What Is A Secured Credit Card?

Just like bank loans, where there is secured and unsecured borrowing by businesses, credit cards as a form of consumer debt can also be either secured or unsecured. Credit cards, as most of us know and use, are unsecured.  The money is lent to card users without any collateral against it and it is up to consumers to pay back the account balance later and if not, the card issuer loses (well, they will go after you but there is no guarantee they get their money back).  When the possibility of not paying back by a credit card holder becomes a serious concern, either because of the applicant’s bad credit in the past or no established credit at all, a card issuer would require certain amount of funds to be deposited as collateral before a credit line can be issued.

How A Secured Credit Card Works

The potential card holder must first open a savings account, also known as collateral account, with a card issuer for an initial amount from $300 or $500 up to $5,000 or $10,000.  The credit line can be equal to the amount deposited or at a percentage of it.  As purchases are made on the card, the funds are not deducted from the account and the funds will stay in the collateral account as long as the card holder makes monthly payments for at least the minimum amount.  Some credit card issuers may pay interest on the deposits.
Like regular credit cards, purchases are billed every month and there will be interest charge on any outstanding balances after each grace period.  Many secured credit cards may require an annual fee and one-time setup fee.  A secured credit card functions like any other credit cards and there is no difference in the appearance of a secured credit card and a regular one.

Why Do Secured Credit Cards Exist?

Even though some consumers are cutting back on credit card use to reduce debt and are turning to debit cards or simply paying cash, credit cards cannot be replaced as long as current consumer credit reporting system remains in place.  Consumer credit rating (your credit score) relies heavily on consumer credit card data that are submitted by credit card issuers and analyzed by the three credit card bureaus. Without credit cards and the data collected about how they are used, a consumer’s credit worthiness is much more difficult to be determined.  Most will need to use a credit card if they wish to build a credit history or repair past credit.  Credit cards, secured or unsecured, can be used for that simple reason.  But for some people, a secured credit card is the only solution.

Who Needs a Secured Credit Card?

Starting with no credit history or a bad credit history makes it hard to apply for a regular, unsecured credit card (think about it, why would a credit company want to loan money to someone that hasn’t proven they can pay OR hasn’t paid in the past). However, applying for a secured credit card can be easy and fast when personal funds are used to guarantee the repayment of future credit card bills.  Because a secured credit card works the same way as a regular credit card in terms of using it for purchases and paying monthly card bills, over time the card holder can establish a positive pattern of card uses by paying back on time.  Ultimately, the data collected by the card issuer is reported to credit card bureaus and good credit will be reflected in the credit report (and in turn will raise your credit score).  Moreover, after a certain period of time, such as a year, based on the card holder’s responsible use of the secured credit card, the card issuer may switch to issuing a regular, unsecured credit card.
A secured credit card certainly isn’t for everybody. But it can be a great tool to help establish credit or develop good credit habits.  I’ve even wondered if it’s not one of the better ways for a person to first get a card.  Think of it, if you know you’re money is on the line you will have a great incentive to develop good spending and paying habits.  I can think of so many people who got their first credit card (unsecured) and went wild with their new credit, quickly using up their credit limit.
If you do decide to get a secured card (if you need one to build credit trust), remember the goal is to build up your credit quickly so you can move to an unsecured card and get your collateral deposit back.  Also look into cards that have little or low fees, shop around for the lowest APR you can find, and make sure you understand the details of where your collateral money is going and what it takes to get it back.

12 New Rules for Your Money

In this era of high unemployment, flat home prices and do-it-yourself retirement savings, some traditional rules of saving and investing are due for an overhaul.

Renting may beat buying. Buying wins hands down when home prices are rising. But when they're flat or falling, it makes sense only if you get a great deal, your monthly payment won't exceed rent on a comparable home by much, and you'll own the home long enough to recoup your costs for both buying and later selling your home.
Consider a Roth. Although the traditional rule of tax planning is never to pay a tax bill today that you can put off until tomorrow, Roth IRAs and Roth 401(k) plans stand that rule on its head. With a traditional IRA or work-based retirement plan, you get an upfront tax deduction, but every dime you withdraw in retirement is taxed at your ordinary income-tax rate. With a Roth, you forgo the upfront tax break, but all withdrawals -- including decades of earnings -- can be withdrawn tax-free. If income-tax rates rise, a pot of tax-free retirement income could be a financial lifesaver. To contribute to a Roth IRA, your income in 2010 can't top $120,000 if you're single or $177,000 if you're married. Anyone, regardless of income, can now convert a traditional IRA to a Roth IRA, but you'll owe taxes on the entire amount. There are no income-eligibility limits to contribute to a Roth 401(k), but not all employers offer them. 

