Is this winter putting a hurt on your heating bill? Here are some small suggestions to cut your costs that can result in big savings.
Source CBNNews.com http://bit.ly/2RKBciE
الأربعاء، 9 يناير 2019
10 Tips For Dealing With Holiday Debt, Part 1: Don't Let Your Generosity Ruin 2019
Did you overspend on holiday gifts last year? Learn the five best ways to pay off holiday debt here.
Source CBNNews.com http://bit.ly/2Cb641N
Source CBNNews.com http://bit.ly/2Cb641N
Divorce and pensions: Splitting assets when splitting up
Amid the stress and emotions of a relationship breakdown, it’s vital to keep a clear head, and take often overlooked pension assets into consideration
January is a busy time for divorce lawyers. The stress of the Christmas holidays can bring things to a head in an unhappy marriage and this means a surge in divorce proceedings come the new year.
Those facing a relationship breakdown need to keep a clear head when it comes to their finances, as research shows pensions are being overlooked in the majority of divorce settlements –particularly by women. This is despite accrued pension assets often being worth much more than the family home.
There were 101,669 divorces in England and Wales in 2017 – a decrease of 4.9% on 2016.
Source: Office for National Statistics (ONS)
Typically, it is the wife in a divorcing heterosexual couple who loses out when pension assets are disregarded during a split. She is less likely to have a private pension of her own, or will have a much smaller retirement fund than her ex-husband, for example, if she has taken time out of work to raise children or has worked part-time.
With divorce rates now on the rise among the over-60s, it is vital for separating couples to think about how they will fund their retirement and include pension assets when splitting the household coffers. Although divorce in later life is still rare and the numbers are much lower than for other age groups, the number of women aged over 60 who are divorcing is rising – it has increased by more than 20% in the past 10 years, according to the Office of National Statistics.
Divorce rates are highest among men aged 45-49 years and among women aged 40-44 years.
Source: ONS
All pension assets – including any pensions already being paid and benefits that have built up – should be taken into account when fairly dividing finances on divorce. Pension funds can then be split, for example, or the value used to offset against other assets in a settlement. Yet a report by insurer and pensions firm Scottish Widows found that pensions are only discussed in about 30% of cases.
“Often with divorcing couples, and particularly younger couples or where children are involved, the woman will be more focused on short-term need, such as keeping the family home,” says Nichola Bright, senior solicitor in family law at Myerson in Altrincham. “But there can be huge hidden benefits within pension schemes. Many women are losing out by not demanding their right to a share of an ex-partner’s pension.”
There is a duty on both parties in a divorce to fully disclose their assets – including any pensions. The lawyers will need to have view of all the assets to ensure things are divided fairly. It is important to get accurate and independent valuations of any pension pots.
Divorce rates are at their lowest since 1973 (40% lower than their peak in 1993) at 8.4 divorces per 1,000 opposite-sex married couples.
Source: ONS
Although this will have a cost – typically about £1,000 per person for a full actuarial report – it could be valuable. If a divorce goes to court, then there is a legal obligation to disclose all assets.
A court can order that an actuarial report takes place.
Ms Bright at Myerson says: “Get expert advice as early as possible to avoid problems or confusion down the line.”
Occupational or workplace pensions (both money purchase and final salary schemes), private pensions, self-invested personal pensions (Sipps), and the additional state pension, such as Serps, but not the basic state pension, can all be shared or divided. In some circumstances you may be able to claim a better state pension based on your ex-spouse’s national insurance contributions (if they are higher than your own, and if you do not remarry).
“Get expert advice as early as possible to avoid problems down the line”
There are a number of ways pension assets can be shared in divorce (see box, below). But since 2000 a pension fund can be shared between ex-spouses with a fund being transferred into an ex-partner’s name, so they hold a pension in their own right. Prior to this, pensions could not be split and it meant one side of the divorcing couple – usually the wife – would often be left with little or no pension provision.
As the options are complex it is advisable to seek expert legal and financial advice, particularly where there may be more than one pension involved, or if the fund is substantial.
