7 Little Improvements That Can Have a Big Impact on Your Financial Health

Trying to keep up with all the interesting and valuable news articles available each day seems like a full-time job. As we did last fall, we have curated a handful of recent news stories that you may have missed and could make your financial life a bit easier.

Don’t Miss Out On Your Free Credit Reports

We are all advised to check our credit reports regularly but often fail to do so. There’s an extra incentive to act now, though. Historically, the three big credit agencies — Equifax, Experian, and TransUnion – have offered one free credit report every 12 months. Due to the COVID pandemic, they are now offering free weekly access to credit reports until April 20, 2022. Frequent checking can help protect you against fraud and increase the likelihood of spotting an error. Since your credit score helps determine if you are considered worthy of a car loan, an apartment rental, or even a job, you’ll want to correct mistakes quickly. Contact both the credit agency and the creditor of the account to ensure correction. Some experts recommend that you go old school and use a snail mail letter to set the record straight. It’s also worth noting that the FICO system changed in 2020. Read how the change in the FICO system could affect your credit score.

Beware: Gift Card Fraud Is On The Rise

One of the most common scams is gift card fraud. There are many variations on the theme, but the basic idea is that someone convinces you (usually on the phone or online) to buy a gift card and give them the card information. Once you provide these scammers with the card number and PIN, the funds are gone and cannot be retrieved because gift cards are like cash. 

The Federal Trade Commission says nearly one-quarter of all successful scams occur through the abuse of gift cards. For example, someone might call you and claim to be from the IRS and say that you owe back taxes, or the caller might say he’s from Microsoft and received an alert that he needs to fix your computer. The caller might even try to convince you there’s a family emergency and that you need to provide some money right away. Billions of dollars are lost to these fraudsters, who try to con you to buy gift cards for Walmart, Target, CVS, and other retailers.

There are countless other tactics, as well. Read this article that provides a checklist to help you prevent fraud. And, of course, COVID-19 scams are running rampant. Here are a few of the COVID-19 scams to beware of and tips on how you can protect yourself and your loved ones.

Check up on your CDs

Even though the yield on CDs (Certificates of Deposit) is meager (the national average is below 0.5% on a one-year CD), many people still have some money invested in FDIC-insured bank CDs. That’s fine, of course, but it’s essential to know when the CD comes due. Most of them are set to automatically renew at the end of the term, with a new rate and possibly a penalty for early withdrawal. Check out Bankrate.com or DepositAccounts.com for the best rates.

The IRS Has Gone (a Little Bit) High-Tech. Watch for Their QR Codes.

The Internal Revenue Service is way behind the times in many areas of technology, but it has started to use QR codes on CP14 notices sent to millions of taxpayers. According to the IRS, notices to inform you that you owe money to the government now come with QR codes designed to help “taxpayers securely and easily navigate to the IRS.gov website.” That allows you to directly access the agency’s website and get information on how to resolve the issue – and pay the tax – online.

Avoid Losses in Your Estate Portfolio

Most of us don’t have to worry about paying the Federal estate tax. Over the past 20 years, Congress has raised the Federal exemption from $675,000 to $11.7 million. In addition to that exemption, one of the most valuable tax breaks available is the step-up provision that adjusts up the cost-basis of an inherited financial asset to the market value at the date of death. Let’s say you paid $50,000 several years ago for Walt Disney stock, and it’s now worth over $100,000. If you sell it, you’ll have to pay capital gains taxes on the profit. If you don’t sell the stock and you hold the stock at your death, the cost-basis resets for your heirs to the market value on the date of death. As a result, Michael Kitces points out in his Nerds Eye View blog that your estate tax planning should focus on minimizing capital losses that might be squandered at death. As they say: you can’t take it with you. While appreciated assets receive a step-up in basis at death, investors with embedded losses will receive a step-down at death, according to Kitces. So, if you have any capital losses, use them to offset gains. It’s a use-it-or-lose-it proposition.

Car Insurance by the Mile

A century ago, the term “Sunday Driver” was popularized to describe people who rarely used their cars. Well, if you are the 21st-century version, you can save on your car insurance payments through a plan known as pay-per-mile insurance. You can save up to 40 percent on insurance costs, according to NerdWallet. There are usage-based policies that produce savings for people who now work from home and leave the car parked most of the time. The average American puts on about 13,500 miles per year, but if you drive less than 8,000, you might save a significant amount in annual premiums. Insurance companies install devices on your vehicle to determine how far you go. These plans are only offered by a limited number of insurance companies, including Nationwide, Allstate, and Metromile. Most car insurers provide discounts to low-usage drivers, but this plan differs in that you pay per actual mile driven instead of a flat rate, whether you travel 2,000 miles or 8,000 miles.

Coins and COVID

One of the stranger fallouts from the COVID crisis is a shortage of nickels, dimes, and quarters in circulation. Because so many more people have been shopping from home and using credit cards to pay for everything, some businesses are scrambling to keep enough change in the cash register. The U.S. Mint is doing its job to keep up. It produced nearly 2.7 billion quarters last year. If you have stashed lots of change in the piggy bank, you may want to roll them up in the paper sleeves available for free at most banks, deposit them into your savings account, and put them back in circulation. Some banks or supermarkets also have machines to count your coins, but be wary that some in-store machines can carry hefty fees of up to 12 percent.

These are just a few financial tips to improve your daily financial health. To review the six tips we discussed in September, click here: 6 Tips to Improve Your Financial Health.

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