Focus on dividends. Invest in stocks that pay dividends. Your options should continue to expand -- more companies are paying dividends, and many of the elite dividend-paying members of Standard & Poor's 500- stock index are upping their payouts to shareholders. True, dividends do not guarantee that a stock will be a winner. Some failed big banks used to pay high dividends, while high-fliers Apple and Google don't pay a penny. But during periods of market volatility, when stock prices tend to bounce around in reaction to political and economic gyrations rather than accurately reflect corporate fundamentals, dividends can provide a predictable income stream. That's not going to make you rich, but it is a comfort when other traditional sources of income have slowed to a trickle 
Personalize your emergency fund. The standard advice is to keep enough in savings to cover three to six months' worth of expenses. But a lot depends on the stability of your job and the predictability of your income. The greater the risk your income could drop, the larger your emergency fund should be. If you think your job is in jeopardy, aim to save at least a year's worth of expenses; ditto for individuals with erratic incomes, such as those who work on commission. Retirees should keep two to three years' worth of expenses in money-market funds, short-term CDs or other liquid investments. The goal is to keep enough cash on hand so that you don't have to sell stocks or rack up expensive credit-card debt if you have an emergency, but not so much that you miss out on the higher returns you can earn on longer-term investments. 
Think McCottage, not McMansion. If you decide you're ready for home-ownership, stick with the traditional (and temporarily forgotten) rule of thumb that you can afford a mortgage equal to up to three times your annual gross income. Most lenders will limit your total monthly housing payment -- including principal, interest, insurance and taxes -- to 28% of your gross income (and your total debt load to 36%). With a down payment of 20% and a 30-year fixed rate of 5%, a couple with a $100,000 income can afford a mortgage of up to $300,000. (Federal Housing Administration mortgages require just 3.5% down, but the smaller your down payment, the bigger your mortgage and the less house you'll be able to afford.) Calculate your eligibility based on a 30-year fixed-rate mortgage. Then decide whether you would prefer a lower-cost adjustable-rate mortgage with an initial fixed rate geared to how long you plan to stay in the house.
Age 66 is the magic number. Although you can begin collecting Social Security benefits as early as age 62, your benefits will be reduced by 25% or more. Better to hold out for full benefits at your normal retirement age -- 66 if you were born between 1943 and 1954; older if you were born later. Once you reach your normal retirement age, you can continue to work while collecting benefits without fear of bumping up against the dreaded earnings cap, which trims $1 in benefits for every $2 you earn over the prescribed limit. In 2010, the earnings cap is $14,160. If you're willing to wait until age 70, you can collect the maximum retirement benefit for you and your surviving spouse. 
Cut your credit-card debt, but not your cards. Minimizing credit-card debt is a great goal, but closing old accounts could hurt your credit score. About one-third of your FICO score (the credit score most lenders use) is based on your credit-utilization ratio, which is the total of your credit-card balances divided by the total of your credit-card limits. What counts is how much you've charged, regardless of whether you pay your balance in full each month. A good target is to use 20% -- or even less -- of your available credit. If your card company has raised your interest rate or imposed an annual fee, you might want to close the account and take a temporary hit to your score. But don't do it within three to six months of applying for a loan.
Lock in your retirement income. Without a pension, you're on your own to figure out how to make your savings last a lifetime. You can use a portion to buy an immediate annuity, which will guarantee monthly payments for the rest of your life. The older you are and the higher interest rates are, the bigger your annuity payout. But you might want to wait for rates to rise before locking up your money. 
Think single-digit returns. Reality check: You should be happy to get 6% a year if you've dialed down risk in preparation for retirement and downright joyous if your overall investments earn 8% annually over the next ten years. Think of the past no-growth decade as a bridge from the unsustainable high returns of the 1980s and 1990s to an era of more-moderate performance. It's time to set a lower total-return target, not only for stocks but for your other investments, too. The performance of large-company U.S. stocks has been flat since 2000, and small-company stocks are losing steam. With interest rates near record lows and economic growth and inflation subdued, bonds and commodities aren't likely to post double-digit returns, either. Emerging economies, such as China and India, will continue to grow, but as their economies mature, investment returns will moderate. 
Retire your mortgage when you do. A house is a long-term investment with attractive tax deductions for mortgage interest and property taxes. It's great during your highest-earning years, but a monthly mortgage payment represents a major portion of most household budgets. One of the best ways to reduce your costs in retirement is to pay off your mortgage by the time you retire. It's best to whittle away at your loan during your final years on the job, making extra payments if necessary. Unless you have a big chunk of savings to pay off your home loan, you could run low on cash and be forced to borrow for future expenses, such as buying a car or replacing a roof.
Spread your assets around. There's no good formula for the right percentage of stocks in your portfolio -- especially the old 100-minus-your-age rule. A fresh idea is to start with 50% and slide the percentage up or down based on your personal situation. If you're 30, you can tilt your long-term money heavily toward stocks but keep your short-term savings in easy-to-access accounts. If you're 60 and have a secure pension and little debt, you can angle for some growth with your long-term investments, perhaps putting 65% in foreign and domestic stocks. Cast a broad net. There are many high-powered alternatives to stocks -- such as emerging-markets bond funds, currency funds, commodities and exchange-traded funds -- that weren't common when the traditional advice was to invest heavily in blue chips.
Save early for retirement. Paying off debt should be a top priority, but don't let your single-mindedness get in the way of your long-term goals. If your employer offers a matching 401(k) contribution, save at least enough to capture the match. Otherwise, you're walking away from free money. Ideally, you should aim to save 15% of your gross income for retirement (include your employer match in that calculation). If your boss doesn't kick in some cash, that's an even better reason to save on your own, either through your employer-based plan or in an IRA. You can start small -- say, 3% of your gross pay -- and allocate a portion of future raises to retirement savings. As you eliminate your debt, you can save even more. The magic of compounding will do the rest.