How pensions can be split on divorce (scenarios assume the largest pension belongs to the husband)
Pension sharing – the wife obtains a share – by court order – of one or more of her ex-partner’s pensions. Usually the pension fund will give a transfer value and then the funds can be transferred into the ex-wife’s own name. This allows for a clean break and is often the preferred course. Many workplace pension schemes will charge a fee to split the fund and in some cases this fee has to be paid up front. In some cases, for example some large public sector pension schemes, the ex-wife must remain part of the pension scheme (albeit in her own right). With other occupational schemes the ex-wife may have to reinvest her fund elsewhere by setting up her own personal pension. If your ex has already retired and is receiving his pension but you have yet to reach pension age, you can defer the sharing order until you reach retirement age. In a similar way you can have a deferred sharing order on a lump sum payment, which may be attached to your ex’s pension. These deferred sharing options are not possible in Scotland.
Offsetting – any pension funds can be offset against other assets, usually property. So, for example, the wife may choose to keep the house and the husband keeps his whole pension. It is vital to have an accurate pension valuation to ensure the division is equal and fair. The wife should bear in mind the property is unlikely to provide her with an income. Offsetting does not require a court order.
Pension attachment or earmarking – the ex-wife gets a share of the pension (both the income and any lump sum payment) once the ex-husband starts to draw his pension benefits. As with pension sharing, this requires a court order. In reality, this option is not popular as the wife has no control over the assets (where they are invested and how and when they are taken), and she could lose some or all of the benefits if the ex-partner dies before retirement. The attachment order may also lapse if the ex-wife remarries.
Reinvesting pension assets
Once a pension sharing order is granted, if you are in receipt of the pension funds you will need to decide how to reinvest the money. In many cases, occupational schemes will ask you to transfer the funds out of the scheme. But if you don’t have your own pension arrangement, or even if you do have an existing plan, it makes sense to consider different options and where appropriate, take advice.
Alice Douglass, an independent financial adviser at Grosvenor Consultancy, based in Highworth, Wiltshire, says: “The existing pensions you have in place may not be the right home for this new pension money. You need to think about what risk you are willing to take with the cash and invest accordingly.
Review your will following divorce as your assets and wishes are likely to have changed
The average length of marriage at the time of divorce is 12 years for opposite-sex couples.
Source: ONS
“Equally, leaving the funds in your ex-partner’s scheme may not be suitable as you may not have the same attitude to investment risk.”
Ms Douglass advises women going through a divorce to get a full state pension forecast and work out whether there are gaps that need plugging. This can also be taken into account during a divorce settlement, for example.
There were 338 divorces of same-sex couples in 2017, more than three times the number in 2016. Three-quarters of same-sex couples divorcing were female.
Source: ONS
“Women need to think about their income after divorce and how it is going to be affected,” says Ms Douglass. “And they also need to keep an eye on retirement and how they want their lifestyle to look in the future. Divorce can seriously dent your finances and people need to plan and work out how they are going to rebuild.”
In those cases where a woman has had to share part of her pension with an ex-partner as part of a divorce settlement, she may want to focus on boosting her retirement pot by increasing pension contributions while she is working. The same is obviously true for men who have had pension benefits split following divorce.
Remember to review your will following a divorce as your assets and your wishes are likely to have changed.
‘The expert advice I had was invaluable’
Dawn Evans (pictured) feels lucky that she had excellent legal advice during her divorce last year. She received 51% of her ex-husband’s civil service final salary pension when the settlement completed in November 2017.
Dawn, 53, who lives in Timperley, Greater Manchester, has two teenage sons, and she says that initially her primary concern was keeping a roof over their heads. But her solicitor pointed out that her own pension provision was not large and that she was entitled to a share of her ex-partner’s scheme.
“I have 10 years built up in my own civil service pension from early in my career, but then I took time out of work when our boys were born,” says Dawn. “That was a joint decision we made as a couple and it meant we saved money on childcare for all those years.
“It was hard with all the emotions and stress of a marriage split to keep a clear head,” she adds. “But that’s why the expert advice I had was invaluable. My lawyer was able to explain to me all the details about pension splitting and that I could take my share of the pensions so I wouldn’t still be financially tied to my ex.
“The pension share will make a huge difference to my life once I can take it at the age of 60.”
