Ways Impulse Buying Could Easily Get You Into Debt

 

Avoid the Pitfalls of Impulse Buying

The way today's society is structured it is pretty easy to outspend your means if you are not careful. Between the ease of technology and the availability of buying on credit, nowadays commercial promotions are designed to get people to spend. Between credit and debit cards, pay later plans, and other forms of deferred payment, it is tempting to make purchases and worry about making payment later.

With these many conveniences available today, on the surface they might seem like terrific options for consumers. In many ways they are - as is anything designed with convenience in mind. However, the big drawback is due to the ease of purchase without worrying about payment right away, debt has a tendency to sneak right up on you. And, if you're not paying attention, interest begins piling on your balances and before you know it you could have creditors knocking at your door demanding payments you cannot afford to make. Ways impulse buying could easily get you into debt include:

You Outspend Your Income

Continuously purchasing items without planning for them financially can lead to debt if spending exceeds income. Chances are most people have a specific monthly income, or at the very least, earn the same average amount each month.


To avoid this pitfall, prior to spending your available credit on non-necessary and non-budgeted items, it is important to pay all outstanding bills first to ensure spending does not amount to more than income does. Debt can creep up if bills are not paid first; however paying bills can give a clear indicator of how much money, if any, is left over for spontaneous shopping adventures.

Overuse of Credit Cards

Many individuals who are compelled to impulse shop frequently use their credit cards. Credit cards are a terrific convenience, however the drawback is using credit cards can lead the spender on a very slippery slope, one that will land the consumer right in heavy debt if he or she is not careful.



When impulse shopping leads to credit cards bills that cannot be paid off at the end of the billing cycle, this means interest charges will be tacked on to the original expense. Depending on the card's interest rate, this could get costly - quickly.

Impulse spenders have to be extra careful when using credit cards because it could lead to excess debt which may be hard to dig up out from.

You Lose Track of Expenses

People who tend to impulse buy also often have a predisposition to not track expenditures until it is too late. As shoppers go from store to store or website to website to make purchases without really paying as close attention to spending, debt can tally up quick.

Online Shopping

The growth of e-commerce, and now mobile commerce (or “m-commerce), in many ways helps contribute to overspending because it is so convenient. With customized ads hand-delivered to pretty much any web page, including social media and flash sales designed to get people to buy impulsively with deals that (the companies are hoping) cannot be resisted. Then there are daily deal sites and other enticements all over the web.

Online shopping is quick, and this alone makes it much easier to compile debt because a consumer can visit many stores within the matter of minutes. Add location trackers and other geo-location details and retailers may send targeted ads or deals on the spot to mobile that people accept in the fear of missing out on such a deal.  In April 2015, Mobile Commerce Daily reported on the ways Twitter's "buy button" can change the dynamics of m-commerce.

Statistics on Debt

According to figures put out by the U.S. Federal Reserve, in the United States, total outstanding consumer debt was said to be $3.34 trillion. This figure includes car loans, student loans and revolving debt. Mortgages were excluded. Reports also indicate credit card debt is steadily on the rise. CardHub reports on American spending:

"Consumers ended 2014 with a $57.1 billion net gain in credit card debt, and CardHub now projects that we will incur more than $60 billion in new credit card debt during 2015 – a 5% increase. We’ve now had six consecutive quarters of year over year increases in our credit card debt load." 

Revolving debt, which is primarily composed of credit card outstanding balances was said to be $884.8 billion as of January 2015. ¹ On the plus side, the number of people who carry credit card balances from month-to-month in the United States is decreasing.

In Canada, statistics indicate total consumer debt  as of Nov. 30, 2014 is $1.810 trillion (unlike U.S. statistics, this does include mortgages). Fifty-two percent of Canadian households carried credit card debt in 2014. This is down 2 percent from 2013.

For many, impulse buying plays a strong role.  As a result, it can lead to serious financial problems and, due to this reason, it is important to be sure to spend only within your means in order to avoid the financial hardship that comes along with excess debt. Even if you have to plan a budget. If not, they'll be financial consequences to pay.