529 College Savings Plans explained

The basics of investing in 529 plans

Section 529 plans have become a popular way to save and invest for your child’s college education. If you’re new to 529 plans, you might wonder how they work. These 10 common questions and answers will help get you up to speed.
1. How does a 529 college savings plan work?
Also known as a Qualified Tuition Program, a 529 college savings plan is a great way to save and invest for a child’s future college education.
2. What are the tax advantages of a 529 plan?
Any earnings in a 529 plan have the potential to grow free of federal income taxes. And when you withdraw funds for your child’s higher-education expenses, you generally won’t pay federal taxes, and you may not have to pay state taxes.¹
There’s no federal income tax deduction for contributions to a 529 savings plan. But many states offer state tax deductions for contributions.
3. Who can open a 529 plan? Who can contribute?
It’s not just parents who can open 529 plans—anyone can, like a relative or a family friend.
And even if you didn’t open the 529 plan, you can still contribute to it. For example, a grandparent can contribute to a 529 college savings plan set up by the child’s parents.
4. Who has access to the money in the plan?
The assets remain in the control of the person who opened the 529 college savings plan—for example, a parent. So decisions about how the funds are used are always in your hands.
5. What can the money in a 529 college savings plan be used for?
Funds can be used to pay for qualified higher-education expenses1, such as tuition, fees, books, as well as room and board at colleges, universities and vocational schools. For 2010, the costs of computers and certain computer technology have also been deemed as qualifying expenses.

College Savings Tip #2

If your child receives money as gifts on birthdays and holidays, make it a habit to deposit the cash in your child’s 529 college savings plan.

6. How should I invest the 529 college savings plan?
Most 529 plans offer a variety of investment options, including stock mutual funds, bond mutual funds and money market funds. Consult a financial advisor to determine your best investment choice. Please remember there’s always the potential of losing money when you invest in securities.
7. Are there contribution limits?
The total contribution limit depends on your plan, but most 529 college savings plans offer a contribution limit higher than $200,000.
You can contribute up to $65,000 ($130,000 for married couples) in a single five-year period without incurring gift taxes, as long as there are no other gifts made to the child in the same five-year period. ²
8. What if my child doesn’t go to college?
Every Section 529 college savings plan has a designated beneficiary. If that person doesn’t go to college, the account owner can change the beneficiary to another family member, like a sibling.³
You can also withdraw the money, but earnings will be taxable, and you’ll generally pay an extra 10% penalty tax on top. ²
9. What happens if the parents divorce or declare bankruptcy?
A 529 college savings plan is an asset of the account owner, often one of the parents. In a divorce settlement, the 529 plan will be treated as an asset—for example, in some states, it can be split into two separate 529 college savings plans.
What about bankruptcy? Depending on many factors, including which state your 529 college savings plan is in, it might not be protected from creditors.
10. Do I have to choose my own state’s 529 college savings plan?
No—you can compare the features of 529 plans offered by other states and choose the one that is most suitable for you.
Generally, a student can use a 529 college savings plan to attend college in any state. Qualified higher-education institutions include all accredited post-secondary institutions that are eligible to participate in Federal Student Assistance Programs. This broad list includes public universities, private colleges, graduate schools, vocational schools and even some foreign schools.

