Credit Card debts: Causes and Prevention

Causes of consumers Overspent & Credit Card debt

Nowadays, consumer always deals with problem of overspending. The creation of credit card is the main root of overspending. However, why most of the consumer will encounter with this problem ???? Below are some relevant reasons:

1. Lack of knowledge of money management

As we know that most consumers do not have the knowledge on how to manage their money. Why is this problem occurring? Most of the time is due to there is no budgeting made by consumer. Without budgeting, consumers will not know how much they spend as well as how much money they have. Therefore, they tend to spend more than their income. This is problems often happens on those credit card users whereby they will only make payment a payment after purchasing.

2. Do not have the habit of saving money

Most of the consumers do not have the habit of put a portion of money to their saving accounts. During inflation, all goods and services has become relatively expensive than before. Consumer need spend more money to buy same value of goods or services. Moreover, there is no saving in their bank account to meet the unexpected expenses and thus consumer will be faced with the problem of credit debt.

3. The used of credit cards

Another cause of credit debt is the increasing relies on credit card. Most consumers will have a wrong perception that they have enough money to make payment a month after purchasing goods and services. There is increased amount of consumer is preferred to purchase something by using credit card rather than paying cash. Although it is convenient but actually it is a way leading to high debt. Consumers have to pay for principle portion plus interest rate that is charged by bank. It is more expensive as compared to make cash payment.

4. Reduced in income

Due to economy downturn, consumers’ income has decreased significantly. Consumers often do not adjust their spending to match with the reduction in income. Without preparation of budget, consumers would not know exactly how much they have spent and thus overspending will be occurred.

5. Excessive Medical expenses

Medical expenses can not be avoided by almost every family. We often deal with problems when our family members have faced with illness or serious diseases. The medical bills are high and most of the time people tend to make payment by using credit card. If they are not able to pay if the amount is due then the debt will carry forward to the following month. Eventually, debt will be accumulated month by month.

Ways to prevent and control credit debt

1. Prepare your own budget

It is advisable to have monthly budget to prevent credit debt. Budget should be prepared based on your income. Consumer should control themselves to spend according to the budget. They should spend their money on necessary goods or services instead of spending on those unnecessary spending.

2. Self control and discipline

The most important element to solve credit debt is the consumer itself. They should
manage their money properly as well as make spending wisely. It is advisable to spend on necessity goods and services especially during economic downturn in order to avoid debt.

3. Avoid using credit card

It is recommended do not to rely on credit card as it will lead to creation of debt. Consumer should not use future money because we could not predict what will happen in the future. The used of debit card can be substitute of using credit card because you can only spend money that you are actually owned.

4. Keep your money in saving account

Consumer should save a portion of their money in their saving accounts. This is important to pay unexpected expenses or during financial problems. Holding cash is relatively important particularly during economic downturn in order to prevent incurring excessive debt .

References:

http://www.creditcards.com/credit-card-news/5-simple-credit-card-debt-rules-1267.php

http://ezinearticles.com/?Why-We-Overspend-Our-Dollars&id=237361

http://www.3debtconsolidation.com/creditcardmistakes.html

Electronic Currency

Do you know what is money? Do you ever seen it before? Do you touch it before? I think everyone will answer "YES". Money basically in the form of physical notes and coins, and it involve in our daily transactions. However, money can be intangible nowadays because of the evolution of technology information.

Electronic currency is known as money that just transacted electronically by computer networks or internet. There is no physical asset for electronic currency. It is a system which allows to pay for goods and services by transmitting a number from one computer to another computer. Funds will be transfered from one party to another party, by using a strong encryption to prevent payment risk to the payer. Electronic Fund Transfer and direct deposits are some of the examples for electronic currency.

Electronic currency have been used widely in banking world for currencies depositing and online payment. It is extremely convenient via electronic currency where no any physical cash involved. There will be an account in the digital world, user have to verify the ownership of the account. After that, the user can withdrew money from the electronic account. The digital bank will send a seriel number like electronic coins to the user, which the bank will sign it by using encrypted keys. Users can use this electronic coins to purchase online goods.

Doing online purchasing by using electronic currency is more secured since it using a strong encryption code that can be said is impossible to break the code. Therefore, it become more and more popular in online world as the security and privacy is protected.

FIRSTGATE Click and Buy

ClickandBuy is one of the e-payment market through INTERNET. It makes the online payment easier by innovative e-billing system. It's also provide security to users when they are using online payment. It is leading in online payment world and provides e-payment support for more than 14,000 merchants in 26 countries, with 126 different currencies and 46 different payment methods.

Paystone

Paystone provide online payment services that is inexpensive and support small financial transaction. It provide a chance for small businesses or merchandise to generate profit more efficiently and easily. In addition, it also offer email funds transfer services which enable the account holders to transfer its fund to any email they want around the world.

