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Get Loan for New Business Summary: Understanding Your Options and the Terms and Requirements - NY Pilot

Get Loan for New Business Summary: Understanding Your Options and the Terms and Requirements - NY Pilot


Get Loan for New Business Summary: Understanding Your Options and the Terms and Requirements - NY Pilot

Posted: 02 Nov 2020 04:50 AM PST

It's no secret that business funding doesn't come easily. Business loans involve a lot of risk for the lender, which results in stricter eligibility requirements. Even though it's a challenge, it's not impossible to get loan for new business endeavors.

It helps to understand the different types of loan options available. There is the small business line of credit, which usually has a cap on the amount of funds you can access, although it is useful for managing a company's cash flow as well as unexpected expenses. There might be a fee for setting up this line of credit, but there usually isn't a charge of interest until you actually withdraw money from the funds.

There is also the working capital loan, which is essentially a debt borrowing vehicle used by the business to finance its day-to-day operations. Some of these types of loans are unsecured, but newer companies that have little to no credit history will have to put up something for collateral.

If the primary reason you need to get loan for new business is for equipment, you might be interested in an equipment loan. Keep in mind that you will still likely e required to make a down payment – usually around 20% of the purchase price. The equipment itself is the security in this type of loan, so if you are unable to pay it all back, you'll lose the equipment. The principal is typically amortized over 2- 4 year periods.

Get Loan for New Business For Specific Purposes

Small business term loans are those that are usually set for a dollar amount and are used for a variety of things, such as capital expenditures, business operations, expansion, etc. The interest must be paid monthly and the principal should be repaid anywhere from 6 months to three years. This type of loan can be unsecured or secured, and the interest can be fixed or varied. This is a good option for small businesses that need capital for either growth or onetime, large expenditures.

There are small business credit cards available if your credit score is good enough. Interest rates vary depending on your credit score, the lender, amount on the card, and so forth. Many of the insurers require that the principal owner be co-liable with the business. On some cards, there are cash back and rewards programs.

Additional options include:

• SBA-Backed loans

• Angel investors

• Crowd funding (peer-to-peer funding)

• Direct online lenders

• Accounts receivable funding

It's wise to do research on all of your options on how to get loan for new business. The best place to start is with US Business Funding. This site will help you get approved with flexible payment and term options. US Business Funding has a lot of positive feedback and has been featured in Forbes, CNN Money, Inc 500, and other prestigious publications.

Source by George Botwin

Op-ed: Here are some action steps for small businesses that survived the Covid pandemic - CNBC

Posted: 02 Nov 2020 05:00 AM PST

andresr | E+ | Getty Images

Covid-19 has disrupted tax and retirement planning for small-business owners, especially those who focused on saving their businesses from the pandemic's fallout earlier this year. With some hard work, however, there is still time to get back on track by Dec. 31.

Here's a great example. After his business tanked this spring, one of my clients didn't take a paycheck for six weeks. To preserve cash, he also lowered the amount of his federal and state withholding tax and stopped contributions to his company retirement plan. Fortunately, in the past few months, his business has largely rebounded. And to his own surprise, revenue for 2020 will be higher than what he projected at the beginning of the year.

Now that he's flush with cash, he needs to make several pro-active adjustments, starting with his tax withholdings and retirement plan contributions. And because his profit sharing contribution is tied to his compensation, we are also adjusting his wages, making his pay retroactive to pre-pandemic levels so he can achieve the maximum benefit.

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Many small-business owners across the country are facing the same scenario. If you took similar steps this spring, there are some action steps to take between now and year-end.

First, increase your compensation, tax withholding and retirement plan contributions. Much like my client, start by restoring your wages and tax withholdings to their pre-pandemic levels. And work to evaluate your retirement plan savings.

If your business has recovered, there is still time to contribute before year-end. For 2020, the maximum contribution for 401(k) plan salary deferrals is $19,500, or $26,000 for those age 50 and over.

In my client's case, he needs to contribute an extra $3,250 by year-end to make up for the months he stopped his deferrals. We simply took his remaining six pay periods and divided into $3,250 to get him caught up.

For those making additional employer contributions, review the amounts you've contributed to your safe harbor, profit sharing and cash balance contributions on a year-to-date basis versus your original 2020 funding strategy. While qualified employer contributions are not due until 2021, I recommend acting now to avoid falling further behind. If not, you may be in a cash-flow pinch in early 2021 when both taxes and retirement plan contributions are due.