Impulse buying can lead to excessive debt, but the good news is recognizing and avoiding the pitfalls of on-the-fly shopping can help allow you to spend and remain within your budget.

source: infobarrel.com

US, Cuba restore ties after 50 years

HAVANA/WASHINGTON - The United States and Cuba agreed on Wednesday to restore diplomatic ties that Washington severed more than 50 years ago, and President Barack Obama called for an end to the long economic embargo against its old Cold War enemy.

After 18 months of secret talks, Obama and Cuban President Raul Castro agreed in a phone call on Tuesday on a breakthrough prisoner exchange, the opening of embassies in each other's countries, and an easing of some restrictions on commerce.

The two leaders made the announcement in simultaneous televised speeches. The Vatican and Canada facilitated the deal.

Obama's call for an end to the economic embargo drew resistance from Republicans who will control both houses of Congress from January and who oppose normal relations with the communist-run island.

Obama said he was ending what he called a rigid and outdated policy of isolating Cuba that had failed to achieve change on the island.

His administration's policy shift includes an opening to more commerce in some areas, allowing use of U.S. credit and debit cards, increasing the amount of money that can be sent to Cubans and allowing export of telecommunications devices and services.

RESTRICTIONS REMAIN

Travel restrictions that make it hard for most Americans to visit will be eased, but the door will not yet be open for broad U.S. tourism on the Caribbean island.

His announcement also will not end the U.S. trade embargo that has been in force for more than 50 years. That is codified in legislation and needs congressional approval. Obama said he would seek that approval but will likely face a struggle.

Obama said the opening was made possible by Havana's release of American Alan Gross, 65, who had been imprisoned in Cuba for five years. Gross' case had been a major obstacle to improving relations.

Cuba is also releasing an intelligence agent who spied for the United States and was held for nearly 20 years, and the United States in return freed three Cuban intelligence agents held in the United States.

Cuba and the United States have been ideological foes since soon after the 1959 revolution that brought Raul Castro's older brother, Fidel Castro, to power. Washington broke diplomatic relations with Havana in 1961 as Cuba steered a leftist course that turned it into a close ally of the former Soviet Union on the island, which lies just 90 miles (140 km) south of Florida.

The hostilities were punctuated by crises over spies, refugees and the Cuban missile crisis of October 1962 that brought the world to the brink of nuclear war. After the demise of the Soviet Union and the end of the Cold War, Washington was increasingly alone in its efforts to squeeze Cuba. Raul Castro, who took over from Fidel Castro when his brother retired in 2008, has maintained a one-party political system.

CRITICS CHALLENGE OBAMA

Obama said Cuba still needed to enact economic reforms and uphold human rights among other changes, but he said it was time for a new approach.

Americans are largely open to establishing diplomatic relations with Cuba, according to a Reuters/Ipsos poll of more than 31,000 adults conducted between July and October. Around one-fifth of those surveyed said they opposed such a move, while 43 percent said the United States should restore relations with Cuba and around 37 percent said they were unsure.

Critics said Cuba should not be rewarded, having yet to change, and the path to completely normal ties is strewn with obstacles, in particular lifting the embargo that the White House said Obama would like to see dismantled by the time he leaves office in 2017.

Although a growing number of U.S. lawmakers favor more normal ties, those lawmakers are still mostly Democrats, and after big midterm election gains in November, Republicans will control both houses of Congress in the new year.

Senator Marco Rubio, a Cuban American Republican, will be incoming chair of a key Senate Foreign Relations panel and said he was committed to doing all he could to "unravel" the plan. Senators John McCain and Lindsey Graham, both set to hold senior foreign policy positions, said the policy shift reflected "America and the values it stands for in retreat and decline."

Whatever the criticism at home, Obama's move was made with the political liberty of a president who, midway through his second term, no longer faces an electorate.

CUBAN AMERICANS SPLIT

News of the changes rippled fast through the 1.5 million-strong Cuban American community in the United States, hailed by some who are keen to see closer ties with the island and condemned by others.

Older Cubans who left the island soon after the revolution have remained opposed to ties with either Castro brother in power. Younger Cubans, who left more recently or were born in the United States, have shown more interest in warmer relations.

"It's amazing," said Hugo Cancio, who arrived in Miami in the 1980 Mariel boatlift and runs a magazine with offices in Miami and Havana. "This is a new beginning, a dream come true for the 11.2 million Cubans in Cuba, and I think it will provoke a change of mentality here too in this community."