Jo Thornhill is a freelance journalist who writes for a wide range of publications including the Daily Mail, This is Money and Travel Wire News.
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Contrarian investing: Investors can bag a bargain by going against the herd
It’s January, the sales are in full swing and shoppers are out in their numbers. Everyone loves a bargain, and investing should be no different. But the reverse is often true – it is one of the few areas of life where the more expensive something becomes, the more people seem to want to buy it.
Is it because we think there is safety in numbers, so we invest where everyone else is investing? Or we simply get caught up in the euphoria of increasing wealth? Maybe.
It is certainly the more ‘comfortable’ way to invest. Doing the opposite takes a lot more nerve and can feel very uncomfortable for long periods of time.
But it can also be very rewarding: if you buy something that’s cheap, I firmly believe you’ve got a better chance of making money over the long term. This is called a ‘value’ style of investing.
Cheap and cheerful
Value investing – or contrarian investing as it is sometimes called – is when you invest in ‘unloved’ companies.
For various reasons, the company is ‘out of favour’ and the share price will have fallen, becoming cheap relative to the business’s fundamental value and/or relative to the company’s own history. Investors are disregarding the company in favour of ones that look to be in better shape.
When investing in an unloved company, the trick is to avoid those that are either badly run or in terminal decline, as it is likely their share price will fall further and you could lose your money.
Instead, you want to invest in a good company that, for whatever reason, is going through a bad patch, but can turn its fortunes around and it will give you reason for cheer.
This is easier said than done, but there are some very good ‘value’ managers around who can do this for you. These are managers who buy shares that others ‘can’t, won’t or don’t’.
Bagging an investment bargain
Alastair Mundy is one of the best-known value managers in the UK. He manages the Investec UK Special Situations and Investec Cautious Managed funds.
Alastair describes his approach to stock selection as “looking in other people’s dustbins – every now and then we will find something of value that has been discarded”.
He will often invest in a company for four to five years to maximise its recovery potential. But this doesn’t mean he will stay invested until it becomes a ‘stock-market darling’ – the company may just return to being ‘average’, but will have increased enough in value to have made the investment worthwhile.
A lesser-known, but very good value manager is Hugh Sergeant, who runs the R&M UK Recovery fund. He believes there are “exceptional” opportunities in the world of value investing at the moment.
He likes undervalued companies that are yet to deliver on their potential, and where he believes management have the capability to turn things around. He is also not afraid to add to his holdings at almost fire-sale prices when markets are volatile or falling.
If you are looking for an equity income option with a value style, Lowland Investment Company is worth a look.
Managed by James Henderson since 1990 with the help of Laura Foll more recently in 2016, this investment trust invests around half of its assets in FTSE 100 companies and the rest in smaller and medium-size businesses.
As contrarian investors, the managers look for undervalued, out-of-favour stocks and are prepared to invest early and bide their time.
Another equity income alternative is Schroder Income. Nick Kirrage and Kevin Murphy have managed this fund since 2010. It is a deep-value fund, investing in companies that have suffered a severe business or price setback, but where the long-term prospects are good.
It has little correlation with other income funds, tending to avoid the big income producers in favour of more niche names, where both capital and income have the potential to grow significantly.
Darius McDermott is managing director at Chelsea Financial Services and FundCalibre
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Darius’s views are his own and do not constitute financial advice.
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How to Decide if a Warehouse Club Membership Is “Worth It”
Max writes in with a great question that had an answer that was just a bit too long for the mailbag:
Recently moved to and bought a house in a new town where I hope to stay for several years. There is a Costco and a Sam’s Club here. Never lived close enough to either or had the storage space to make it worthwhile so I’m considering joining one or the other. Sam’s Club is closer and more convenient but Costco isn’t bad either. Trying to figure out if it’s worth it.
I assume Max is trying to decide if he’d save enough money over the course of a year to pay for a year’s membership at either club. So, let’s address that question.
In my experience, warehouse clubs really only save money on a few specific things. Outside of those specific things, the prices at warehouse clubs are comparable to other big box retailers like Target or Wal-Mart. The value of a warehouse club comes down to whether or not the savings on those things adds up to enough over the course of a year.
