Why Everyone Needs a Credit Card…maybe

When you work inside a bank on a regular basis you begin to better understand some of the financial challenges and pitfalls that exist in our world today. While I don’t believe the challenges to be bigger than ever, they certainly can present themselves in a much wider variety of ways. From card fraud to fake retail sites that steal from us to text messages and pop-ups that attempt to collect our personal information, the internet and mobile phones have certainly opened many new ways that criminals look to exploit.


I would venture to guess that almost everybody that is reading this post can share a story, from either first-hand experience or via another person’s misfortune, about a time when we fell prey to one of these scams. My hope is that you never face a loss in your financial world, but there are steps you can take to better protect yourself from scams.


Let’s talk about Credit Cards versus that more common Debit Card that you have to access your checking account and much of your personal cash on hand. I would like to share some thoughts on the proper use of a credit card and the potential that this tool has for securing your financial well-being.


To make sure we are speaking in the proper terms, remember that the debit card provides the direct access to your bank account, so when your debit card is compromised, you stand to risk your account balances at the hands of the scammer or entity that is using your card information. The credit card comes with an agreement to borrow funds from a lender with a promise to repay, but it is not tied directly to your bank account. Both can be used to make purchases in stores, online, or via your phone.


Before I talk about advantages, it’s vitally important, to me, that my readers understand that credit cards are NOT for everyone. When I speak of using a credit card in this article, my first and best suggestion is that you commit to paying the balance in FULL at every statement. The interest rate on a credit card is simply too high and will take a larger and larger piece of your income every month if you allow the balance to rollover on a monthly basis. I will speak more about the responsible use of credit in a future post but suffice it to say that I would never encourage any customer to carry a balance on a credit card for more than a few months, if ever at all.


So let’s look at some positives of adding a credit card to your billfold or wallet…


1. Credit cards often offer better fraud protection

Debit cards and credit cards both offer fraud liability protection. But there is a major difference in the amount you could be liable for if someone uses your card for fraudulent transactions. With a credit card, you're typically responsible for up to $50 of unauthorized transactions or $0 if you report the loss before the credit card is used.


You could be liable for much more for unauthorized transactions on your debit card. If you report the debit card as lost or stolen within two days, you’re typically responsible for up to $50. If you wait longer than two days to report the card as lost or stolen, your liability could be as high as $500--or even the full amount if you wait longer than 60 days.


2. Using a credit card can help build good credit

If you're trying to build a credit history or improve your credit, charging even a small amount on your credit card each month can have a positive impact on your credit score, provided you make timely payments or pay off the statement balance each month.


3. Use your debit card for ATM withdrawals

When you need cash from an ATM, you're probably better off using your debit card to withdraw funds, even if you must pay an ATM fee. Most credit card issuers charge a cash advance fee, typically a flat fee of $10 or 5% of the transaction, whichever is higher. On top of the cash advance fee and a higher interest rate on the advanced funds, there is also no statement cycle for cash advances – they begin charging interest from the day of the advance. Use the Debit Card at the ATM.


4. Use a credit card for hotel deposits

If you are traveling, you may be staying at a hotel. Most hotels require a credit card or debit card for a deposit on room rates, taxes and incidentals when you check in. Both types of cards return the deposit after you check out, but you’re better off using your credit card in this scenario. Keep in mind that the hotel will charge your debit card for that deposit immediately, withdrawing funds from your checking account and decreasing the amount of money you have available. When you use a credit card, the deposit is simply a hold on your card's available funds.


Hopefully some of this information is helpful for your use of Debit and Credit Cards. We have more detailed information at BANZAI!. Take a few moments to read some more detailed articles and make smarter financial decisions in 2024!