Beenz.com & Flooz.com

Both of these two website developed in the early stage of online currency heat and enable users to earn online currency. Beenz.com with beenz currency, Flooz.com with flooz currency. This online currency is used to make online purchase, similar like using coupon to purchase item in real world. They have been supported by online merchant and people tends to use this kind of online currency to make payment. However, dot-com disaster happen and both of these two dot com had been shut down. The difference between these two dot com and e-payment nowadays is these two dot com ise using own kind of currency which might not be accepted by certain party. Once failure of these two dot com happen, the beenz and flooz currency become unusable and worthless.

Peppercoin
It is a system to process small payment(micropayment). Peppercoin.Inc is the company who has the idea of aggregrate transactions of all user, merchant and payment service provider and pick randomly selected small transactions and bill them in a lum sum amount of money. This can helps to save transaction per cost.

Review of " what sell best online"

Based on the post of “what Sell Best Online”, we can conclude that the numbers of e-tailing company are keeping on rising. The online transaction is very common in developed country such as US. In Malaysia e-tailing activities are still limited as most of the Malaysian still relies on traditional commerce. Generally, the online sales involve selling computer hardware and software, clothes, home furnishing, books and etc.

E-tailing is environmental friendly because it encourages paperless transaction, so that save the resources. At the same time, E-tailing is easy to be used for searching greater products information and selection to customers so that they can make comparison easily. Besides this, customers can also save their cost whereby they no need travel from shop to shop for product hunting. This is why people prefer to purchase items through e-tailing. According to the post, more and more people interested to purchase clothes through online may be because they can customize the clothes according to their preferences. If physically travel to the shop may be hard to get the design and size that they want. In the future, all of the items might be sold through e-tailing even stationeries. For example, customers might be able to customize the style of pencils. Therefore, the competition among E-tailing companies will become greater.

However, we also concern about the drawback of such E-tailing. When people all the time work with the computers and lazy to travel, it may lead to health problems. In today’s environment, a lot of people only focus on their job with computers and do not exercise. Furthermore, some computers will release greater radioactive, if people always exposed to it, cancer can be easily caused.

Review of " Online Brokerage Fraud-Millions of Dollar Loss"

Based on the post of Online Brokerage Fraud-Millions of Dollar Loss, obviously this is due to lack of internet security. E-Trade Financial and Ameritrade might already try hard to design and implement the internet security system such as firewall, anti-virus, encryption and etc. However, hackers will still find out the weaknesses of such internet security system and try to break down that system. The question is why the hacker able to hack into the company system even though the security system is very strong. We think such a criminal hacking might be directly or indirectly done by the people who are very clear with the company’s internet security system and its weaknesses. The hacker might be the staff of the company especially those who involve in designing the system. Therefore, inspection should be done on those people as well. Furthermore, IDs and passwords might be stolen by outsiders and lead to the fraud cases.

Usually, the motive of hacker is to gain unauthorized access to the database of the company to destroy the data, change the information or to corrupt the company’s computer system for their own interest. The real example is stated on the post whereby the system of E-Trade Financial and Ameritrade had been hacked and lead to millions of dollars losses.

Besides facing financial losses, company at the same time will lose customers’ confidents. Customers are always concern whether their private information is filed properly in the company database. If hackers can easily access to the database, customers might worry their confidential information will be stolen especially for online banking system. Hackers might hack into the account of customers and make unauthorized transfer of money to hackers account.

In order to minimize the chances of internet fraud, company should always renew its internet security systems and always change the IDs and passwords.

Phishing

Definition

Phishing is the criminally fraudulent process of attempting to acquire confidential information such as username, passwords and credit card detail by masquerading as a trustworthy entity in an electronic communication. Phishing is carried out by e-mail or instant messaging which the email request the users to update their personal information. Its' look are almost identical like legitimate but actually it is fake and set up to steal the user’s private information. Normally, phishing will appear in popular social web sites, auction sites, online payment processors or IT administrators such as PayPal, eBay, MSN, Yahoo, BestBuy, and America Online and so on.

A Few Examples of Phishing

eBay Phishing Example

Ebay/PayPal phishing is very common currently. A scammer will send out thousands or even millions of emails to his list. Once the end user click on the links in the e-mail ,it will link to a web site that designed like ebay. Next, the end user attempts to login his or her username and password to the scammer. Further, the scammer also e-mails to his list and claiming to be eBay or PayPal and request your username and password. The novice user may send those details back to the address and their account is compromised.To prevent this problems, the users do not reply or click any e-mail and links that claimed themselves as Ebay or Paypal.In fact, Ebay or PayPal website will never ask their users for personal information.

Bank Phishing Example

The scammer will send out phishing e-mails to bank users and claims that the recipients account has been suspended and in order to return their account to normal standing they need to verify some information. The users will clicks on the link and submit their information to scammer. Then, the scammer will use the information to operate the victims account.

To prevent the problem, the users do not click or reply any e-mail and link which it is claiming to be from bank. As this is a pretty common occurrence you should be able to just ignore it.