First, warehouse clubs usually save money on gas. Many warehouse clubs offer gas for members at a price that’s $0.05 per gallon cheaper than nearby competitors, give or take a few cents. In my area, the only convenient warehouse club is Sam’s Club, and the one nearest to me sells gas at a price that’s pretty much always $0.07 cheaper than the two gas stations closest to it – believe me, I’ve checked.
Let’s say I go there once a month and fill up the tank on our van, which is a 16 gallon tank. 16 gallons per visit times $0.07 per gallon times 12 visits per year gets me to $13.44 in savings over the course of a year with monthly fill-ups. If I do that more frequently – for example, if I do it once a week (though I don’t need to fill up that often) – it would pay for my membership right there.
So, the first thing to look at is whether or not any warehouse clubs near you offer gas sales and, if so, how much it saves. If you join, you should start filling up there as often as possible because that will pay for a significant slice of the membership.
Second, warehouse clubs usually price their store brands very well and the store brands are of at least reliable quality. At Sam’s Club, the store brand is Member’s Mark; at Costco, the store brand is Kirkland Signature. The store brand products at both places are of at least reasonably high quality; in particular, the Costco store brand is quite good for most products.
What really makes them stand out, though, is the price – while it’s not quite universal, the store brand at both Costco and Sam’s Club is almost always a very nice bargain over name brands and even store brands at other stores.
We rely on Member’s Mark for things like toilet paper, trash bags, dishwasher detergent, and many other household needs. It’s usually the least expensive option for those things available to us and it’s comparable in quality to almost every brand we’ve tried.
The catch is that to really nail the savings, you have to buy them in bulk. You’re going to be buying 200 trash bags at once or enough dishwasher soap for more than 100 dishwasher loads or enough toilet paper to last a family of five for several months.
I ran the math carefully over the course of a year just calculating our savings on bulk nonperishable household products, comparing them to prices on similar items at Fareway (our primary grocery store, which is a discount grocer), and I found that we saved enough over the course of a year on nonperishable bulk items to pay for our membership multiple times over. It’s worth noting here that we stuck almost exclusively to store brands in doing so.
This brings us to the third point: most warehouse club bargains come when you buy something in incredible bulk, which usually means perishable goods are off the table unless you’re going to consume a lot of it. We rely on warehouse clubs for a lot of nonperishable items, but we generally only buy them in bulk (and many of them are the store brand). That means that we have to have storage space for that stuff, which means if you look in our main floor closet, you’ll find lots of things like toilet paper and extra canned foods and toothpaste and so on. I’ve joked before that our main floor closet looks like the closet of a prepper.
It’s worth noting here that the value of doing this varies a lot depending on the nature of your household. A single person is going to get far less value out of this kind of bulk buying than a family of five would. I speak here as someone who shopped at warehouse clubs as a single person, as a married person without kids, and as a married person with kids: the larger your family, the bigger the benefit of bulk buying is, but I’m not sure the benefit is big enough if you’re single.
It’s also worth noting here that not every bulk item at a warehouse club is going to be strictly cheaper than elsewhere. You’re generally not going to be paying higher prices there, but on some goods, the prices at a warehouse club are comparable to what you’d find elsewhere for similar quantities.
This is one of the challenges of shopping at a warehouse club: there’s a carefully cultivated sense of “value” when you shop there that makes it easy to convince yourself to buy something that you might not otherwise buy because you perceive it as a bargain. Fairly often, it isn’t a bargain at all. That’s why, just like at other stores, it pays to shop at a warehouse club with a shopping list while not buying things that aren’t on your list.
There’s a final thing that I want to mention that provides a lot of value from warehouse clubs: electronics. The prices on many electronic items at warehouse clubs are, at the very least, extremely comparable to the prices found elsewhere on basically the exact same items. If you’re looking for something like a tablet computer or a laptop or a television or even a small kitchen appliance, you absolutely must include your local warehouse club in that comparison shopping if you’re a member because, at the very least, the prices will be highly competitive. Several electronic devices in our house right now were purchased from a warehouse club simply because their price on that type of item couldn’t be beat by other retailers, even online ones.