In Havana, stunned Cubans celebrated the news, although some were skeptical that the long years of animosity really would end. In one student demonstration on a busy Havana street corner, about 100 people shut off traffic while motorists honked their horns. Neighbors peered out from their balconies, joining in the cheers.

"I have waited for this day since I can remember," said taxi driver Jorge Reymond, wiping away tears.

GROSS CASE

Obama said the Gross case had stalled his ambitions to try to reset relations with Havana, calling it a "major obstacle." Pope Francis, the first Latin American pontiff, played an active role in pressing for his release from Cuba, where a sizable part of the population is Roman Catholic.

Cuba arrested Gross on Dec. 3, 2009, and sentenced him to 15 years in prison for importing banned technology and trying to establish clandestine Internet service for Cuban Jews. Gross had been working as a subcontractor for the U.S. Agency for International Development (USAID).

Gross's lawyer and family have described him as mentally vanquished, gaunt, hobbling and missing five teeth. Speaking to reporters after arriving in the United States, Gross thanked Obama for all he had done to secure his release and said he did not blame the Cuban people for his ordeal.

His case raised alarm about USAID's practice of hiring private citizens to carry out secretive assignments in hostile places. Cuba considers USAID another instrument of continual U.S. harassment dating back to 1959.

The three Cuban intelligence agents, jailed since 1998, are Gerardo Hernandez, 49, Antonio Guerrero, 56, and Ramon Labañino, 51. Two others had been released before on completing their sentences - Rene Gonzalez, 58, and Fernando Gonzalez, 51. The three arrived in Cuba on Wednesday, Castro said.

Despite their decades of animosity, the two countries have long been engaged on a host of issues such as immigration, drug interdiction and oil-spill mitigation.

source: www.abs-cbnnews.com

Choosing the right plastic: When to go credit or debit

MANILA, Philippines - Have you ever opened your wallet and wondered if you should use your credit card or debit card? Both provide the convenience of cashless transactions and make paying a breeze. Like many cardholders, you have probably asked yourself when it makes sense to use one over the other.

Although they offer similar features, credit cards and debit cards are not as alike as you think.

Credit cards are issued by banks or credit card companies. To get one, you go through the whole process of applying for a card and proving your capacity to pay. When you use a credit card, you are doing so with borrowed funds that must be settled in full or partially on your next payment due date.

On the other hand, debit cards can only be issued by banks. To get a debit card, you have to open a savings or a checking account. The ATM card which you use to withdraw money is the same card you will use for debit transactions. When you use a debit card, you are using funds you already have in your own account.

If you own both, there are instances when using one makes more sense than the other.

Use your credit card when:

You are shopping online. 

Credit card companies offer security features that would be especially useful when you are shopping online. When you make an online purchase using your card, there is a lag time during which a verification of the purchase is made, allowing you to dispute a charge. Further, credit card companies can offer insurance against fraudulent purchases for a nominal fee.

You need to buy time between purchase date and payment date. 

When your cash is tight but you need to make an immediate purchase, say for emergencies or for important items such as medicine or tuition fees, then your credit card will be most helpful. It gives you the extra elbow room right when you need it.

‘Gives’ is your best option. 

Credit cards allow you to amortize payments over a period of time, ranging from as low as 3 months to as long as 2 years. During promotional periods, you can avail of 0% payment terms which allows you greater flexibility in setting budgets. In contrast, this cannot be arranged when you use a debit card.

You want to buy goods to be used in the future. 

For purchases like tickets and hotel bookings that are meant to be used in the future and may be rebooked or cancelled, credit cards make a better choice. Should your plans change, you will be able to get your refund through a reversal of charges on your credit card.

You want to make a recurring payment. 

When you want to make regular automated payments, usually for payments made for subscription, utilities, service providers, or voluntary donations to a charitable organization, it makes more sense to use a credit card. This is particularly helpful when you want to stop the recurring payment, with the card company able to reject payments billed by the merchant.

Use your debit card when:



You don’t have enough cash in your wallet for small purchases. 

A debit card is a convenient tool to have. It acts like an extension of your wallet, saving you from having to make that trip to the ATM machine to withdraw money.

You don’t want to rack up additional debt. 

