Money matters: How money works (Part I)

[This is Part I of a two-part series on banking -- what it does, and can do, for you. Part II is 5 things banks do for you that's really important.]

What is money? Seriously, answer the question: What do you say is money? Everyone thinks they have a basic idea what money is, but no two people will come up with the same definition. And chances are none of them are correct.

In order to understand what money really is, we need to first look at its uses and then at the history of banking, because money and banking are so intertwined as to be inseparable.

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5 things that undermine automating your finances

Ever feel like your finances are managing you instead of you managing your finances? Late fees pile up, interest charges multiply, and as soon as you find your 401(k) participation paperwork, you'll fill it out and start participating.

If you felt stressed reading that last sentence, you can understand why people choose to automate their finances. The fewer decisions you have to make in a day, the better.

Automating your finances can help put your financial life in order and free up some of your time … or it could turn into a costly experiment. The trick is to create a solid financial system -- and to monitor it. Continue reading...

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5 ways to keep your financial information safer from hackers

Hey, do you mind if I try to guess one of your passwords? No? Okay, how about "123456" or "password"? Maybe "Max123" or "Bella2011"?

Although I hope no Get Rich Slowly readers are using any of these passwords currently, "123456" and "password" are among the most common passwords chosen. And "Max" and "Bella"? Those are some of the most popular pet names; and since pet names are commonly used too -- Well …

I am no hacker, and I spend very little time thinking about hackers. I wouldn't hack into someone else's information, so why would anyone think about hacking into my information? Continue reading...

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Revisiting the credit union vs. bank debate: Which is better?

Judging from the comments in Kristin Wong's article “Credit unions vs. banks: Things to consider“ back in January 2014, there was a lot of interest — and a fair amount of skepticism — in what credit unions have to offer.

The sentiments went in a lot of different directions. People were quick to point out that interest rates on deposits at credit unions were usually much higher than at banks and interest rates on loans were generally lower.

A lot of people were very appreciative of the level of service to be found at most credit unions; but quite a few mentioned how difficult it might be to switch from one institution to another, particularly when it came to all their bill-paying information.

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How to dispute credit card charges

According to a 2013 Nilson report, credit and debit card fraud were the cause of over $11.2 billion in losses in 2012. And if you think that sounds bad, just wait; it's expected to get much worse.

As USA Today reported last year, hackers and scammers have turned stealing credit card numbers into an art form. By focusing on major retailers such as P.F. Chang's, Target, and Home Depot, they can score thousands of credit card numbers in one fell swoop -- numbers that are then packaged and resold for a profit.

And stolen credit card numbers aren't as cheap as one might think; they often pull in big profits. According to Neal O'Farrell, founder of the non-profit Identity Theft Council, stolen numbers are often sold for $120.

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Wedding savings accounts: How I saved for my wedding

When my husband proposed to me on July 10th, 2005, I was ecstatic. In fact, I'm pretty sure I screeched "Yeeeeeeeeessssssssssssssssssssssssss" before he could even pull the ring out of his pocket.

Our plan was to move into the little apartment above his work -- it was part of his compensation package -- then get married the following summer. Unfortunately (fortunately?), a few of the older ladies in the company didn't like the idea of an unmarried couple living together, and they ended up changing the terms so we couldn't both live there until we were married.

I was crushed ... until, of course, my mom suggested something novel. "Get married this winter," she said. "Why not?"

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30 days to better finances

coin jar

Learning to manage your finances isn't something most people would put at the very top of their "most fun thing to do" list, but we all know that we ignore money and budgets at our peril. Having a strong handle on what money is going in and what money is going out is an essential first step. But you don't have to be overwhelmed. By setting aside between five and 30 minutes each day, you can transform your finances dramatically in 30 days. Here's one such plan:

Day 1: Compile all your expenses and income. Bucket them by categories such as Savings (retirement accounts, emergency fund), Mortgage/Rent, Household Expenses (food, utilities, heating oil, etc.), Commuting (tolls, commuter rail cards), Debt Repayment (student loans), Entertainment. It doesn't have to be perfect, just complete. Use a service like Mint, software like Excel or even just good old pen and paper -- whatever you are comfortable with. Yearly budgets are more accurate because you will see irregular expenses like property taxes or gifts.

Related >> Building a budget on variable income

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New developments in online banking security

Most banks (especially the larger ones) have been regarded as pretty safe, for all intents and purposes, since the middle of the previous century. But since banks started maintaining our balances in secure data centers at various locations (instead of holding our savings in safes and vaults in their local branches), a bank's records of what is yours and mine become increasingly visible to people within the banks, but also to some on the outside that have malicious intent.

In the never-ending game of cat and mouse, each time a bank improved their security measures, bank robbers improved their methods to attack those centrally located files. At first, stealing money in the electronic age became an exercise in simply transferring the money in your account to their account. Call it "Phase I of electronic banks and robbers," but those initial efforts were only focused on getting inside the banks' now-electronic vaults … where the "money" is.

The advent of electronic identity theft Continue reading...

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Ask the Readers: When was the last time you went to the bank?

It used to be part of everyone's existence, like going to the grocery store once a week. You'd stand in a teller's line and hope everyone in front of you had uncomplicated transactions. Then you'd hand over your cash and the teller would stamp your passbook to record your deposit. It all felt very solid and respectable, even sort of fun knowing you were adding to your savings.

When we moved to rural Washington, the nearest branch for the big bank where I had my accounts was 70 miles away, so I opened an account at the local bank too. It was an entirely new experience for me, going to the bank in our little town. I'm certain that the tellers were on a first-name basis with all their customers, and it didn't take long for us to fit in and enjoy the social interaction at the branch too. In fact, we still have the branch manager's mobile number on our cell phones.

Now that we live in the big city again, it's actually been five months since I stepped foot in a bank. The last time was in March, and I only went because I needed to give the bank my new address — for my safe deposit box that is housed in another city. Apparently client information for safe deposit boxes at my bank is still handled the old-fashioned way. Otherwise, I could say I almost never go into a branch. Continue reading...

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Best CD rates | Certificate of Deposit rates

Certificates of deposit (often simply called CDs), by definition are time deposits. You give your money to the bank and then promise not to touch it for a specific length of time. In general, the longer you agree to let the bank keep your money via a CD investment, the higher the interest rate you will receive.

If certificates of deposit offer higher returns than a savings account, then why doesn't everybody use them? The primary reason is that a CD investment is less liquid than a savings account in that you can't just move money in and out without penalty as you can in a savings account. You can take your money out of a CD before it “matures,” but you are docked interest when you do. In fact, it is typical for a bank to penalize the interest amount even if it hasn't been earned (meaning you could lose part of your principal if you close your CD early).

Anatomy of a CD

I was fortunate to win a $1,000 6-month certificate of deposit from ING Direct recently. (I never win anything!) Looking at it might be instructive:

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