Money Management

It’s always exciting when there’s a new player in town. 

There’s no denying that Apple’s customer base is fiercely loyal to the brand. It had no trouble signing up customers when it first offered a branded credit card. It’s possible that banks are nervous about what will happen as the tech giant rolls out other financial services. In fact, banks are likely nervous about what will happen when a host of fintechs introduce new financial products and services.

It may be for that reason that several banks are working to release a version of digital wallet that will compete with the likes of Apple Pay, Samsung Wallet, and PayPal. Reportedly, the wallet will be released as early as the end of 2023 and, like other digital wallets, will link with both debit and credit cards.

Who’s involved?

While the digital wallet will be operated by Early Warning Services, it’s a joint venture between several of the same banks that own Zelle. This includes Wells Fargo, JPMorgan Chase, and Bank of America.

What is a digital wallet?

Also known as an electronic wallet, mobile wallet, or e-wallet, a digital wallet is a software application that allows users to securely store the digital versions of their payment methods. For example, a user can store credit cards, debit cards, cryptocurrency, gift cards, event tickets, and boarding passes directly on their smartphones or smartwatches. Users can even use their wallets to store coupons and passwords.

Digital wallets can be used online and in stores that accept mobile payments. To determine whether a business accepts mobile payment, customers look for a symbol resembling a sideways wifi icon.

What’s it going to take for the new digital wallet to succeed?

Chances are, most people who are interested in using a digital wallet are already doing so and have grown comfortable with the way their current wallet works.

In an interview with CNBC, an analyst from the private wealth management firm Bernstein discussed what it will take for the new digital wallet to create a faithful following of its own. According to Harshita Rawat, it’s going to take a very long time, a killer customer experience that’s better than its competitors, and compelling merchant value to compete with the big, established names in digital wallets.

Should you take the leap?

Whether you adopt the new digital wallet may come down to three things:

Are you currently using a digital wallet? If so, how do you feel about the experience? Have you encountered any issues that have made the experience more difficult than it needs to be?Are you comfortable with the level of security that surrounds your current digital wallet?Is there something else you’re looking for? For example, if a company released a digital wallet that provided you with access to your credit card balances, would that be enough to encourage you to use a new wallet?

If you’re not currently a digital wallet user, the field is wide open to you. Before taking the leap, though, you may want to allow the new service to iron out any potential kinks in their offering.

When released, the new wallet will have a couple of big names onboard, as Visa and Mastercard have already committed.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Dana George has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, JPMorgan Chase, Mastercard, PayPal, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard, long March 2023 $120 calls on Apple, short April 2023 $70 puts on PayPal, short January 2025 $380 calls on Mastercard, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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Act fast, and credit card fraud is much easier to resolve. 

These could happen to anyone, so every adult should know what to do in these situations. If you’re a victim of credit card fraud, here are five steps that will help you resolve it ASAP.

1. Report it to the credit card issuer

If you found a fraudulent transaction on your credit card, report it to the card issuer immediately. You can dispute a credit card charge by calling the number on the back of your card or through your online account.

It’s important to do this quickly so your card issuer can cancel the compromised card and prevent any more unauthorized charges. It will also send you a new card in the mail and take any fraudulent charges off your bill. Legally, consumers are only liable for a maximum of $50 in fraudulent credit card transactions. But just about every quality card issuer offers zero liability fraud protection.

You’ll also need to do this if you were a victim of new account fraud. In this case, you’d call the card issuer of the credit card that was opened with your information.

2. Go over your credit card transactions

Check to see if there are any other fraudulent transactions on your bill. Start with the compromised credit card, but make sure to do this for any other credit cards you have, too. If you called your card issuer to report the fraud, the representative will likely review recent transactions with you over the phone to confirm they all check out.

Keep an eye out for small charges. Scammers often test credit card numbers with small transactions to see if they work. If so, they then move on to bigger scores.

