Banking

What Does the Federal Reserve’s Recent Rate Reduction Mean to You?

The recent interest rate reduction, from 2.5 percent to 2.25 percent, by the Federal Reserve doesn’t directly touch any of the everyday interest rates that affect Americans. This quarter-point cut, the first cut in a decade, reduced the federal funds rate, the rate banks and other financial institutions charge one another for very short-term borrowing.

Even though most Americans don’t participate in this type of
borrowing, the Fed’s move will still have consequences on the borrowing and
saving rates you encounter every day.

Interest rates on car loans, credit card balances,
mortgages, etc., and earned interest on the money you save won’t necessarily be
directly or immediately impacted. But, consumers could, likely, over time, experience
the following trickle-down effects.

Savings Account Rates

Savers have only recently benefited from higher deposit
rates – the annual percentage yield banks pay consumers on their money – with
several online banks offering over 2.5 percent. However, the recent rate cut
will most likely cause these rates to come down.  Now is the time for consumers to shop around
for short-term rates or lock in rates with a 1-, 3- or 5-year certificate of
deposit with money that doesn’t need to be readily accessible.

Mortgage Rates

According to Bankrate, the current 30-year fixed mortgage
rate is about 3.93 percent, the lowest it’s been since November 2016. Because
mortgage rates are tied to long-term rates, which move well in advance of any
rate changes by the Fed, the current low rate came on the heels of the
expectation that the Fed was going to cut rates.  Consequently, unless the Fed hints that more
rate cuts are on the horizon, mortgage rates are not expected to fall much
more.

With that said, if you borrowed money to purchase a home
late last year, when the average 30-year mortgage rate was nearly 5 percent, it
may be time to consider refinancing.

Credit Card Interest
Rates

The Fed’s recent rate reduction is good news for Americans
who carry balances on their credit cards. Because most credit cards have
variable interest rates, there is a direct correlation to the Fed’s benchmark
rate.

With the rate cut, the prime rate lowers too, and credit
card rates will likely follow. For credit cardholders, this means you should
see a reduction in your annual percentage yield or APR (the current rates on
average are as high as 17.85 percent) within a couple of billing cycles.

With almost half of all credit cardholders in the U.S.
holding balances every month, averaging approximately $1,150 in interest
yearly, this quarter-point reduction will create some savings.

Auto Loan Rates

For those of you who are planning to purchase a new vehicle,
the Fed’s rate reduction will most likely have little impact on your car
payment. However, this rate cut lowers the financing costs for car manufacturers
and dealers, which can offer a better negotiating position for the would-be car
buyer.

Student Loan Rates

While most student loans are fixed-rate federal loans,
approximately 1.4 million students in the U.S. today use private student loans.
Private loans can be fixed or have a variable rate tied to the Libor, prime or T-bill
rates. Consequently, the Fed’s rate cut means borrowers with variable rate loans
will likely pay less interest. If you have private, variable rate loans, you
should look into refinancing to possibly lock in a lower fixed rate.

However, as borrowers begin to celebrate this recent rate
cut, retirees have begun to worry. This type of rate reduction doesn’t bode
well for returns on investments preferred by those who’ve left or have
immediate plans to leave the workforce.

Typically, yields on fixed annuities, CDs, savings accounts
and bonds go down with a Fed rate cut. Long-term care premiums and pensions
will also be pinched. The impact will likely not be felt immediately. Retirees’
portfolios may not feel a hit for more than a year.

Investment professionals warn retirees not to chase returns
in the market, possibly placing more emphasis in their portfolio on investments
like equities and real estate, which might not be safe for those who have a lot
more to lose and generally can’t afford to take on much risk. With any rate
fluctuation, it’s important to work with your financial advisor or planner to
develop a portfolio that’s right for your situation.

Although the Federal Reserve’s recent rate cut can be viewed
as both a good thing and a bad thing, the same as any rate increase, the
guiding force behind the reduction is heading off a recession. With this move,
the Fed hopes to prevent the economy from weakening and forestall layoffs and
other economic damages that could adversely affect everyone.