The other fraudulent ways is included the followings:

E-mail

Phone Phishing

Credit Card Phishing

Prevention of Phishing

There are few ways to solve the phishing such as do not reply or accept any unauthorized e-mail or messages. Besides, you can install the anti-virus to block any unauthorized mails. For more details about any software to solve phishing, you can refer to website like wikipedia, google, and so on.

Anti-Phishing Program

Article of Prevention Phishing

Type of Prevention Phishing

Prevention of Phishing

How to Safeguard Our Personal and Financial Data

Try to imagine this illustration: You love to do online shopping. Usually you will log in as member and use credit card for payment of the product. Recently you heard your friend said the website that you usually log in as member to do online shopping is being hacked by online hackers. You are so worried that your personal data would be stolen, especially your password that you use for logging in. This illustration fully described the importance of safeguarding for computer users nowadays. There are more and more people using computers to carry out their daily work, even companies make use of computers to do their ordinary business transactions. Therefore, online security is crucial in today's world to safeguard our personal and financial data.

There is some suggestions to protect your personal and financial data:

1. Install a firewall
Firewall referred to a system that is responsible to block unauthorized access and allowing authorized communication. Firewall act as a guard in front of our computer to block all unapproved users to log into our computer network.

Retrieved from http://en.wikipedia.org/wiki/Firewall_(networking)



2. Password control
Password has to be created before access into any personal data to ensure no other one else can simply access to our data. However, the password has to be strong enough or complicated to avoid other from guessing your password correctly. Many of the website has enable users to log in using their password, however it seems not secured enough to safeguard our personal and financial data. This is just a preliminary stage in protecting our privacy. It is recommended to change password frequently as to prevent others from hacking into the data.



3. Encryption
Some information that are private and confidential should be encrypted. Encryption enable readable data to convert into unreadable characteristic so that others unable to read the data. It is a useful method to prevent others from stealing private data from the computer.



4. Do not access financial information publicly
Please avoid to access personal financial account when using public wireless or at public computer. Public wireless or computer not like our own personal computer, they are more easier to hacked by others.



5. Install antivirus or antispyware programs

This is the most common way to protect your data. Every personal computer should have one antivirus program to ensure clean file or information saved in computers. Norton, AVG or other antivirus sofware could help you to avoid viruses and attacked by intruders. In an addition, it is important to update your antivirus programs frequently.




6. Do not access to unknown site or download unknown file
It is essential to have knowledge that all unknown site or file might contained viruses. Therefore, please do not simply access to it as once you clicked on it, there will be a chance for the intruders. Besides, any pop-out that appeared on the screen should be ignored.

The Threat of online security: How Safety is our data?

The used of internet has become fundamental in our daily life. It has been widely used in different networks such as education, business and banking as well as government networks. However, organization continuously exposes to the threat of online security. The threat of online security that organizations face was different and it will lead to substantial financial losses for the organization.

Nowadays,people often face with problem that their personal data is being accessed by unauthorized user. Hence,now we have to know that there are two types of attacks which are called non technical and technical. The word non technical attack is defined as an attack that is a collection of techniques to manipulate someone to perform an action or revealing private information that compromise a network or computer. Social engineering is examples of non technical attack whereby the hacker make use of human weaknesses to influence people provide confidential information rather than invest their time to break the access control system. Phishing is an example of social engineering attack whereby email users will receive fraudulent email that requires he or she provide their password or any other private information to update their personal account data. In fact, it is a technique used by social engineer to private information.Those are examples of non technical attack which is one of the threat of online security which will harm personal confidential data.

Below is an example of fraudulent email:

On the other hand, technical attack is defined as attack that using software and system knowledge to gain access to private information. The most common types of technical attack include the virus, worm and Trojan Horse.

Virus is a program that attaches itself to a legitimate program to penetrate the operating system and destroy application program, data files and the operating system itself. Virus has the ability to spread throughout the host system and on the other systems before perpetrating its destructive acts. Personal computer always encounter with virus penetration. This is particularly when connecting in a network where the infected personal computer can upload the virus to the host system. Subsequently, the virus will spread throughout the operating system and to other user. Virus will be spreading via email attachment, downloading free program from the internet and so on.

Besides, Worm is a software program that hides into the computer memory and replicate itself into different area memory. Worms is different from Virus because it can be replicated systematically without transfer as part of host. Other than that , Trojan Horse is also an example of technical attack. It is a program that aims to obtain the IDs and passwords from private users. It able mimic normal log on procedures of the operating system. Trojan Horse will save a copy of those confidential data in a secret file when the users entering their IDs and password. Ultimately, Trojan Horse’s author can access to the system by using those IDs and password. Worm and Trojan horse are also another ways where confidential data will be hacked by the unauthorized user.

As a conclusion, there is substantial number of threat of online security and users’ data has become less safety as a result of advancement in technology. Therefore, proper safeguard like firewall and antivirus software should be used in order to encounter with the risk of online security.

References:

http://www.bsagovernment.com/downloads/MajorOnlineThreats.pdf