3. Review your credit report

If you were a victim of new account fraud, there could be more than one fraudulent account opened using your information. Request your credit report with each of the three credit bureaus: Equifax, Experian, and TransUnion. You can do this on AnnualCreditReport.com. Look for accounts you don’t recognize. If you find any, report them to the creditor.

It’s also a good idea to continue checking your credit report periodically after this type of identity theft. Fortunately, you can get free weekly credit reports throughout 2023.

4. Contact the credit bureaus and consider freezing your credit

After new account fraud, you should contact each credit bureau to report the identity theft. That way, they can take the fraudulent accounts off your credit file.

You may also want to freeze your credit. A credit freeze prevents anyone from running a hard credit check on you, which is normally a requirement to open a credit account. This will prevent scammers from opening more credit cards or loans in your name. When you want to apply for credit yourself, you can unfreeze your credit.

5. Consider filing a police report

You can file a police report for either type of credit card fraud. Whether it’s worth doing depends on the severity of the crime.

If someone opened a credit account in your name, or used your credit card for a large fraudulent purchase, then filing a police report makes sense. A police report is good supporting evidence to take to creditors and credit bureaus. Your credit card company will likely believe you if you say that you didn’t make a $900 purchase — but reporting it as a crime helps silence any doubts.

For fraudulent transactions below $500, you probably don’t need a police report. You can ask your card issuer if a police report will help to double check. But in these situations, it tends to be a pretty cut-and-dried process. You report the fraud, your card issuer takes it off your bill and sends you a replacement credit card, and that’s that.

The most important thing to remember about handling credit card fraud is that time is of the essence. If your credit card is lost or stolen, let the card issuer know right away to hopefully prevent fraudulent charges. And if you’re the victim of either new or existing account fraud, report it as soon as you find out to get on top of it.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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You will regret these moves. 

I’ve been accused of overthinking things, and while this has led to many sleepless nights and anxious days, I think it’s a good quality to have when it comes to certain experiences, such as preparing to buy a home. I’m still at least a year away from starting the process in earnest, but that hasn’t stopped me from thinking, dreaming, and getting my finances in order. I paid off all my debt in 2022, and I’ll be spending 2023 saving money for a down payment.

If you’re plotting your own future as a homeowner, here are three home-buying don’ts to avoid, as well as the moves to make instead. After all, a home is likely to be the most expensive purchase you’ll ever make, so it’s important to tackle it in such a way that you succeed.

1. DON’T buy when your life isn’t settled

I’ve been down the homeownership road before, and it was a big mistake for a number of reasons, most notably because my life wasn’t in the right place for me to buy a home. I was very young, new to a career that ended up seeing me move thousands of miles for positions in it, and I was nowhere near mature enough (or financially prepared enough) to handle the requirements and costs of homeownership. I wish I had kept renting instead, it would have saved me a lot of money, a damaged credit score, and so much worry.

DO continue renting until then

I am a renter now, and have been one in multiple states and cities since my house debacle more than a decade ago. I’ve made my peace with it, because not only is it cheaper than owning a home, it has been a much better fit for my life. Every time since I’ve needed to move (usually for a job), it was easy to break my lease. I didn’t have to sell a house and potentially take a loss on it. Renting can come with some pretty cool perks too.

2. DON’T pretend your credit score is fine

If you’re hoping to buy soon, now is not the time to go ostrich and stick your head in the sand. You will want a clear picture of your finances as a whole, including and especially your credit score. After all, lenders are going to take a deep dive into your finances and use that information to figure out what interest rate to offer you on a mortgage. The better your score, the lower that interest rate will be. You want to check things out before they do.

DO work on improving it as much as you can

You can access your credit score through credit card companies you have accounts with, and likely also your bank. You can sign up for a credit monitoring service to keep tabs on your score, and until the end of 2023, you even have access to free weekly credit reports. Now is the time to make some changes to improve your credit, in advance of contacting mortgage lenders. To start, if you’ve made some late payments, resolve to make them on time going forward — payment history is 35% of your credit score. Look for errors on your credit report (like accounts that aren’t yours, or delinquencies that should have fallen off your report by now); if you have them removed, your score will rise. And pay down debt, if you can. Your score will rise as your credit utilization ratio falls.