When using a debit card, you are actually using money that you already have. Using it allows you to control your spending and live within your means. If you want to cut down on borrowings but don’t want to carry cash, then you should use your debit card.

You want to withdraw money abroad. 

Sometimes it is cheaper to withdraw foreign exchange from your own account once you to get to your destination instead of charging your credit card. This is because conversion rates for withdrawals are sometimes lower than that charged by credit card firms. However, there may be corresponding charges for these withdrawals so it would be best to check with your bank and credit card provider before proceeding.

Whether you choose to pay with a credit card or make a debit card payment, you may be entitled to rewards or rebates. Credit cards regularly offer rebates and rewards. When you are keen to accumulate any of these, or when the rebates being offered are superior to that when you pay in cash, then a credit card makes a better choice.

As banks try to get more of its clients to pay with a debit card, they too are throwing in similar rewards, so in these instances, cash is no longer king. In any situation, always look for the best value for your hard-earned money.

source: www.abs-cbnnews.com

Prepaid debit cards: A weak link in bank security

A brazen gang of cyber criminals, who stole $45 million from bank ATMs in 27 countries, exposes an Achilles heel in the global financial industry: prepaid debit cards.

Cyber security experts and industry analysts say the burgeoning use of prepaid debit cards for everything from gift certificates to disaster relief handouts is making it easier for hackers to withdraw large amounts of money before detection.

Prepaid cards have fewer controls on them than on regular credit and debit cards issued by banks. Each prepaid card issued is like a blank slate: anonymous, new, and lacking any credit history or individual behavior pattern against which bankers and payment processors can measure activity to look for red flags.

They are also easier to hack. Raising a withdrawal limit on a prepaid card involves hacking into a system at a third-party payment processor, a company that is generally smaller than a bank and, if based outside the United States, potentially subject to looser cyber security standards.

"It's usually prepaid debit cards. That's the card of choice in this. The bad guys know the system and they have been able to exploit it," said Joe Petro, a managing director at Promontory Financial Group, who worked for 20 years as the head of fraud prevention and investigations for Citigroup Inc.

"The vulnerability stems from third-party processors, who may not have the same level of security systems that banks are able to have," he added. Petro was speaking generally and said he did not have direct knowledge of the $45 million heist.

In a globally coordinated campaign, hackers broke into two unidentified payment processing companies that handled the prepaid debit cards for two Middle Eastern banks, U.S. prosecutors said on Thursday.

Once inside the computer networks, they increased the available balance and withdrawal limits on prepaid MasterCard debit cards issued by Bank of Muscat of Oman and National Bank of Ras Al Khaimah PSC of the United Arab Emirates.

The criminal ring's operatives then fanned out around the world and used fraudulent prepaid cards to withdraw money from thousands of ATMs. The global scope and speed of the theft was unprecedented, cyber investigators said. In the case of Bank of Muscat, $40 million was stolen in just over 10 hours.

Experts said the use of prepaid debit cards, instead of credit cards, was not accidental. Credit cards are attached to individuals whose spending habits over time give banks and credit card companies clear patterns they can use when trying to identify unusual or illicit activity.

EVADING DETECTION

A thief moving from ATM to ATM with a personal credit card would likely quickly raise alarms, because his or her behavior would look out of place compared to the credit card user's normal activity.

"The banks are using state-of-the art defenses, but the more sophisticated actors are able to breach their networks," said Shawn Henry, the former head of cyber crime investigations at the FBI, now president of professional services at security firm CrowdStrike.

While the $45 million swindle is one of the largest ever, security experts say banks deal with similar, albeit smaller, thefts regularly - they are just rarely disclosed.

By 2013, the amount of money that was placed onto reloadable prepaid cards reached about $201.9 billion from $28.6 billion in 2009, according to a report published by Mercator Advisory Group.

"Of all the types of cards that are there, prepaid cards is the fastest growing category," said Scott Valentin, analyst with FBR Capital Markets & Co.

"With cash payments slowing and an increase in mobile payment and online commerce, the importance of these cards is only going to increase," Valentin said. "With credit cards you need to be credit worthy and with debit cards you need a bank account. Prepaid cards gets you past these two issues and as a result are extremely popular."

That has raised concerns about the need for better security around prepaid cards, and the card processing companies that service them.