Michael Herzog

President

Time & Savings

By Michael Herzog • February 5, 2025
You may not think that my title goes along with a consistent thought pattern, after all, taxes are one of those normal life headaches that cost us money and typically, savings is something we are doing that provides a long-term benefit. But what if you could save money and reduce your taxes at the same time? Have you considered the tax-deferral available to you by utilizing an IRA? IRA accounts have been around for a long time, and yet, many of us don’t take the opportunity to fund this portion of savings that avoid the taxes that would be imposed upon that income you are setting aside for future use – in retirement. We have a couple of good options for your consideration. Washington State Bank offers these first two options to anyone who wishes to start or continue depositing dollars for retirement planning. Traditional IRA – every taxpayer in the United States has this option, even if you are covered by an employer 401k or other type of retirement program. There are limits to the amount you may contribute, and I would encourage you to speak with your tax preparer about those limits. Roth IRA – this is going to be after-tax dollars, so you don’t receive the immediate benefit, but since you have already paid taxes on these contributions, you will be able to withdraw those funds with very little tax consequences in the future. In most cases, the withdrawals will be tax free. Additionally, we have a partnership with NestEgg that allows you to access investment products that are typically offered in a brokerage with a discounted fee structure. These investments allow you to increase your potential return over the time that you are working toward retirement. Nest Egg is an online brokerage and they offer one on one service as well as the opportunity for you to make investment choices on your own. Let me give you an example of how much you might be saving over a 20-year time frame… For example, you decide that in 2024 you wanted to defer the full amount of $7,000 to an IRA account. And you commit to setting aside this amount each year going forward. $7,000 per year for the next 20 years. I am going to use a conservative 6.0% return on investment over the 20 years. (For this example, I am using the Future Value of Money Calculator at calculator.net) In 2024, you begin and at the end of the first year you have a total of $7,420.00. At year 5 you would have a total of $39,459.00 (while contributing $35,000) By year 10, your $70,000 investment would be worth $92,265.00. In year 20, compounding has almost doubled your investment of $140,000 to a total of 279,949.09. If you are young and can afford this $7,000 annual investment – according to this calculator, you would accumulate $1,000,000 in 39 years. So, if you are in your 30s today, by beginning this simple plan, you would have saved one million dollars by the time you are 70 years old! I think just about everyone would be excited about that number. Start small, finish big. The rules of compound interest are always the same. If you don’t have $7,000 today, start by adding to your IRA on a monthly basis – that would be about $600.00 per month. Maybe the first question is why am I not already doing this? Michael Herzog President

Happy New Year

By Emily Brandenstein • January 6, 2025
As I was taking some time to reflect upon all that has happened in my life and the world around me during 2024, I thought of these words from Scripture found in Isaiah 9:6 – “For a child is born to us, a son is given to us. The government will rest on his shoulders. And he will be called: Wonderful Counselor, Mighty God, Everlasting Father, Prince of Peace.” My wife and I welcomed three new grandchildren into our lives during 2024, two of our sons are now parents and “wow!” what a ride this has been so far! I always thought that I was protective of my own children, and yet, I find myself even more concerned for the well-being of my grandchildren – looking around our current world, I’m guessing you are experiencing some of the same feelings as we turn the page on 2025. One of the biggest things I have found true is the cost of everything from diapers to formula to toys and books has gone up quite a bit over the last number of years; frankly, I was shocked at the cost of a package of diapers! I have always tried to keep a close eye on my personal finances and watch those pennies to avoid over-spending, but once again, it isn’t just about my own spending, it’s also about keeping a close eye on who else might be trying to “spend” my money. Nope, not talking about my wife or others in my home – I’m talking about those fraudsters that are hard at work trying to pad their own financial picture at my expense. As we step into this new year with hope and excitement, it’s also a great time to protect what matters most — our personal information. Identity theft is a growing concern, but by staying vigilant and informed, we can safeguard ourselves. Here are a few simple tips to help prevent identity theft in 2025: Monitor Your Accounts: Regularly check your bank and credit card statements for any suspicious activity. Very important to check the statement if you are needing to prove fraud. Use Strong Passwords: Create unique and strong passwords for each of your online accounts. Passphrases are also helpful and easy to remember – ie. “Fall is my favorite time of year” – the more characters that you can use, the better. Shred Personal Documents: Shred any sensitive papers before discarding them to avoid dumpster divers. Washington State Bank will be hosting another shred day this spring for your larger projects. Enable Two-Factor Authentication: Secure your accounts with an extra layer of protection. This is most commonly established by a text message to your phone or adding an authenticator from Google, Microsoft, etc – that produce a login code for you. Stay Wary of Phishing Scams: Always verify sources before sharing personal or financial information online. When your bank sends you a code and it has the following message: WE WILL NEVER ASK FOR THIS CODE, please take that seriously – no one from a financial institution needs to have access to your online banking. To revisit my opening paragraph. Isaiah was writing about the coming Messiah – the child will establish a new, eternal government – He shall be called Wonderful Counselor, Everlasting Father, and Prince of Peace. Remember that He called us to be wise as serpents and gentle as doves – Part of wisdom is protecting yourself and your home from these various “serpents” looking to steal what you are working for in this life. Protect yourself and reap the benefits of peace in your homes. Don’t be a victim of identity theft in the new year or any year for that matter! Let’s start 2025 with a plan to stay vigilant in our finances and prosperous in our lives! I look forward to sharing more of this new grandparent journey with you over the next year – and more ideas on making the financial parts of your lives work to your benefit! May God bless each of you as we begin the New Year of 2025! Michael Herzog President