Tips for Managing Your Money

Managing your money in college can be challenging. The key is learning what to do with the money you already have, and the money you earn.

Set Up a Budget

• List your income sources (money from parents, working a part-time job, etc.); always use after-tax income in your calculations.
• Figure your expenses.
• Set aside 5% of your income for savings.
• Subtract your expenses from your income and savings to see how much spending money you have.

Know Your Responsibilities

• Learn the difference between gross vs. net income and budget to the latter.
• Calculate expenses you'll have to pay once you're out on your own (rent, car, groceries, utilities, insurance, etc.).
• Get student health insurance.
• Get renters insurance, and protect yourself and the things you own for as little as $5 a month.¹
• Use credit wisely! Bad credit will stick with you long after college, impacting you when making large purchases, such as a car.

Manage Your Checking Account

• Determine how much cash you need weekly and limit your ATM trips to once a week or less.
• Use your debit card whenever possible to avoid ATM fees.
• Use online bill pay and online money transfers where you can.
• Set up overdraft protection on your account.

Invest in Your Future

• Have money deducted directly from your paycheck or checking account through electronic funds transfer.
• Establish an emergency fund for car repairs and unexpected expenses.
• Learn how mutual funds can help you compound your earnings over your lifetime
• Invest a little each month with an automatic investment plan that takes funds directly from one of your accounts.

Your Yearly Money Guide

JANUARY

See where you stand.

• Start off the year with a financial checkup. USAA's free Financial Assessment takes only 10 minutes.
• Calculate your net worth. Add up the value of everything you own, and subtract all your debts.
• Take a look at what you bring home and what you spend each month. Set up a budget, and find some painless ways to save.

Check your credit.

• Keeping a high credit score starts with making sure the reporting agencies have accurate information. By law, you're entitled to a free copy of your credit report every year. Request one from each of the three major agencies (Equifax^®, Experian^® and TransUnion^®) by visiting annualcreditreport.com.
• Your actual credit score isn't free. Expect to pay the agencies around $15 for it. For easy, unlimited access to your credit score for a low monthly fee, sign up for USAA's CreditCheck^® Monitoring.

Consider a Roth conversion.

• In 2010, it could be beneficial for many people to move money from a traditional IRA — and many employer plans — to a Roth IRA. The advantages? Qualified withdrawals from Roth IRAs are tax-free, and there are no required minimum distributions. However, withdrawals made before age 59½ may be subject to a 10% federal penalty and ordinary income taxes. Learn more about conversions.
• You'll pay taxes on the amount you convert, but if you do it this year, Uncle Sam will let you split the converted amounts in half and not tax them until your 2011 and 2012 returns. Consult with your tax attorney for your specific situation.

FEBRUARY

Gather your tax papers.

• It's time to get ready for tax season by gathering your W-2, 1099 and other tax forms.
• If you want to file your taxes on your own, take advantage of a 25% USAA member discount and sign up for TurboTax¹. It's an easy, secure, web-based service. After you start, you can save your progress and come back to pick up where you left off at any time.

Attack your debt.

• Carrying around a big debt burden can make it harder to pay the bills and diverts money that could be used to save for your future. Make 2010 the year you turn the corner on high-interest, non-deductible debt.
• First, get smart about debt, then use USAA's Debt Analyzer to assess your situation and put together a customized plan of attack.

Check mortgage rates.

• Some economists expect interest rates will rise as the economy recovers, which means now may be a good time to shift from an adjustable rate to a fixed-rate mortgage if you are planning to stay in your house for a while.
• On the other hand, a fixed-to-fixed refinance might make sense if the new rate is at least 1% below your current rate and you plan on staying in your house for at least five years.