For more than a decade, banks have been required by U.S. law to ensure their electronic systems and those used by their outside contractors meet certain safety requirement. U.S. banks using payment processors must have a contractual agreement that states the payment processor is meeting the same security standards the bank does.

The problem, said Doug Johnson, vice president for risk management policy at the American Bankers Association in Washington, is that U.S.-based banks, don't always find it easy to ensure that what is agreed in the contract with an overseas payment processor is really being implemented.

"I fully anticipate that regulatory agencies are going to spend increased time looking at third-party providers," Johnson said.

In the case of the two Middle Eastern banks, one used a U.S.-based credit card processor, while the other used one in India. The U.S.-based company's breach shows even third-party processors close to home can make banks vulnerable.

The hackers likely used some of the most sophisticated software available, said George Tubin, a senior security strategist for Trusteer, a Boston-based cyber security firm.

Emails and other communications can bring malware into a corporate computer system. Employees opening email attachments unwittingly download spy software without even realizing it, Tubin said. The software then collects and transmits information back to the hackers who created it.

"Once they gain access to the right corporate network and figure out how to get the right privileges, they can do whatever they want," Tubin said.

source: www.abs-cbnnews.com

Why more Filipinos are shopping online

MANILA, Philippines - Whether it's shopping for shoes on Zalora or deals on Groupon, a growing number of Filipinos are opting to shop online.

A recent study conducted by global payments technology company Visa showed more Filipinos have tried online shopping, buoyed by improved perception in security of credit cards and debit cards.

The Visa e-Commerce Consumer Monitor Research 2012 showed the number of online transactions made by Filipinos have nearly doubled in the last 12 months. Now, 71% of Filipinos have made an online purchase, compared to 35% 12 months ago.

Iain Jamieson, Visa country manager for the Philippines, said the number is expected to go up to 86% in the next 12 months.

Most of the online purchases made by Filipinos were in travel (38%), fashion (30%) and personal electronics (28%). In terms of frequent online purchases, Filipinos bought movie tickets (27%), cosmetics (27%) and health products (26%).

Jamieson attributed the growth in online shopping in the Philippines to improved consumer perception of online security. Around 77% of those surveyed said they now feel more secure than 2 years ago, mainly due to the banks' protection of personal and financial data, as well as online security features such as Verified by Visa.

"While eCommerce is still in its early stages in the Philippines, we expect to see rapid growth across all purchase categories in the next year. However, there are still barriers to overcome for the eCommerce ecosystem in the Philippines to fulfill its potential. Besides increasing consumer trust in online merchants when it comes to product delivery, online payment security concerns also have to be addressed," Jamieson said.

"As we have seen in the survey, as important as it is to develop innovative solutions to improve security online, it is also crucial to communicate these measures frequently and effectively to the Filipino consumer, from both the banks and the merchants," he added.

When shopping online, 68% of Filipinos use a payment card. Credit cards are used more frequently (42%) than debit cards (34%).

With the popularity of smartphones and tablets, many Filipinos are going online to browse for products and services. Digital content was the most browsed item on mobile phones (40%), followed by personal electronics (33%) and household electronics (30%).

source: abs-cbnnews.com

Ride a black taxi in Davao City, pay your fare via ATM card

Twenty-five unconventionally colored black taxis that are safer for passengers and allow you to pay your fare via automated teller machine (ATM) cards have become the talk of the town in Davao City.

The transport innovation was the idea of Pierre Ryan Tan, assistant manager of Mabuhay Taxi, who thought of addressing the passengers' common complaints against taxi drivers who do not give exact change.

The taxis will accept payments from Bancnet and Megalink ATM and debit cards.

The cabs are also safer for passengers because they have a Global Positioning System tracking device that will automatically give information on the current location of the vehicles, according to Tan.

"It also has an emergency button. It has a security feature that will automatically inform us of the driver's location, engine on, engine off," added Tan.

Leoloy Nahi-al said that the innovation would not only benefit the riding public but the drivers of the black taxis like him, as well.


"I think our income will also increase...commuters won't have second thoughts riding a taxi because they can use their ATM in case they don't have cash," Nahi-al said in Filipino. - with Aliana Gimena

source: interaksyon.com