Trade School or College?

By the end of the 1950s, the focus of education in the United States shifted from vocational and job-ready skills to preparing all high school students, through college prep courses, for college. However, today, statistics indicate that the highly coveted bachelor’s degree doesn’t seem to carry the weight it once did.

The latest figures from the U.S. Bureau of Labor Statistics (BLS) indicate that approximately 68 percent of high school students attend college. The remaining students graduate with neither academic nor job-ready skills. But even the 68 percent aren’t fairing that well. Almost 40 percent of these students, as low as 10 percent for those in poverty, don’t complete a four-year college program, wasting a lot of time and money, and often acquiring significant student debt. Of those students who do graduate, the BLS found that about 37 percent end up with jobs they could’ve obtained with a high school degree.

In the United States, a college degree has been viewed as the pathway to success, and it still is for many. Earnings studies do show that college graduates earn more over their lifetime than high school graduates. However, these studies don’t take into account the amount of debt these students take on in pursuit of higher education (the outstanding student debt balance in the U.S. was $1.5 trillion as of 2018, according to the Federal Reserve) nor that more than half of recent college graduates are unemployed or underemployed. In addition, these studies don’t include data on those high school students who graduated with vocational training. These graduates have gone on to well-paying, skilled jobs, creating a rosier picture for them than many of their college graduate counterparts.

The U.S. economy has changed. The manufacturing sector is growing and modernizing. This, along with the demise of vocational education in high school and retiring baby boomer, skilled trades workers, has created, and will continue to create, a significant demand for skilled labor. The skills shortage in manufacturing today has created a wealth of opportunities for high school and unemployed and underemployed graduates alike. Many of these jobs are attainable through apprenticeships, on-the-job training, and vocational programs offered at community colleges.

Even with the above statistics aside, the traditional 4-year degree isn’t for everyone. People have a diverse range of skills and learning styles. Some do best in a lecture hall or classroom, studying math, biology, history and other traditional subjects, while others learn best by doing, and would thrive in a studio, workshop or shop floor.

There are still many advantages to a 4-year degree. As stated before, most college graduates will earn more money over their lifetime, especially if they continue their studies through master’s or doctoral degrees. However, the cost/benefit equation to higher education is changing every day. The education system needs to recognize this and that vocational schools can offer students with valuable skills, resulting in competitive paying jobs and a secure financial future. Students need to be exposed to the possibility of vocational training as an alternative to the college degree, helping both them and their parents see a variety of paths to a successful future.

Nurturing the Entrepreneurial Spirit in the Workplace

Many employees have fantasized about being their own boss.
But, they typically don’t act on it because of the responsibility and/or risk associated
with owning and running a company. This doesn’t mean, however, these employees
don’t harbor the entrepreneurial traits, which if nurtured, could take the
organization to a whole new level of success.

As businesses strive for increased competitiveness, creating
an entrepreneurial culture has become an important advantage.  In today’s business environment, the term
entrepreneurial means more than just the business intelligence required to turn
an idea into an enterprise. It’s a skill or mindset embodying innovation,
creativity, calculated risk-taking and empowerment. It’s the responsibility of leaders
to identify, tap into and cultivate these traits within their organization.

Sometimes referred to as an “intrapreneur” (entrepreneurs
working within a company), these employees can be identified by the following
traits:

  1. Creativity
    – Innovation stems from creativity. This drives the company forward.
    Intrapreneurs change the status quo and notice opportunities.

  • Long-term
    focus
    – A person who is creative and innovative must also be focused,
    otherwise they will fleet from one shiny object…new idea to another. The
    intrapreneur can identify what adds value to the company and what doesn’t.

  • Team
    player
    – Naturally, teamwork is essential in a business. Yet, it’s the
    ability to realize that sometimes others have to take control that makes the
    intrapreneur standout in the company.