So, should Max join a warehouse club? Here are my thoughts.
If Max has at least three people in his home, he should join. He’ll get enough value from the bulk purchases to more than pay for his membership because, with three or more people at home, those items will get used up fast.
If Max has a significant daily commute by car where he drives right by a warehouse club that sells gas, he should join. At my old job, I drove right by a Sam’s Club that sold gas and I ended up paying for most of my membership just with gas savings.
If Max is intending to buy a significant electronic device soon, he should use the warehouse clubs as a pricing tool and join if he can save money on the purchase. I’ve consistently found the prices on electronics at local warehouse clubs to be very, very competitive and often the lowest around. Our last television replacement saved us enough on comparable models at other retailers that it more than paid for our annual membership in one purchase.
Otherwise, it’s probably not worth it. If one of those three factors doesn’t pull Max in, then he’s likely not getting enough value out of a warehouse club to make it worth the cost of the annual membership.
A final tip: if you do join, take advantage of it. Don’t let the membership languish. Use it with intention and seek out genuine bargains there (it’s a good idea to note the prices on some things from your ordinary grocer, like toothpaste and toilet paper and garbage bags, and make sure you’re saving money on them at the warehouse club).
Good luck!
The post How to Decide if a Warehouse Club Membership Is “Worth It” appeared first on The Simple Dollar.
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Do These 7 Companies Owe You Money? Check These Class Action Settlements
The holidays may have made everything merry and bright, but some businesses will be fighting to keep the office lights on after they pay these class-action lawsuit settlements. Our New Year’s countdown includes three tiers of claimants, two small-appliance companies and one payment processor accused of charging unauthorized fees.
Intuit TurboTax Fraudulent Tax Return
If you had a fraudulent tax return filed in your name, you could be eligible for two years of free credit monitoring by TransUnion as a result of an Intuit TurboTax class-action settlement.
Intuit TurboTax faced allegations the company failed to adequately protect consumers’ information, which allowed fraudulent tax returns to be filed for several years.
Class members are those who had a fraudulent tax return filed in their name through Intuit TurboTax for tax years 2014, 2015 or 2016.
Intuit admits no wrongdoing by agreeing to the settlement. No money is offered in the settlement, which could affect more than 915,000 consumers who will not be compensated for expenses related to fraudulent tax return filings. Consumers may wish to pursue such compensation separately.
To receive two years of free TransUnion credit monitoring services, click here to file a claim by Jan. 22, 2019.
Black & Decker, Farberware Small Appliances
Consumers who bought Black & Decker or Farberware small appliances may qualify for a portion of a class-action settlement.
Plaintiffs alleged that both companies failed to represent that certain covered products are manufactured and warranted by them.
Some plaintiffs also accused the brands of selling coffee makers that make much less coffee than they were marketed as producing.
The coffee makers were advertised as making a predetermined number of “cups,” which the plaintiffs allege are not the standard 8 fluid ounces that most consumers purportedly assume is meant by a “cup.”
The defendants included Spectrum Brands Holdings Inc. and Applica Consumer Products Inc. Neither admitted to wrongdoing in the settlement.
Consumers who purchased certain appliances between Feb. 5, 2014, and Oct. 19, 2018, may be eligible to receive compensation. Eligible items include:
- Black & Decker: air fryers, blenders, can openers, coffee grinders, coffee makers, electric knives, food processors, grills, irons, juicers, kettles, mixers, quesadilla makers, rice cookers, skillets and other surface cookers, slow cookers, toasters, toaster ovens and waffles.
- Farberware: coffee urns and percolators, food processors and toaster ovens.
Class members are eligible to receive up to $4.
For more information — and to fill out your claim form by the Feb. 28, 2019, deadline — click here.
Van Heusen Fake Sale (California Only)
Customers who shopped at a Van Heusen store in California could receive up to $150 in merchandise certificates due to a recent class-action settlement.
The retailer admits no wrongdoing in the settlement but faced allegations that it engaged in deceptive advertising practices by placing false reference prices on merchandise.
The fake prices were allegedly designed to convince customers that the products were of high quality and that the current prices were a bargain.