3. DON’T make the bare minimum down payment

Chances are, the hurdle of saving for a down payment is weighing heavily on your mind. While you can get a conventional mortgage loan with as little as 3% down, and take advantage of federal programs that may require 0% down (such as a VA loan), it is likely better to save more for a down payment.

DO put down as much as you can

I’m not going to tell you that you must make a 20% down payment to buy a house. If you live in an expensive area, that could take years to save, and of course, you want to be able to get on the property ladder sooner rather than later. However, the more you can put down, the better off you’ll be, for two reasons:

The lender won’t be taking as big of a risk on you, and so it may offer you a better interest rate.You won’t have to pay mortgage insurance for as long (if you’re making that 20% down payment, you can avoid it altogether). Once you reach 20% equity in your home with a conventional mortgage loan, private mortgage insurance (PMI) can be removed. And if you buy with an FHA loan and put at least 10% down, your mortgage insurance premiums (MIP) can be canceled after 11 years.

Buying a home is both scary and exciting, and if you avoid these don’ts (and focus on the dos instead), you’ll have a greater chance of success in the process.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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This practice could be a recipe for disaster. 

Back in the day, it was common to buy things like furniture or electronics on layaway. But growing access to credit cards made that less necessary. That’s because consumers with credit cards can simply charge purchases on those cards and pay them off over time.

The problem, of course, is that carrying a credit card balance forward means racking up interest on it (assuming we’re not talking about a 0% interest rate card). And that could get costly. Plus, carrying too much credit card debt could cause credit score damage.

These days, there’s an alternative payment solution that many consumers are turning to in place of credit cards — buy now, pay later plans (BNPL plans). BNPL plans let you make a down payment on a purchase and pay the rest of it off in installments, usually within a three-month period. But while these plans have their benefits, they could also open the door to a host of unfavorable financial consequences.

Use BNPL plans with caution

In November, Forbes Advisor and OnePoll conducted a survey of 1,000 American consumers who have used BNPL plans at least once. Among respondents, the top reason for using BNPL plans was to reduce the financial impact of a large purchase. But 51% of those surveyed said they use BNPL plans to purchase items they can’t afford right away. And that’s more of a problem.

It’s one thing to use a BNPL plan to cover an emergency purchase — for example, a new fridge if yours breaks. That’s the sort of thing you can’t go without for months, so financing it in some shape or form makes sense. But it’s another thing to use a BNPL plan to cover a nonessential purchase you can’t afford. And if you’re going to make a habit of using BNPL plans, it’s a good idea to note that distinction, because falling behind on BNPL plans could cause serious financial damage.

The consequences of not keeping up with BNPL plans

When you charge expenses on a credit card and don’t make your minimum payments on time, you’re not only assessed fees, but that activity is reported to the credit bureaus. And your credit score could take a serious hit after just one late payment.

The same holds true for BNPL plans. If you keep up with your payments under one of these agreements, you won’t be charged interest, you won’t have to deal with fees, and you won’t face credit score damage. But if you do fall behind, the opposite could happen — you might end up on the hook for a host of extra charges, and your credit score might plunge, since late BNPL plan payments are reported to the credit bureaus just like late credit card payments.

That’s why using BNPL plans for purchases you can’t afford isn’t the best practice. Again, if you’re in a jam and have to make a purchase you can’t put off, using a BNPL plan may be a reasonable approach. But for purchases that aren’t essential, you’re better off saving up first so you can pay for those items in full.

Along these lines, if you need to charge an emergency purchase you know you can’t pay for right away, you may want to consider using a credit card over a BNPL plan. While you might rack up more interest from the start with a credit card, you’ll generally get more time to pay your purchase off, since BNPL plans often limit you to 12 weeks or less. And when you’re talking about a large purchase like a household appliance, you might really need that added flexibility.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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