  • Risk-taker
    – Playing it safe in today’s world will get you nowhere. Intrapreneurs aren’t risk
    adverse.

  • Results
    oriented
    – The intrapreneur is more concerned about the results than the process.

  • Take
    responsibility
    – The intrapreneur takes ownership of his or her successes
    as well as his or her failures.

  • Adaptable
    – The business landscape is continually changing. The intrapreneur is very
    flexible to change and can quickly adapt, especially in high-pressure
    situations.

  • Planners
    – Intrapreneurs develop a plan and then work the plan.

  • Effective
    – Intrapreneurs are more interested in how effective each task or activity
    is as opposed to concentrating solely on efficiency.

Once a company leader recognizes the intrapreneurs in
his/her organization, he or she must take the next steps to cultivate these
traits.

Create an environment
of empowerment

It’s a business leader’s actions that create an environment
of empowerment. It’s his or her leadership style. Research shows that
leadership based on relationships increases the entrepreneurial spirit of the
company as opposed to task oriented leadership style. An effective leader leads
by example.

Encourage innovation

Innovation keeps a company competitive and growing. In large
companies with layers of management, the innovative spirit can often get lost.
Leaders must welcome, encourage and reward innovative thinking in the
workplace.

Welcome internal
competition

Competition amongst co-workers, if handled correctly, can
spur incentive and innovation. Healthy competition can drive co-workers to push
one another to be more productive and produce better work.

Communicate

Communication is a fundamental function of good leadership.
Leaders often get so caught up in the day-to-day operations of the business
that they forget to tell their staff where they are going – the company’s
vision and direction. Employees want to get the important information. They
also want to know that their concerns and ideas are being heard. Leaders must
continually communicate to their staff that the entrepreneurial approach is
valued, encouraged and rewarded.

The ATM Celebrates Golden Anniversary

On June 27, the world’s first ATM, automated teller machine, was turned into gold to commemorate its 50th anniversary.

The ATM was jointly developed by inventor John Shepherd-Barron and De La Rue Instruments, a company specializing in printing newspapers, just over five decades ago.

So the story goes, the ATM was conceptualized after Barron arrived at his bank a minute too late one Saturday in 1965, leaving him without cash until the bank reopened on Monday morning. Extremely frustrated by this experience, Barron began thinking that getting cash should be as easy as getting a chocolate bar from a dispensing machine.  Consequently, two years later, the first ATM was opened at the branch of Barclays bank in Enfield, north London. This was the first of six cash dispensers commissioned by Barclays.

When the ATM first debuted in Enfield it made a huge splash in the media, sending many other European banks racing to debut their own. However, most consumers viewed these “cash machines,” eventually known as ATMs, as a cumbersome novelty. Predating the debit card, the original ATM required customers to insert a single-use paper voucher, which was mailed back to the customer to prevent fraud, and key in a four-digit code, we now call a PIN, to access their money.

America’s first ATM debuted at Chemical Bank in Rockville Center, New York on September 2, 1969. Although several inventors worked on the early versions of the cash dispensing machine in the U.S., Don Wetzel, an executive at Docutel, a Dallas company that developed automated baggage-handling equipment, is generally credited with the development of America’s modern ATM.

By the 1970s, with the introduction of the debit card, the ATM became more consumer-friendly, and began handling multiple functions, including providing customers with their account balances. By the mid-2000s, as ATMs began supporting check deposits, consumers began seeing what was once thought of as only a cash dispenser in a whole new light.

Today, ATMs have spread across the world, and people think nothing of walking out of their houses without a penny in their pocket. There are approximately 70,000 cash machines in the UK, 425,000 in the U.S., and an estimated three million across the globe. The world’s most northerly ATM is located in Longyearbyen, Svalbard, Norway and the most southerly is located at the McMurdo station at the South Pole.

However, with all the plastic in our pockets and the continued hype of mobile payments today, does the ATM, which Paul Volcker, chairman of the Federal Reserve under Presidents Carter and Reagan, once touted as “the only thing useful banks invented in 20 years,” have a future?