It's also time to get back in the stock market. By holding onto much of their cash this spring and summer, many small-business owners stopped investing any of their "after-tax" earnings, fearing every dollar would be needed to keep their businesses running. Unfortunately, the equity markets quickly rebounded in late spring and went on a tear — and these investors missed out on substantial gains.

Now is the time to re-evaluate your liquidity needs. Start by setting aside a reasonable amount of cash, or considering opening a home equity line of credit. These moves will provide you with a safety net without jeopardizing the long-term benefit of compound earnings from future investments.

Once you are comfortable with the amount, I recommend resuming after-tax savings using a dollar cost averaging strategy. This will work down the excess cash by making periodic purchases over time and reducing the impact of day-to-day market volatility.

Make some smart charitable donations. Despite the hardships of running a business, many owners sought to donate money to non-profit organizations in their communities to help the less fortunate weather the Covid-19 storm. One way to accomplish this goal is to gift appreciated stock. Instead of selling the stock and recognizing capital gains, a security can be donated for a deduction of fair market value, gains included.

For example, one of my clients wanted to support a local community organization that was providing rent and utility assistance to those in need. He had an oversized position in a well-performing stock that he wanted to reduce. So, instead of giving cash to the nonprofit, he donated the stock and was able to reduce his exposure while saving on capital gains.

This strategy achieved several goals – the client supported a local nonprofit during a time of crisis, saved on saved future capital gains and was able to take the cash he would have otherwise gifted and reinvest to diversify his portfolio by purchasing a new security in its place.

While we continue to wait for a Covid-19 vaccine, millions of small-business owners know this winter will present some challenges. By keeping daily tabs on revenues and cash flow, they can continue to run their businesses while funding their tax obligations and retirement plans. Now is the time to get those plans in place.

Triad Business Bank Delivers Immediate Results for the Business Community and its Shareholders - GlobeNewswire