Class members are those who shopped at a Van Heusen store in California between June 1, 2018, and Oct. 3, 2018, where such fake reference prices were displayed upon products.
Compensation will be distributed by means of single-use merchandise certificates in the amount of $6.50.
There are three levels of class members, which include:
- First tier of claimants: Class members who are a member of the Van Heusen loyalty program and made one or more qualifying purchases. These claimants are not required to submit proof and are eligible for one merchandise certificate.
- Second tier of claimants: Class members who made one or more qualifying purchases and submit a valid claim form with proof of purchase. These claimants are eligible for one merchandise certificate.
- Third tier of claimants: Class members who are a tier one or tier two claimant, made a qualifying purchase of $150 or more and submit a valid claim with proof of purchase. These claimants are eligible for additional merchandising certificates.
The potential award is $150 in merchandise certificates with proof of purchase or just one merchandise certificate of $6.50 without proof.
Click here for more details and to submit a claim by Jan. 16, 2019.
Subway Credit Card Receipt
Customers who used a debit or credit card to purchase items at a Subway fast-food restaurant may be eligible for part of a $30.9 million class-action settlement.
Subway faced allegations that the company violated the Fair and Accurate Credit Transactions Act (FACTA) by allowing the expiration date of credit and debit cards to appear on receipts handed to customers.
FACTA prohibits anything other than the last five digits of the card number to appear on a receipt. The expiration dates allegedly appeared on receipts given at specific restaurant locations that used a Subway payment management system that had been programmed to print the dates.
Class members include customers who purchased food or other merchandise from those Subway restaurants between Jan. 1, 2016, and March 23, 2017.
Each class member is eligible for a potential award up to $75.
For instructions on how to obtain a claim ID and to submit a claim by the Jan. 22, 2019, deadline, click here.
Fiat Chrysler Automatic Transmission
If you owned or leased a 2014 or 2015 Jeep Cherokee, 2015 Jeep Renegade, 2015 Chrysler 200 or 2015 Ram ProMaster City vehicle, you could be eligible for a portion of a class-action settlement regarding allegations that Fiat Chrysler installed defective automatic transmissions.
Vehicles equipped with a ZF 9HP transmission allegedly included a defect that causes loud noises and makes it difficult to shift into gear. The vehicles were marketed as having the benefits of both manual and automatic transmissions.
Under the terms of the class-action settlement, class members who made at least three transmission-related complaints to an FCA US-authorized dealer could receive up to $2,000 cash or a trade-in value of up to $4,000.
Fiat Chrysler has also agreed to extend warranties on vehicles containing the ZF 9HP transmission of the class vehicles to six years or 100,000 miles.
Class members with one of the qualifying vehicles must complete a claim form and include documentation that they made at least three transmission-related complaints prior to Nov. 16, 2018.
Get into gear and click here for more information and to file a claim by May 15, 2019.
Conde Nast, Vogue, Golf Digest Magazines (Michigan Only)
Magazine subscribers in Michigan may be eligible for a portion of a $13.75 million class-action settlement.
Plaintiffs in the Condé Nast class-action lawsuit alleged Advance Magazine Publishers Inc. violated Michigan’s Preservation of Personal Privacy Act by allegedly sharing subscriber information with third parties.
No wrongdoing has been determined in the settlement, but Michigan subscribers of Allure, Architectural Digest, Bon Appétit, Brides, Condé Nast Traveler, Footwear News, Glamour, Golf Digest, Golf World, GQ, Lucky, Self, Teen Vogue, The New Yorker, Vanity Fair, Vogue, W, Wired, and Women’s Wear Daily may qualify to receive up to $75 each in the settlement.
The actual award will depend upon the number of qualifying claims received by the estimated deadline of April 14, 2019.
Class members include Michigan residents who subscribed to a Condé Nast publication between July 20, 2009, and July 30, 2016.
For more information on the magazine privacy class action settlement flip or click here.
Merchants’ Choice Payment Solutions Fees
A $15 million class-action settlement has been reached between businesses and Merchants’ Choice Payment Solutions, a payment card processing service accused of adding unauthorized charges to the merchants’ invoices.