According to Raheel Ahmen, head of customer experience and channels at Barclays, the birthplace of the ATM, even though there’s been a huge uptake in digital banking and card payments, cash remains a crucial part of people’s day-to-day lives.

“Today, what consumers are asking for is to be able to bank wherever and whenever, and through different channels,” says Bernardo Batiz-Lazo, a professor of business history and bank management at Bangor University in Wales. “People are changing the way they consume in the same way that banks are trying to change the way they operate.”

What does this mean for the future of the ATM…and ultimately the consumer? According to the banking industry, it means ATMs will hurtle right along with us into the future, bringing a whole lot of new and exciting technology our way.

So, happy golden anniversary ATM, and here’s to another 50 years!

Helping your Teen Understand Income Taxes

tax planningThe often-dreaded tax day is just around the corner. But, as this day approaches, whether we’re anticipating it or not, it provides the perfect opportunity for us, as parents, to teach our teens about taxes, and, if they’ve had a part-time job, filing a tax return.

As our children move toward adulthood, they face many milestones. And with these milestones come great opportunities for them to learn important life skills.

The subject of income taxes and income tax filing, like most financial concepts, is not taught in school. Most teen’s initial understanding of taxes and tax filing is limited to the look of anguish they see on their parents’ faces during tax season.

A teen job is likely your child’s first, and no doubt shocking, introduction to the world of taxes. When they receive their first paycheck, they will notice that some of their money has been taken from this vaguely familiar entity called the federal government, and in some cases the state and city governments as well. (The FICA tax is separate discussion.)

Most teens have trouble understanding the tax concept (some adults still do). It seems strange, as well as frustrating, that some of their hard-earned money was deducted for such shared services as government employee benefits, roads and national defense. All they really comprehend at this point in their young, working lives is that these items have affected their cash in hand.

As parents, we can help our teenagers better understand income taxes by explaining the following:

1. Make them aware that when they work and earn money, they have to pay taxes – Explain that when they receive money from a company, the company will take taxes out of their pay and, if they make over a certain amount in a given year (with no unearned income, above $6,300), they will be required to file a separate tax return. (In most cases, a 1040EZ.)

Teens should also understand that even though they may not be required to file a tax return, it might be beneficial for them to do so anyway. If, for example, they’ve worked part-time for an employer, earning less then the required amount, and federal taxes were taken out on that lesser amount, they’ll be due a refund. The only way they can receive this refund is by filing an income tax form.

2. Teens should also become familiar with certain tax forms and paperwork – Explain and help them fill out their W-4 when they land their first job, and how it affects their net income. When they receive their first W-2, go over it with them (even the boxes that don’t pertain to them), and how this form is used to file their tax return. Explain the importance of the form and that it should be kept in a safe place.

3. Teach your teen how to file their own tax return – Now is an ideal time to show them how to file their return because, in most cases, their tax situations are extremely simple.

Many tax preparation software companies, like TurboTax for example, offer free e-filing if certain qualifications are met. (Visit IRS.gov for details and lists of free software options.)

These programs will walk your teen through the process, step-by-step, and keep them updated on the progress of their return. If your teen doesn’t have a checking account already, now is a good time to open one. (Their return can be automatically deposited in their account.) By helping them with this the first time, they’ll soon become old pros.

The bottom line is that it is up to us to teach our children about taxes, returns and the value of a dollar by fully explaining the steps involved in the process and the reasons behind each step they are taking. If you don’t have all the answers…don’t stress…there are plenty resources out there today that you can turn to for help.

Beating the Winter Doldrums

Cheryl TanenbaumEven with Punxsutawney Phil’s recent declaration that spring is coming early this year, many
feel that this is still not soon enough.

As the excitement of the holidays and the seasonal changes wane, so does our mood. Even for us Floridians, the once welcoming milder temperatures have now become too low and the shorter days too short.