Don't squander your raise.

• If you were lucky enough to get a raise this year, don't let that extra money get lost in the shuffle. Dedicate at least half of it to savings or paying down debt.
• This is a great time to increase your contributions to your employer's retirement plan, or set up an automatic monthly transfer from your checking account to your savings account.

MARCH

Max out your IRA.

• You have until April 15th to make an IRA contribution for the 2009 tax year. The maximum contribution is $5,000 per year if you were under age 50 or $6,000 if you were 50 and older at the end of last year.
• It's hard for many people to scrape that much money together all at once. Make it easier to reach the 2010 max by setting up an automatic investment plan this month.²

Clean up your investment clutter.

• If you have investment accounts, 401(k)s and mutual funds scattered across the financial world, simplify your life by consolidating them with one trusted provider.³

Get rid of the paper piles.

• Switching from paper statements to electronic delivery will give you a cleaner desk and make your mailbox less attractive to thieves out to steal your identity. Update your USAA document preferences.
• Save stamps: Pay bills easily and electronically with USAA Web BillPay^®.
• Learn how to use USAA mobile to check balances, transfer funds, request an auto ID card, deposit checks⁴ and more.

APRIL

Adjust your withholding.

How did your tax return look?

• If you got a big refund, don't celebrate — that only means you gave the government an interest-free loan during the year. On the other hand, if you ended up owing Uncle Sam too much, you may have been penalized for doing so.
• Fine-tune your withholding to make sure you're closer to the target next time around.

Put your refund to work.

If you got a tax refund, do something strategic with it.

• Pay down debt.
• Build your emergency fund.
• Consider an Individual Retirement Account.
• Save it for college.

MAY

Get ready to move.

• Summer is a popular season for moving. If you're buying a house, figure out how much you can afford to spend, then put yourself in a position to negotiate by getting pre-qualified for a mortgage.
• Check out MoversAdvantage^®5. We'll help you through every step of the relocation process, from selling your current home to buying a new one using a USAA-preferred agent. Plus, you can receive up to $3,100 when you use the service.⁶

Start an emergency fund.

• You should have a stash of cash big enough to cover three to six months of your regular expenses.
• Use a conservative account you can access easily, like a savings account.

Re-think your insurance deductibles.

• Take a look at your auto, property and health insurance deductibles. Consider increasing them to an amount you could cover on your own, which could lower your premiums significantly.

JUNE

Travel safely and smoothly.

• Planning a summer road trip? Store the number for USAA roadside assistance in your cell phone: 1-800-531-8555.
• If you have a USAA credit card, let us know when you'll be traveling. It will help protect your card from fraud and avoid unnecessary disruptions triggered by unusual transactions. Just enter "manage travel notifications" in the search box right here on usaa.com.

Take a look at long-term care.

• $77,000: That's the average cost of a private room per year in a nursing home. If you're over 50, it's time to get educated about long-term care insurance.

JULY

Protect your assets.

• Homeowners policies don't cover floods. Even if you don't live near water, consider a flood policy.
• If you rent, your landlord's policy probably doesn't cover your possessions. Get a renters policy for as little as $10 a month.
• Protect your high-value items — like jewelry, art, silverware, cameras and weapons — with valuable personal property insurance.
• Homeowners, renters, auto and watercraft policies have liability coverage that protects you if you're responsible for harming others or their possessions. As a rule of thumb, each policy should have enough to cover your assets and future earnings. You can supplement this coverage with an umbrella policy.

Take inventory.

• If your property's lost, damaged or stolen, you'll want a good record of what you owned. Make a list or capture images of all your possessions using a camera or video camcorder.
• You can also download free inventory software from the Insurance Information Institute.
• Store your inventory records in a safe and separate location, such as a safe-deposit box.

AUGUST

Boost your energy efficiency.

• Lower your utility bills with a little help from the federal government. There's a 30% tax credit (max value $1,500) for energy-saving improvements like new doors, windows, insulation, air conditioners and heaters.
• You can take another 30% credit — with no cap — for installing alternative energy equipment like wind turbines or solar water heaters. See the government's Energy Star site for details.

Take a hard look at your bank.

• Your bank is at the center of your financial universe, so make sure it's giving you what you need.