Class members are those who contracted with or through Merchants’ Choice for payment processing services between Dec. 22, 2013, and Sept. 18, 2018, and were charged one of the following fees:
- Annual fees.
- Batch header fees.
- PCI program/compliance fees.
- PCI noncompliance/non-validation fees.
- Gateway access fees.
- Foundry/e-merchant fees.
- Monthly minimum discount fees.
- Nonqualified fees.
- Discount rates.
- Other discount fees (including signature debit rates).
- Paper statement fees.
Potential awards are estimated to be $65 to $70.
Click here for more information and to file a claim by the March 4, 2019, deadline.
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Six Warning Signs That Your Child’s Identity Has Been Stolen
Identity theft is a disturbing crime regardless of your age. The idea that your personal information is now in the hands of people with bad intentions can leave you feeling quite vulnerable.
Now imagine the panic of discovering that your minor child’s personal information has been stolen and is being used fraudulently.
Why Would Anyone Steal a Child’s Identity?
The sad truth is that children can make particularly appealing targets for identity thieves for several reasons.
First, your children’s credit reports are blank slates. There isn’t any negative information on a child’s credit reports that would hamper a thief’s efforts to open fraudulent accounts. On the other hand, if an adult’s identity is stolen, it might not be as useful, depending on the prior credit history and the current credit score.
Another reason why children can be appealing identity theft targets is because the crime might not be detected right away. Child identity theft often goes unnoticed for years until the child grows old enough to apply for credit, housing, utilities, or a job in his or her own name. Then they find out the hard way that they’ve been the victim of fraud for years, and now have a horrible credit report as a result.
Warning Signs of Child Identity Theft
As a parent, you can help to safeguard your child’s information and non-existent credit reports from identity thieves. One way to accomplish this is to learn the warning signs so you’re able to recognize indications that your child’s identity has been stolen.
Here are some red flags that should tip you off to a potential problem:
- Your child receives phone calls or letters from collection agencies.
- Your child is mailed a credit card in his or her own name (and you didn’t add the child as an authorized user to any of your existing credit card accounts).
- Your child is turned down for government benefits because the benefits are already being paid to someone else using the same Social Security number.
- Your child receives a notice from the IRS regarding unpaid income taxes or stating that his or her Social Security number was used on another tax return.
- Your child receives pre-approved offers of credit or insurance in the mail, in his or her own name.
- You try to open a bank account or other financial account for your child, but he or she is turned down due to negative information on a consumer report (e.g., a credit report or ChexSystems report).
Undoing the Damage
If you discover that your child’s identity has been stolen, it may take some work on your part to undo the damage. The good news is that federal law, namely the Fair Credit Reporting Act (FCRA), does afford many protections to victims of identity theft—that includes your children.
For starters, you can freeze your child’s three credit reports (Equifax, Trans Union, and Experian). This prevents fraudsters from committing further damage to your child’s credit because it takes the credit reports out of circulation.
If your children don’t have credit reports yet the credit bureaus will create one in your child’s name, and then freeze it.
Freezing your child’s credit reports is free and easy. You can make the requests online here:
Once you child is old enough to open credit in his or her own name, the reports can be placed back into circulation. Until then, a credit freeze will provide an extra layer of safety to thwart would-be thieves.
You can also file an identity theft report on behalf of your child at IdentityTheft.gov. Once completed, a copy of the report can be sent to the three credit bureaus along with a list of any fraudulent accounts you are disputing. The credit bureaus will be required under the FCRA to block the reported, fraudulent information from your child’s credit reports within four business days.
At the same time you should contact every lender that has issued some form of credit in your child’s name. They’ll want proof that they’ve been defrauded, just like your child has been defrauded, which may require some work. But, once that has been completed they’ll stop reporting the account and cease contacting your family.
More by John Ulzheimer:
- Use a Credit Freeze to Stop Identity Thieves Cold
- Four Ways You Could Be Hurting Your Credit Without Realizing It
- Three Legitimate Ways to Raise Your Credit Score Fast
John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. The author of four books on the subject, Ulzheimer has been featured thousands of times over the past decade in media outlets including the Wall Street Journal, NBC Nightly News, The Los Angeles Times, CNBC, and countless others. With professional experience at both Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.
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