As February progresses, many of us find ourselves lethargic, anxious and moody, cocooning with sweet and high-carb fare, and counting the days until we can begin complaining about how hot it is again.

Does this sound familiar?

If you’re beginning to feel the winter blues, here are a few tips to help brighten your mood while you wait for the long, warm, sunny, Florida days to return.

  1. Brighten your environment – Your body is craving more daylight. You can satisfy your body’s craving either artificially, by purchasing a light box and sitting in front of it for at least 30 minutes per day, or by simply opening your blinds or drapes and sitting by the window.
  1. Maximize the benefits of food – Studies show that there is a strong relationship between the food we eat and our mood. Following a well-balanced diet, rich in protein, moderate in carbs (complex carbs are the best) and low in fat improves our mood and energy level. And for all you chocoholics out there, chocolate in moderation has been shown to enhance mood and relieve anxiety. (Of course…we chocoholics knew that, didn’t we?)
  1. Exercise – A recent study by Harvard University showed that walking briskly for about 35 minutes a day, five days a week or 60 minutes, three days a week improves mild to moderate depression. Yoga/meditation is another great way to beat the winter blahs. As a relaxation technique, yoga/meditation is great for restructuring the mind and those habitual patterns of thought.
  1. Crank up the tunes – Research shows that listening to upbeat or cheery music elevates the mood. Then, break out your best dance moves for the added physical benefits.
  2. Begin making plans for your summer vacation – Just the simple act of planning a vacation, especially one that promises warm, sunny days, significantly increases overall happiness. It gives you something to look forward to as you wait out the winter.
  1. Make yourself useful – volunteer – Giving some of your time to a cause you’re passionate about or helping someone in need improves mental health as well as overall life satisfaction.
  1. Get up off the couch and go outside – Convincing yourself to take a long walk when it’s chilly outside isn’t easy but, the benefits, emotionally and physically, are well worth it. So, put on your jacket and hat and get moving!
  1. Socialize – Make plans with family and friends. We go from fast and furious socializing during the holidays to a screeching halt, hibernating in our homes until the warmer temperatures bring us out of our winter cocoons again.

Maintaining relationships with our friends and family is key to our well-being. Research shows that people with more social support tend to be less depressed, less vulnerable to certain diseases and even live longer.

So, even though winter may not be your favorite season, keeping a positive attitude and physically on track with the tips mentioned above will help make the colder days fly by and the warmer months return before you know it.

Life in the Fast Lane – Fit Tips for the Office

Our workdays are no longer 9 to 5. Today’s technology ensures we are connected wherever we go. Although our work hours continue to stretch, for most of us, it’s the only thing that gets any stretching done.

According to a recent study, most people sit for more than nine hours a day. Due to this, lifestyle ailments and a sense of general discontent with our lives are on the rise. Nervous breakdowns, Carpal Tunnel Syndrome and Cervical Spondylitis are just a few of the medical issues that plague more and more corporate employees today. The old adage, “All work and no play, makes Jack a dull boy,” couldn’t be more applicable to today’s working culture.

With the amount of time we spend in the office and on the road, it becomes difficult to work exercise into our already jam-packed schedules. However, for our physical and mental well-being, we must find creative ways to incorporate this into our day.

We can make creative use of our sitting time, especially the time we spend in front of our desks. Although exercising while we’re sitting won’t provide us with the same health benefits as a good workout at the gym, according to health experts, it can help strengthen and tone muscles, and give us the well-deserved and much-needed break from work.

Here are a few suggestions:

Stretching – Spending long periods of time slouching over our computers/laptops does more damage than we think. We strain our eyes and our neck is bent at an unnatural position causing bad posture, which can lead to serious problems in some cases. These extended periods of time on our computers/laptops can also lead to Carpal Tunnel Syndrome, an extremely painful condition of the wrist.