Trick or Treat, or Mostly Just Trick

By Emily Brandenstein • November 6, 2024
When I was much younger, my father used to prepare for a long road trip by starting at our kitchen table and pulling out the current edition of the Rand McNally US Atlas. If you are of a certain age, you will remember this large book that was filled with maps by state to include all of the U.S. highways, state routes and back-country roads located within each of our 50 states. My father would go on to mark up the route in the book so Greetings to all of you who may be reading this short post! I love the changing of seasons in the Midwest, the renewed palette all around us as the trees and shrubs begin to show the Fall’s festival of color. Children are starting to think about the upcoming holidays and the annual gathering of candy from local neighbors willing to share. But, along with all of the positive vibes from the change to cooler weather come the regular emails and phone calls from “helpful” people looking to separate us from our money in less than honest ways. October has often brought a special emphasis on Cyber Crime and awareness to the dangers that our online lives make us susceptible to in the wider world. I was recently reading an email newsletter that I received from BankBeat, and in this article I thought it would be important to lift a couple of sections as additional information. Quoting from the article: “The statistics for individual fraud are staggering. According to the FBI’s 2023 Internet Crime Report , 880,418 complaints of cyber-crime were reported to the FBI by the public, a 10 percent increase from 2022. In 2023, there were more than 3,200 data compromises, up from 1,801 the year prior, according to the Identity Theft Resource Center. A study conducted by the Federal Reserve Bank of Boston indicates that check fraud in 2023 was $20 billion, up from $100 million in 2006.” Data compromises almost doubled from 2022 to 2023! $20 billion in check fraud in 2023! The criminals are very busy indeed. Even so, there are a few things that you can do to keep yourself safe from being a victim. First, NEVER, NEVER, NEVER click on a link in an email that you receive. If you receive a message from a familiar company telling you that you made a purchase or that your payment has been declined – DO NOT CLICK the provided link. Simply go to that familiar website directly, log into your account and check your activity. Let me give you an actual example of what this looks like…I receive at least 5 of these per week. Here is the text… “Thank you for your purchase. You bought $856.72 on October 21, 2024 using your credit card XXXX. If this wasn’t your purchase please click the link and you will be directed to our customer service team. Again, thank you for buying from Apple.com.” When you click the link you are immediately transferred to the scammers who will then look to “assist” with your purchase. They will likely ask you to let them share your computer screen – giving them access to your PC. Then they will obtain your credit card or bank account information in order to confirm that they have the correct information. Meanwhile, you are giving them access to your accounts and banking information. Do NOT make the mistake of thinking you can outsmart them, they are very good and very convincing. Secondly, keep your phone secure by not answering calls that you don’t know the caller. If a call comes to my phone, and the person doesn’t show in caller ID, I don’t answer. So, if by some chance you call my phone, you will likely go to voicemail. Very few scam calls leave a message. That is the easiest way to keep yourself safe while using your phone. Third, and final for this article, obtain a good Identity Theft partner. For many years you have heard advertisements for these companies, and there are many good ones, but be aware of the cost. I find that the companies with advertising budgets are typically, not always, more expensive to utilize. Also, be cautious about the “First Year Free or discounted”, that normally means that the ongoing years will be more expensive. We have a ID Theft program called ID Theftsmart here at the bank that is pretty economical and you don’t even have to be a cyber security. That was my only bank advertisement this month – but if you’re serious about staying safe online consider visiting these pages for more info: 1. Federal Trade Commission 2. CISA 3. National Cyber Alliance Have a wonderful Fall season and take some time to be safe online! Michael Herzog President
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