Despite a whittling away of consumer debt that has been underway since the recession, many Americans are still entering the holiday season unprepared to cope with the expenses that crop up around this time of year.
Think Finance, a provider of payday loans and other financial services for consumers with limited or no access to banking services, recently surveyed 1,000 Americans across all income levels who use various forms of alternative financial services — including payday loans, prepaid debit cards and direct deposit advances.
Although many of these consumers are on better financial footing and optimistic about their economic future this year, the holidays are still a source of stress and strain on their precarious finances, Think Finance said in the poll.
Some 45 percent of those polled said the holiday season brings so much financial pressure, they would prefer to skip it altogether. Almost half said their level of stress related to holiday expenses is high or extremely high.
That’s probably because nearly the same amount — some 45 percent — say they do not expect to have enough money set aside to cover holiday expenses.
Moving to new methods of payment is far from an easy leap for most of us. Recent figures from the Payments Council show that many are concerned about the security of such methods. Nearly two thirds of those surveyed admitted they were worried that payments using the new technology might not be secure.
It is worth remembering, of course, that we all had the same fears about debit cards, cash machines and online banking when they were introduced, and these innovations have now become commonplace. None the less, it is important to be sure about the technology that you are using before you jump in with both feet and your smartphone. The following pointers should help.
Know your limits
Contactless cards allow you to pay instantly by waving your card over a reader in a shop instead of entering a Pin. New technology such as the Barclays PayTag, which is a sticker that you can attach to your phone, and Orange‘s Quick Tap app, which lets you make a purchase using your phone, allow you to cut out the card altogether.
These transactions carry more risk than a transaction using a card and Pin, as they don’t rely on a second level of identification – merely on the fact you have the phone or contactless card with you. Your main safeguard is that the system can be used only for small payments – different limits apply in each case.
However, even small payments add up, and it is important that you know how much you are taking on and check your statements regularly.
Given the recent spotlight on attempts — and ultimate failures — by some of the nation’s biggest banks to tack on new debit card fees, thousands of disgruntled consumers have already either left or pledged to leave their current bank for a community bank or credit union, which are known for having fewer and/or lower bank account fees.
At least 650,000 consumers have already joined credit unions since Sept. 29, the day Bank of America (BAC, Fortune 500) announced plans to impose its controversial $5 debit card fee, according to a nationwide survey of credit unions by the Credit Union National Association.
That’s more than a year’s worth of members in a single month — with credit unions adding 600,000 members in all of 2010.
The new memberships in October amount to $4.5 billion in new savings accounts, CUNA said.
And while Bank of America and other banks have since backpedaled on imposing the fees, consumers are making it clear they are still fed up. More than four in every five credit unions said new customers cited days like “Bank Transfer Day” and new fees imposed by their banks as reasons for opening accounts.
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Strange Random Banking Quote:
Good bankers, like good tea, can only be appreciated when they are in hot water. – Jaffar Hussein
- Bank dumping day begins – Nov. 4, 2011 (mbcalyn.com)
- Bank Transfer Day: A Roundup of Credit Union Alternatives (savings.com)
- Lake Trust Credit Union Proves Great Value for Consumers Participating in “Bank Transfer Day”, Sat. Nov. 5 (prweb.com)
- Dump Your Bank Day…catching on (bonjupatten.wordpress.com)
- Fee Increase Attempt Inspires ‘Dump Your Bank Day’ (yro.slashdot.org)
- Credit unions add 650K members ahead of ‘Bank Transfer Day’ (content.usatoday.com)
- 6 Reasons to Move Your Money for Bank Transfer Day (shareable.net)
- Credit union enrollment skyrockets in October (dailykos.com)
- 650K Americans Have Closed Their Bank Accounts and Moved To Credit Unions – So Far (crooksandliars.com)
- Bank Transfer Day Looms, Will You Be Making the Switch? (inquisitr.com)