Something as simple as standing up and stretching can ward off these afflictions. After every hour of continuous sitting, take a break and stand up from your seat. Intertwine your fingers and stretch with your hands towards the ceiling. Reach higher and higher until you are standing on your toes.

Come back to normal position and slowly rotate your neck, forward, backward and side-to-side, and then roll your shoulders forward and backward, stretching the shoulder muscles. Now work the wrists by slowly rotating them in a clockwise and counterclockwise direction. While doing this, close your eyes and give them their due rest.

Getting the most out of your chair –

Leg straightener – While sitting forward in your chair, away from the backrest, lift one leg at a time about 3 inches off the ground. Tighten your leg muscles for about 10 seconds. Release them and repeat. From this position, you can also rotate your feet in a clockwise and counterclockwise direction.

Pelvic Tilt – With your hands on your desk, sit in the middle of your chair with your feet flat on the floor. Arch your lower back so your butt feels like its sticking out. Make your abs do the work not your legs. Then, slowly pull your hips underneath your stomach, bringing your butt back underneath you, like you’re doing a crunch. Hold each of these positions for about four seconds. Repeat 10 to 20 times.

Arm Circles – Sit straight up in your chair, feet flat on the floor, and lift your arms out to your sides, parallel to the floor. Extend your fingers and make 20 small, tight circles in each direction. Then, make 20 large, open circles in each direction.

Do these exercises a few times a day.

Walk – It’s as easy as getting up out of your chair and moving. If you work in a multi-story building, walk up and down the stairs a few times during your workday. If your office is located above the ground floor, routinely take the stairs instead of the elevator when you come to work. If you need to discuss something with a colleague, walk over to him or her and chat in person instead of picking up the phone.

When you’re on the phone, stand in place and march or if you are on your cell, walk around the office while you chat.

Graze – Keep a ready stock of healthy munchies in your desk for in-between-meal snacks. A handful of nuts, baked snacks or fruits are great nutritious options. These snacks will keep your energy levels high as well as ward off the temptation to overeat at mealtime.

Also make sure to drink plenty of water (eight to ten 8-once glasses a day). Not only is water good for you, but by doing this, you will also up your daily step count due to increasing bathroom breaks.

The best cure for the body is a quiet mind. ~ Napoleon Bonaparte

Even though we try to fit more and more into our workday, including exercise, it’s vital we get 8-9 hours of sleep each night. A tired mind is an unproductive mind. We need to rest our bodies as well as our minds so we can think fresh the next day. Meditation and yoga are great options – they calm the mind and increase focus and concentration. Some people reach this same state of mind through an intensive workout. The goal in the end is to give your body and mind a pause for a while.

There are endless possibilities and no excuses. With a little creativity and dedication to our health, we can make it possible to incorporate fitness into our busy days with office exercise.

Smart, Smartphone Security

Smartphones today are capable of doing many things to make our lives easier… except, at least for now, making dinner. However, with its growing repertoire of capabilities, also come new security risks.

As we continue to use our smartphones for a much wider range of activities – social networking, online banking and shopping, emailing and surfing the web – we need to take sensible precautions to ensure that our phones and our information are safe.

Here are some security tips to protect your phone and your information from malware attacks and cybercriminals.

1. Keep your smartphone locked – Create a PIN or a PASSWORD and always have your phone’s lock screen on.

2. Don’t modify your smartphone’s security settings – Although it may be tempting to alter some of your security settings in order to access specific apps or services, don’t do it!

3. Protect your phone and your data – Today’s smartphones are powerful computers, and, like any laptop, PC, or Mac, should be protected by a reputable anti-malware program. You should also make sure your antivirus databases are regularly updated.

4. Backup your data – You should continually backup the data stored on your smartphone – contacts, important documents, photos, etc. These files can be stored on your computer, a storage card, or the cloud. By doing this, you can easily restore the information on your phone in the event your phone is lost, stolen or otherwise erased.