SEPTEMBER

Review your investments.

• Are you confident that you have the right mix of investments? The USAA Portfolio Planner can give you a personalized recommendation in a matter of minutes.

Conduct a back-to-school review.

• Use USAA's Education Savings Planner to get started on saving for college or check your progress toward this goal.
• A 529 college savings plan is a great way to save because there are no income limits on contributions and qualified withdrawals are tax free.⁷
•  

• OCTOBER

  Make a (new) will.

• Don't leave a mess for your family to clean up. Plan your estate by creating a health care power of attorney, a living will and a durable power of attorney.

Review your life insurance.

• Make sure you have the right amount of coverage. Don't rely on employer coverage — it may not be enough, and you may not be able to take it with you when you leave.
• To cover both short- and long-term needs, consider a combination of term and permanent insurance.

Set up Required Minimum Distributions.

• If you're older than 70½, IRS rules require you to tap your IRA and employer retirement plan.
• Last year, this requirement was suspended, but it's back in place for 2010. Review the rules and then make arrangements to avoid a harsh 50% tax penalty.

NOVEMBER

Set a holiday shopping budget.

• Before you hit the stores or the web, set spending limits to make sure you don't get carried away with the spirit of giving. If you can't pay for it in the month you bought it, don't do it.
• Check out USAA MemberShop for rewards of up to 20% when you buy online from hundreds of affiliated merchants⁸.
• Some consumers desperate for cash during the holidays fall prey to payday lenders, pawn shops and rent-to-own stores. Don't be one of them: You'll pay sky-high interest rates and dig yourself a financial hole.

It's Medicare season.

• Nov. 15 is an important date; it's the first day of Medicare's annual open enrollment period. You have until Dec. 31 to enroll in a Part D prescription drug plan or switch providers, and until March 31 to change your health coverage.

Have a heart-to-heart talk with your parents.

• Use the holidays to set aside some time to ask your parents about their financial situation.
• Make sure they have a sound retirement income plan, have addressed the potential need for long-term care the right estate planning documents. and have all

DECEMBER

Make your end-of-year tax moves.

Use these tips to lower your 2010 tax bill:

1. Pay deductible expenses early. This might include your January 2011 mortgage payment, property taxes or charitable contributions you've pledged for the coming year.
2. Defer income. People who are self-employed have the greatest ability to push off income into the next year: Simply wait till the beginning of the year to issue some of your invoices.

Before making a move, talk to a tax professional. If it looks like you'll end up in a higher tax bracket next year, you may actually want to reverse these tactics — accelerating income into this year's lower return, and pushing off deductions to the next year, when they'll be more valuable.

Track your donations.

• December is a popular time for making charitable donations. Keep a record of what you donated and remember you'll need receipts for contributions of $250 or more, and an appraisal for non-cash contributions worth more than $5,000.

Debit or Credit?

Don't know whether to use your credit or debit card? Use this guide to help you decide.

Pay with credit, when you want to:

• Shop online. One of the biggest cardholder benefits is purchase protection. If, for example, an item never arrives, is damaged or you have a dispute with the merchant, you can ask your credit card company to withhold payment. With a debit card, the money is gone from your account until the matter is settled.
• Buy something big. Some credit cards offer warranty protection beyond the manufacturer or store's coverage. For example, a home theater system may come with a one-year manufacturer's warranty. Buy it with a credit card, such as MasterCard^® or American Express^® and you get another year's protection automatically. Review the specifics with your credit card company before making the purchase.
• Establish a credit history. Debit card activity doesn't translate to your credit report.
• Rent a car. Some credit cards offer damage insurance, eliminating the need to pay for the add-on coverage rental agencies charge. Be sure to check your card's exact coverage and exclusions before you charge.
• Stay at a hotel or travel in general. Using a credit card is usually easier, especially for hotel and airline reservations.

Pay with debit, when you want to:

• Get cash fast. You can get cash from your bank's ATM without the fees and interest many credit cards charge for cash advances.
• Avoid interest charges. You'll pay no interest on purchases and only buy what you truly can afford. Set up overdraft protection to avoid fees or penalties for spending more than your available funds.
• Buy something inexpensive. Debit cards are great for purchases under $50. It's faster than writing checks and most merchants accept them. Make sure you keep track of your debits to avoid overspending.

