PhilHuang.com » Finance & Money

Victim of Bank/Identity Fraud

Philip — Fri, 31 Aug 2007 20:10:19 +0000

I got a call earlier today from HSBC “corporate security” who wanted to review transactions on my account. Turns out someone’s been making fraudulent transactions using my debit card! Apparently not only do they have the card number but they’ve duplicated the card and even swiped it yesterday at a gas station in Canada. This came as a surprise since I practically never use my debit card and I’ve never lost it (it just sits in my wallet). Luckily HSBC told me that I’m not liable for any of the fraud charges.

Thanks HSBC, For Alerting Me

The fraudulent charges started around the beginning of August. I think there were about 3 charges they made which never went through so that’s why I didn’t notice anything wrong. I have to give kudos to HSBC for being able to catch fraud like this so quickly. The lady on the phone was also very nice. My home phone’s not working at the moment and they called me on my business line so they clearly made an effort to get a hold of me. I’m happy with HSBC - they have no minimums, not a lot of stupid fees, tons of locations, great Internet banking, and of course good fraud prevention services. Good service needs attention too - so thanks HSBC, you rock.

Identity Theft Likely Caused by Inadequate Protection of Consumer Data

It looks like the fraudsters first tried to make a small charge at the beginning of August to probably test the card. I’m pretty sure my debit card data was probably stored in some database that got hacked or stolen. You hear about this in the news a lot these days and that’s just the big companies that actually report it. Who knows what goes on at smaller companies and if they even know their data is compromised.

I’m not entirely sure but the last time I remember using the card was to get money at an ATM in Florida during Spring Break back in March 2005. During freshman year I used the debit card regularly for a few months but that was back in 2001. But then I stopped because it would always be an uphill battle if I ever want to dispute a charge, since the money has already left my checking account. I’m thinking the likeliest scenario is that one of the vendors had their data compromised and not only is that bad in itself but they should not be keeping customers’ financial data for that long anyway!

Managing Personal/Business Finances

Philip — Wed, 06 Jun 2007 20:53:36 +0000

I pretty much use only 1 credit card for all of my personal expenses and 1 credit card for all of my business expenses. If I can swipe, I’ll swipe instead of using cash. It’s just so much easier to manage especially with online account access and statements. My main card is a rewards card so even though it’s not much, I’m still getting a little bit back. When the monthly billing date comes around, I simply pay the statement off using electronic transfer from my checking account. This makes my personal expenses incredibly easily to manage and lets me import everything into Quicken (I may move to Quickbooks, but Quicken is enough for now).

Exhibiting Self Control With Credit Cards
Financial discipline is important with credits cards, especially with the APR’s being so high. Some people just keep swiping away. The key is to simply not spend more money than you have. I’ve always paid off my entire statement on time every month ever since college. Because of this, I have excellent credit (I have a WaMu card I never use but their online account panel shows monthly updates of my credit score so I keep the card ).

I’m not getting into it but there are MANY reasons why having good credit is beneficial. Too many people, especially in the US, think that credit cards are like allowances or something. That’s why national debt is so high (I’m not talking about the goverment deficits). It’s just basically a bad practice to simply swipe on an expensive item and then pay it back slowly. You end up paying so much more. If you must, I’d suggest signing up for a new card with 0% APR for the first 6 months or something and then pay it off in that time so you don’t pay interest. Or do a balance transfer of your existing credit card debt to the new card and earn a reprieve for a couple of months.

Single Member LLC and Personal/Business Expenses
As a single member LLC, there’s pass-through taxation which means I’m basically taxed as a self-proprietor. All of my business revenue gets taxed as my personal income and all business expenses are written off as tax deductions. For entrepreneurs and those interested, it’s very important that you strictly separate personal and business expenses. I have a separate business credit card as well as a business checking account for this very purpose. I never spend any money for my business using personal accounts.

Why is that important? Well, if you don’t do this you can’t maintain your LLC (limited liability company) as an independent liable entity. What this means is that if you get sued or your business owes debts to creditors, the LLC protects your personal assets. Those creditors can only pursue the assets of your business. But if you don’t separate them, you lose that liability protection.

Two Certainties in Life - Death and Taxes
2006 was the first year I had to track personal/business expenses and do taxes on my own. We ditched the accountant and I just filed my whole family’s returns using TurboTax. Although for 2007, I’m probably going to consult an accountant again just to make sure things are in order. Plus there are just things accountants know that can reduce your taxes. I’ll admit my first year in business I didn’t keep very good records even though I told myself I’d pay for it during tax season which is exactly what happened. I had to trace through the entire year and bring all my records in line which was not that fun. Sometimes it can get very hard remembering what certain expenses were for or you might have misplaced a receipt. That’s why proper record-keeping is so important.

I’m also a bit paranoid because I’ve read that Schedule C filers are at a higher probability of being audited and certain other red flags for self-employed individuals can also attract audits. So it never hurts to make sure your house is in order (just in case).

Now I keep all my records current - every 2 weeks or so, I review everything and make sure everything’s up to date. I keep all my invoices, statements, and receipts all filed away and accounted for. Trust me, speaking from experience, this will help you a lot when it comes time to file taxes. It also saves your accountant time if you use one, which saves you money.

What’s the Real Deal with these High Yield Savings Accounts?

Philip — Sun, 02 Jul 2006 22:11:13 +0000

So I’ve been looking into these high yield savings accounts that are offering up to 5.05% APY. I know they can cut costs by not offering you normal bank services and only allowing online access, but it still seems a little too good to be true. Are banks really competing that hard to get savers to open accounts with them?

I’m looking to open a savings account so I can start my permanent savings. Following generally good advice repeated over and over in accounting classes and articles, I’m going to take advantage of compound interest and start saving as early as possible. Honestly, I don’t have that much to save now but I’m looking to save a set amount each month, then increase it gradually.

Then I hear from people what you should call them up and verify a lot of details because there’s all kinds of hidden fees. Well I looked at the HSBC Direct site and I looked through the FAQ’s and fine print and I don’t see any signs of these hidden fees. It just seems like I can open a high yield account and start wiring money into it. And when things seem to good to be true, it almost always is. Especially with banks.

So do you have experience with these accounts? Are there hidden or transactional fees? Do they lower your rate a certain period after you open the account?