5. Only install trusted apps – Bad apps are loaded with malware that can infect your smartphone with viruses and steal your information. Before downloading an app, do some research to ensure the app is legitimate and safe. Also be cautious about granting applications access to your personal information contained on your phone. Make sure to check the apps privacy settings before installing it.

6. Update your smartphone’s software – Keep your smartphone’s operating system software up-to-date by accepting updates and enabling automatic updates when prompted by your service provider, operating system provider, device manufacturer or application provider.

7. Stay safe on public Wi-Fi networks – Even though free public Wi-Fi is a cost-effective way to surf the web on your smartphone (it doesn’t eat into your data plan), it can be dangerous. Hackers love to infiltrate these networks to snoop and steal valuable information. So, be safe, and do your online banking and shopping at home or use a mobile wireless connection.

8. Install security apps that enable remote location and wiping – Most smartphones today, either by default or as an app, have the ability to remotely locate and erase all data stored on your phone, even if the GPS is disabled. Visit www.CTIA.org for a full list of anti-theft protection apps.

9. Wipe your old smartphone before donating, selling or recycling – Your smartphone contains your personal data. So, make sure to protect your privacy by completely erasing the data off your phone and resetting the phone to its original factory settings before donating, selling or recycling. Visit www.komando.com for step-by-step instructions.

10. Report a stolen smartphone immediately – If your phone is stolen, you should immediately report the theft to your local law enforcement authorities and your wireless provider. By doing this, all of the major wireless service providers will be notified that the phone has been stolen and will not re-activate the phone without your permission.

11. Turn off your Bluetooth when you’re not using it – Switching off your Bluetooth connection reduces your smartphone’s vulnerability to cyber-attacks as well as the drain on its battery.

For more information on smartphone security, visit www.fcc.gov.

The Chip Cards are Coming!

In a continual effort to reduce fraudulent credit card charges and increase security, the credit card companies are moving away from magnetic-stripe cards, which are easier to counterfeit, and towards the EMV chip card as soon as possible.

According to a recent report by Barclays, almost half of the world’s credit card fraud happens in the United States, even though only a quarter of all credit card transactions occur here. This statistic, in addition to the Target and Neiman Marcus security breaches, are the major motivators behind the changeover.

In an attempt to reduce this statistic and future breaches in security, the EMV (Europay, MasterCard and Visa) chip card is already being rolled out across the U.S., and by October of 2015 merchants will be pretty much forced (see below) to upgrade their machines.

These cards, which have been status quo for in EU and Canada for several years, are manufactured with a small integrated circuit or chip in the card. Payment data (name, billing address, phone number, etc.) is read from this chip instead of the magnetic stripe. This chip protects against fraud in two ways: making it more difficult and expensive to counterfeit and varying the way the data is transmitted each time the card is read. Consequently, while the magnetic-stripe card can be skimmed easily, chip information will be much harder to garner.

Processing device providers are promising to make the transition for their customers (merchants) as flawless and cost-effective as possible. They are also working on several solutions for their Square Stand customers.

Chip cards will not be swiped in the same way as the magnetic-stripe cards, hence the new processing equipment. The cards are inserted into the payment device and left in place for the entire transaction as the reader and the card talk back and forth.

Although this new measure goes a long way to thwart fraud, it will not provide any added protection against the card-not-present transaction, i.e. purchases online or over the phone.

Even though merchants will have the option of using their current processing technology because the new chip cards will still have the magnetic stripe as a backup, starting in October 2015, the liability for fraud will shift to the cardholder and the merchant. In other words, since the EMV terminal could have theoretically prevented the fraud, the liability now falls on the user (the customer) and the processor (the merchant/business).

The timeline for the EMV Chip Card Liability Shift in the U.S.

October 1, 2015 – Visa, MasterCard, American Express and Discover liability shift to POS terminals.

October 1, 2016 – MasterCard liability shift for ATMs.

October 1, 2017 – Visa, MasterCard, American Express and Discover liability shift to pay-at-pump gas stations, as well as for Visa and American Express at ATMs.