Posted: 02 Nov 2020 05:45 AM PST

Greensboro, N.C., Nov. 02, 2020 (GLOBE NEWSWIRE) -- Triad Business Bank (OTC Pink – TBBC) today reported financial results for its second quarter of operations ended September 30, 2020.September Quarter 2020 Highlights:Total assets increased to $241 million at September 30, 2020Core loans increased $36 million to $50 millionCommitted loans increased $62 millionInterest income expanded 91% to $996,000 compared to the prior quarterPre-provision net loss declined 26%, an improvement of $262,000Core deposits increased 35% to $93 millionLoan pipeline climbed to record level of $135 millionPaycheck Protection Program (PPP) deferred fees of $2.4 million ($1.8 million net of deferred costs) to be realized in future quartersAllowance for loan loss increased to $628,000, or 1.26% of non-PPP loansReported no classified or non-performing assets"TBB remains one of the newest banks in the country," said Ramsey K. Hamadi, Chief Executive Officer. "The Bank opened March 16th simultaneously with the Pandemic lockdown. In the two quarters that followed, the Bank grew from $51.2 million in assets at March 31, 2020 to $241.3 million in assets at September 30, 2020. During this six-month period, the Bank has been pivotal for Triad's economic health. In its opening months, the Bank originated more than $100 million of Paycheck Protection Program loans to approximately 350 businesses. These loans protected over 12,000 jobs in the Triad business community.  In the four months that followed this program, the Bank transitioned to focus on its core business that included originating nearly $86 million loans and funding those loans with $94 million of deposits from businesses and private bank customers."September Quarter ResultsThe Bank had a net loss of $1.2 million or $0.24 per share in each of the June and September quarters. However, when excluding the provision for loan losses, the quarter's operating loss declined 26% to $758,000, an improvement of $262,000 from the June quarter's loss of $1.0 million. The Bank's net interest margin rose 29 basis points to 1.74% in the September quarter from 1.44% in the June quarter. Notably the average balance of core loans increased from $4.0 million to $32.7 million and the weighted average yield on these loans increased from 3.34% to 4.15% in the June and September quarters, respectively. Hamadi commented: "During the capital raise, our proforma financial statements anticipated the Bank's operations would be breakeven at the end of the sixth quarter with the seventh quarter being profitable. Through two quarters, our results indicate we should meet or beat our projections. Our loan and deposit growth rates are exceeding expectations and the margins we projected also appear attainable.  Further, our costs are directly in line with the results forecasted."Core Lending and Deposit ActivityThe Bank grew core loans by $36.0 million to $49.9 million during the September quarter. The Bank also originated $72.2 million in core loans, which included $36.0 million in funded loan balances, $25.7 million in unfunded loan commitments and $10.5 million in loan participations sold to other financial institutions. For the six-month period, the Bank originated $195 million which included $108 million of PPP loans, $49.9 million of funded core loans, $25.7 million in unfunded loan commitments and $13.5 million in loan participations sold. The unfunded loan commitments consist primarily of operating lines of credit to commercial and industrial companies ("C & I") and unfunded construction projects. At September 30, 2020, 70% of the Bank's loan portfolio was C&I in nature:Loan Diversification
Core deposits increased $24.3 million and totaled $93.4 million at September 30, 2020. Money market accounts of businesses were the leading product. Total money market account balances increased $36.2 million to $70.0 million, but growth in money market balances was partially offset by a $13.9 million decline in demand deposit accounts. The decline in demand deposit accounts was primarily due to withdrawals of PPP loan proceeds.  For the September quarter, the Bank opened 197 new deposit accounts, bringing the total number of accounts opened to more than 500 in the first six months. Of all deposits, business treasury relationships are the largest and most profitable. These deposit relationships have the most activity which generates fee income and are the Bank's lowest cost deposit relationships. Total treasury relationships increased from 23 companies at June 30, 2020 to 60 companies at September 30, 2020. Twelve other businesses are in process of converting to Triad Business Bank's treasury systems and numerous other businesses are evaluating our services. Robin Hager, President and Chief Operating Officer, commented, "We chose a Jack Henry Silverlake product for our core systems specifically because it offers what we believe is the best suite of Treasury Management products on the market. These systems are making a difference.  Our customers are bringing us more business relationships than they planned because of the quality of our systems and products."PPP Program UpdateAt September 30, 2020, the Bank had $100.1 million of PPP loans outstanding to more than 340 local and regional businesses. In addition, the Bank had unamortized fees of $2.4 million ($1.8 million net of deferred costs) on these loans. Barring changes in the PPP loan forgiveness process, the Bank anticipates recognizing the balance of these fees in the December quarter 2020 and the March quarter of 2021. The Bank received the first of the forgiveness payments from the U.S. Treasury in October.  Noninterest ExpenseNoninterest expense increased $116,000 to $1.6 million for the September quarter compared to the prior quarter. The increase in expenses was primarily due to the Bank converting from a cash basis to an accrual basis of accounting for certain items such as data processing and facility costs which resulted in the recognition of four months of expense instead of three months.Credit RiskThe Bank had $0 of nonperforming assets and $0 of substandard assets at September 30, 2020. The Bank's emerging loan portfolio is being underwritten with an eye on the impact COVID-19 is having on cashflows of borrowers. Many businesses are prospering in the current environment and have either stable or expanding revenues. By building a loan portfolio as the impact of the COVID pandemic unfolded, the Bank has been able to assess credit risk with a high level of clarity.Deferred Tax Asset, Non-GAAP MeasureThe Bank's tangible book value at September 30, 2020 was $8.90. Net operating losses during the organization period and during the first six months of operations have created a deferred tax asset of $954,000. This asset is being carried at $0 until the Bank's core operations become profitable. At that time, the valuation allowance will be reversed. At September 30, 2020, the valuation allowance lowered tangible book value by $0.19 from $9.09 (a non-GAAP measurement).Outlook"Triad Business Bank has had an exceptional beginning which should propel the Bank forward to our near-term goal, which is to become profitable within six quarters. The December and March quarters are expected to have high loan growth activity due to a continued strong loan pipeline. In addition, we believe the December and March quarters will benefit by realization of PPP loan fees as loan forgiveness payments are received. This rapid start has prompted an acceleration of our business plan.  The loan and deposit pipelines are stronger than we had projected, and we anticipate a continued rise in revenues will follow. We expect that the net interest margin will continue to widen as core loans replace PPP loans and cash as the primary source of earning assets," Hamadi commented. About Triad Business Bank (OTC Pink: TBBC)With three offices located in Winston-Salem, High Point and Greensboro, Triad Business Bank focuses on meeting the needs of small to midsize businesses and their owners by providing loans, treasury management and private banking, all with a high level of personal attention and best-in-class technology.  The Bank's common stock is quoted on the OTC Pink Market under the symbol "TBBC." For more information, visit www.triadbusinessbank.com
Forward Looking LanguageThis release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Triad Business Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of Triad Business Bank and on the information available to management at the time that these disclosures were prepared. These statements can be identified by the use of words like "expect," "anticipate," "estimate" and "believe," variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Triad Business Bank undertakes no obligation to update any forward-looking statements. ###   AttachmentsTriad Business Bank Key RatiosTriad Business Bank Book ValueTriad Business Bank Income StatementTriad Business Bank Balance SheetMichelle Rash RLF Communications 336-553-1733

