BEWARE THE FAIR TRADING SCAM

By Jackie Pearson

Another banking scam to look out for is called the Office of Fair Trading Scam. It works like this.

The caller tells you they are from your bank and explains that your bank has been over-charging you for years. The reason for the call is that they need to verify your personal information so they can organise for the Office of Fair Trading, which has supposedly prosecuted your bank for over-charging, to provide you with a refund.

Before you can get that refund, the person calling says they need to issue you with a unique security code and to do that they will need to verify your account details.

The person then proceeds to read you the first four digits of your credit or debit card number and then asks you to verify the remaining 12 digits of the number. This is an easy trap to fall into because, well, who doesn't want their bank to pay them a refund for over-charging.

What most consumers don't know is that the first four digits of your credit or debit card are the same for every card issued by your bank. Those four digits are like the card BSB number.

YOUR BANK SHOULD NEVER, EVER ASK YOU FOR PERSONAL DETAILS OVER THE PHONE. If any caller asks for your credit or debit card number or for the three-digit security card number on the bank of your card, THEY ARE NOT REALLY FROM YOUR BANK.

When I received one of these scam calls on my home phone recently I asked the caller to stay on the line while I called my bank on my mobile phone to verify that they were, in fact, a representative of the bank. Guess what, they hung up straight away!

So repeat after me: "I am sorry, I never give my account or card details to anyone over the phone, even if you say you are representing a charity or want to GIVE ME MONEY. If you want my personal and confidential banking information, send me your details in writing so I can verify them with my bank". If you say those words, even on occasions when you are convinced the call is legitimate, you will stay safe and free of nasty scams!

MONEY TOO TIGHT TO MENTION?

By Jackie Pearson
A new report by The Australia Institute explains why Australians are in so much debt.
The report, entitled Evidence versus emotion: how do we really make financial decisions? says that a large proportion of the community "confesses to not even knowing what their mortgage interest rate is or who their electricity provider is."
The report labels these consumers "the oblivious". By contrast a much smaller group are described as "human calculators" ... "hyper-vigilant in ensuring that they do not pay credit card interest, they compare phone plans and seek out things they need when they are on sale".
According to the report, orthodox or noeclassical economics is based on the idea that people behave rationally, whereas behvarioral economics is based on how people really do behave.
Orthodox economics makes some pretty interesting assumptions about human behaviour, according to the report, such as that "consumers have access to complete information, collecting and analysing information is costless... suppliers have no market power, there are no spillover costs or benefits associated with consumption decisions... people are motivated solely by self-interest".
The report goes on to say that behavioural economics indicates that, in reality, consumer behaviour is completely at odds with the above description. Instead we are creatures of habit, concerned about the approval of others, bad at computation when making decisions, want our actions and behaviours to be in line with our convictions,..."
According to the study's results:

• 28% of the population are over-confident. They think they are better-than-average at making financial decisions but their actual behaviour suggests otherwise;
• 18% admit to being overwhelmed but think it's too difficult to take steps to get a better deal;
• 30% are playing catch-up: don't pay their credit card balance each month and continue to use it to pay for essentials;
• 41% are oblivious: unconcerned or unaware that they could, in fact, get a better deal on their banking, mortgage or phone plan;
• 44% of people who took out a mortgage recently are described as 'eternal optimists': they took out the loan without considering the possibility of losing their job or getting sick

The other three categories are compartmentalisers, spending hawks, and, of course, the human calculators. 
So which group do you fit into? Are you a human calculator or honestly oblivious when it comes to your finances, or somewhere in between?
Do you know, for example, how much money you owe on your credit cards and how long, if you stopped making new purchases on those cards today, it would take you to pay them down to a zero account balance?
Can you honestly answer whether you are beating the bank when it comes to paying off your mortgage or are you completely behind the eightball, making regular redraws and not quite sure how many more years it will take you to own your home outright.
Todays headlines are talking about the European sovereign debt crisis pushing to global economy into stage two of the Global Financial Crisis in 2011.
Many Australians are, unfortunately, having their own personal financial crises right this minute. Another interest rate increase, a job loss or illness and they could be pushed over the edge.
According to The Australia Institute 52% of the respondents who had experienced financial difficulties in the past year said they did not pay off their credit cards in full. Forty one percent of all respondents said if they were in financial difficulty they wouldn't talk to anyone about it but would attempt to sort it out themselves.
In recent years the Commonwealth Government and Australian Securities Commission have been pouring substantial funds into improving our financial literacy. The Australia Institute Study would seem to indicate that we still have a long way to go.
It also adds evidence to the argument that many people don't understand the increasingly complex nature of the financial transactions they enter into. I commend the study to you. You don't have to be a rocket scientist to understand it and it could be a helpful starting point for changing your attitudes to your own financial situation.