Creating a Beautiful Wedding Day on a Realistic Budget

As we move into the summer months, many parents will also be heading into the wedding months.

Although, as parents, this is a milestone, a rite of passage in your life as well as your child’s, this can also be a very stressful time as well.

The cost of a wedding today can be overwhelming. Whether you’re picking up the entire bill for your child’s big day or sharing the cost with the bride and groom-to-be or his or her perspective in-laws, having a well-thought-out plan and a realistic budget will help keep what should be one of the most memorable days of your life and your child’s from getting out of control.

In a perfect world, we would’ve started saving for this big day shortly after our child was born…in addition to saving for his or her college and our retirement fund. But, if you’re like most parents, this just wasn’t doable. Although, it’s an admirable goal to save for your child’s wedding, most financial experts would advise that this shouldn’t be prioritized over college or retirement.

This is not to say that it’s too late to save, however. As soon as you know that a wedding is on the horizon, you should start saving.

But, don’t promise what you can’t deliver. As much as you’d like to be able to give your child the wedding of his or her dreams, it’s definitely not worth jeopardizing your financial viability to do it. For example, if you withdraw money from your retirement account pre-59 ½, you could face a penalty as well as additional taxes. In addition, you may never be able to replenish the money you withdrew or make up it’s earning potential, which could really set you back.

The first step in reducing the financial stress often associated with wedding planning is by simply talking about it. Sit down and talk with the bride and groom-to-be and put your financial cards, so to speak, on the table. This way, the couple has a realistic idea of what they can expect from you and the big day in general.

The second step is to find ways to save money.

You don’t have to break the bank to give your son or daughter a beautiful wedding day. Here are a few suggestions to save money on the big day without sacrificing the memories.

Limit the Guest List – One of the easiest ways to reduce the wedding budget is to reduce the guest list. Yes, a wedding is a celebration. But, keep in mind, it’s also an intimate moment. Be realistic. If budget is a concern, limit your guest list to the immediate families and closest friends. Not only will this save a lot of money but it will also be a more meaningful day.

The Dress – Many women spend a good portion of their lives fantasizing about their wedding dress…and consequently, spend a good portion of the wedding budget on it. This doesn’t have to be the case. It’s possible to find a gorgeous dress for far less than the exorbitant prices charged by most bridal salons (e.g. secondhand stores, eBay or consider using a family member’s gown).

Reception – This typically is the most expensive part of the big day. Consider cutting the cost of the reception by holding the wedding on a Friday or Sunday and/or opt for a brunch or cocktails and hors d’oeuvres or dessert/cake/champagne or possibly a garden picnic over a full, sit-down dinner. If you want a dinner meal, consider a buffet with less expensive items like chicken, pasta and in-season produce.

Music – Have the bride or groom-to-be load up the playlists on their iPod or iPhone for each part of your wedding – pre-ceremony, ceremony, cocktail hour, special dances, dinner, dancing, etc. Ask a member of the wedding party to act as MC for special announcements.

Flowers – To cut costs on the wedding flowers make sure to only order in-season flowers and use the same flowers at the church and the reception. You can also reduce this expense by ordering loose stems and making the arrangements yourself. In addition, flowers ordered online are typically less expensive than those ordered through a traditional florist.

Drinks – It’s a personal option whether to serve alcohol or not. But, if you’re going to serve alcohol, you can save money by offering only beer and wine and/or a champagne punch. But, make sure to have ample non-alcoholic beverages as well.

What You Can Skip – Most guests toss wedding favors as soon as they get home. If you absolutely have to give out favors, make something yourself…like baking a special treat (cookies).

You can also eliminate the unnecessary expense of save-the-date cards unless it’s a destination wedding, requiring people to make travel arrangements well in advance.

With all of these suggestions in mind, remember that budgeting and saving money doesn’t mean that you’re skimping on your child’s big day. With imagination, creativity and open communication, you can still have a beautiful wedding day for your child on a realistic budget.

Happy planning!

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