Pay with debit or credit, when you want to:

• Earn perks and points. Many credit cards offer frequent-flier mileage and points for hotels, restaurants and purchases from participating vendors. More and more debit cards now have cash-back bonuses similar to those offered by credit card companies. Review reward programs carefully — some may offer smaller bonuses for debit card transactions than credit card purchases.

5 Online Scams That Could Steal Your Joy

Keep the jingle in your pocket and ward off fraudsters this holiday season.

Cyber criminals are always hard at work this time of year. They're corrupting e-cards with viruses, creating fake online auctions, imitating charity sites — all to take advantage of your holiday habits, says Alison Southwick of the Better Business Bureau.
Each year, scammers use the season of giving to devise new schemes — and relying on their tried-and-true tactics — to steal your money and personal information, warns Dave Marcus, director of security research for McAfee Inc., a leading security technology company.
Here are five major holiday scams to look out for this season and tips on protecting yourself.

1. Quizzes, Polls and Contests

The promise of something for nothing is a classic ploy of online crooks. One typical scam promises the first 20,000 responders will receive $1,000 gift cards to a popular electronics store if they "Like" the store on Facebook. Clicking the link takes you to a bogus page that asks for numerous personal details, which can be used for identity theft. And, of course, there are no gift cards.
To protect yourself: Ignore such offers or go directly to a company's Facebook page or website to verify if these offers are legit.

2. Auctions and Deals Too Good To Be True

Shopping on eBay and other auction sites can be a great way to save money, but the deals may be too good to be true — especially if the seller wants you to wire money in advance.

USAA's Security Guarantees

Here are five ways USAA works to protect your accounts and transactions. 1. Careful communication. You can easily recognize legitimate inquiries about your USAA accounts. "USAA will never — ever — ask for your account or personal information via text message, e-mail or phone call," says Tom Shaw, vice president of USAA's Enterprise Security Group. 2. Zero liability protection. You are never responsible for unauthorized charges on USAA cards. Notify us of loss or theft at a 1-800-531-USAA (8722). 3. Account monitoring. We proactively monitor accounts for fraudulent activity and alert members if anything is suspicious. 4. Payment protection. When using USAA's Web BillPay service, if we don't process bills and payments the way you specify, we'll pay up to $50 to cover your late fees or penalties. 5. Online account fraud protection. If your account is the victim of unauthorized access, we will reimburse your account and credit you for any fees charged due to the unauthorized transaction.

To protect yourself: Remember the old saying: "If the deal's too good to be true, it probably is." USAA members have made insurance claims on damaged jewelry and sent it in for repair, only to have USAA gemologists discover it's not what the member thought they owned. "We had one disappointed member learn that a semi-precious stone she had purchased was actually glass," says Russell Schulze, USAA claims replacement manager.
Before considering any deal, Southwick says, check the seller's ratings and reviews on the selling site. Be extra cautious: Some fraudulent sites may even imitate a Better Business Bureau seal to throw you off. You can verify BBB-approval at bbb.org. And whatever you do, never pay by wire transfer, a surefire indication of a fraudulent sale.

3. Phony Charities

Scammers take advantage of your good nature and generosity by asking for donations via a website or text message, particularly after a natural disaster (such as the earthquake in Haiti) or during the holidays.
To protect yourself: Check that a charity is legitimate at the BBB Wise Giving Alliance or the American Institute of Philanthropy. You can always donate directly via a charity's website, too.

4. Malware-ridden Holiday Cards and Programs

Animated greetings, seasonal screensavers and winter-themed games become popular this time of year. Sadly, many of these programs are accompanied by spyware and other malicious technology.
To protect yourself: A good anti-malware product — try McAfee, Norton, Kaspersky or Avira — will stop virtually all of this stuff in its tracks. But your best bet is simply to not open any e-mail — even from a loved one — that contains a forwarded greeting card or holiday game. Get extra protection by ensuring your computer software updates are downloaded and applied automatically.

5. Vacation Homes Not Really for Rent

This up-and-coming scam is surprisingly simple: Fraudsters set up a "vacation rental" site for a real home (complete with photos), and they rent it out for weekend and holiday getaways. The problem: The scammer doesn't own the house, and it's not actually for rent, much to the surprise of both owner and renter come arrival day.
To protect yourself: Use trusted travel sites and rental agencies when booking. Low-resolution photos of the home and super-low rental prices are also a giveaway that something is fishy.