Your Checking Account?

7. Update Browsers With the Newest Security Patches

The devices that you use for your online shopping are targets for hackers and scams. “Think about how much financial data you have in cyber space,” said Daniel Conroy, chief information security officer for Synchrony Financial. “How many sites store your credit card information? If you can minimize the amount and ensure that your profiles and accounts are deleted for sites you no longer use, it will minimize your digital footprint.”

“No matter what device or operating system you use, your data is only as secure as its hardware and software,” said Siciliano. “That means updating everything and locking everything up … Each device’s manufacturer provides frequent software updates with critical security patches designed to patch any vulnerabilities that were discovered by researchers or criminal hackers. Set critical security patches to update automatically.”

“Your browser needs to be updated to its latest version for the same reason an operating system does. Only enter credit card numbers in sites that have HTTPS in the address bar. That means there’s encryption on that page,” said Siciliano. “Always use an encrypted wireless connection [for your wireless devices] using, at a minimum, WPA or WPA2 encryption. Otherwise, use a virtual private network software.”

For the best identity theft protection, your holiday shopping will require extra diligence. Remember to check your mail and destroy any documentation offering you a new credit card. Also check your credit and debit card statements in detail, stick to reputable retailers and don’t give out any personal information. “Remember, you are your first and best defense,” said Conroy.

 

This article was originally published on gobankingrates.com on November 23, 2015 and can be found here.