Smart Money Podcast: Financial Stability and Identity Theft - Morton Times-News

Posted: 02 Nov 2020 12:19 PM PST

Welcome to NerdWallet's Smart Money podcast, where we answer your real-world money questions. This week's episode starts with a discussion of how to create more financial stability in an unstable

Welcome to NerdWallet's Smart Money podcast, where we answer your real-world money questions.

This week's episode starts with a discussion of how to create more financial stability in an unstable world. Saving more if you can is a good start, but also think about how you want to feel about your money, and consider creating a Plan B if your financial life goes off the rails.

Then we pivot to this week's question from David in Florida. He says, "I've been very concerned about identity theft these days. So what can we do to protect our identities and accounts? What should we do if we find our identity and/or accounts are compromised?"

Have a money question? Text or call us at 901-730-6373. Or you can email us at podcast@nerdwallet.com. To hear previous episodes, go to the podcast homepage.

Check out this episode on any of these platforms:

Apple PodcastsSpotifySoundCloudOur take

As a result of �database breaches, your private information is probably no longer private. Your Social Security number, date of birth and even some of your passwords may be for sale to criminals on the dark web. Although you should still be careful about where you disclose this information, there are additional steps you can take to reduce the odds of becoming a victim of identity theft.

Most important, consider freezing your credit reports at the three major credit bureaus. That makes it much harder for scam artists to open new accounts in your name. You can still use all your credit accounts after a freeze, and you can temporarily thaw the freeze if you want to apply for a new credit card or loan. You can freeze and thaw your credit reports for free. If you have kids, freeze their credit reports as well because children are even more vulnerable to identity theft than adults.

Good account hygiene is important as well. That means monitoring your bank and credit card accounts for fraudulent charges and reporting those right away. Other good habits include using unique, complex passwords and changing them regularly. (A password manager can help you create, keep track of and change all your various passwords.) Also, turn on two-factor authentication for your financial, email and social media accounts.

Speaking of social media, be judicious about what you post. Fraudsters can use personal information to guess passwords and the answers to security questions. The bad guys' schemes are constantly changing, so consider getting updates on the latest scams. AARP's Watchdog Alerts can be useful to consumers of any age.

Despite your best efforts, you could still become a victim of identity theft. In addition to credit fraud, there are other types of identity theft that can be pretty hard to prevent, including health care fraud, unemployment benefits fraud, tax return fraud and criminal identity theft. If you are victimized, the government has the information you need to start putting your life back together at IdentityTheft.gov.

Our tips

Freeze your credit. And freeze your kids' credit, if you have kids. That will make it harder for bad guys to open fraudulent accounts in your name.

Be skeptical. Phishing emails, attachments that install malware on your devices and government imposter scams are used frequently by scammers because they work. Avoid giving people access to your personal information if they don't need it.

Know that scams are always evolving. Right now that means scammers are trying to leverage the pandemic to get your personal information. Don't fall for it.

Episode transcript

Sean Pyles: Welcome to the NerdWallet SmartMoney podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Pyles.

Liz Weston: And I'm Liz Weston. To have your money questions answered in a future episode, call or text us on the Nerd hotline at 901-730-6373, that's 901-730-NERD. Or email us at podcast@nerdwallet.com.

Sean: It is such a joy to hear from all of you. So please keep your questions coming.

Liz: And hit that subscribe button to get new episodes delivered to your devices every Monday. If you like what you hear, please leave us a review and tell your friends. OK, one last plug before we get into the episode. We want to know, what has the pandemic taught you about money? How has the way you've handled your money changed in 2020? We're working on a special episode about all the money lessons we've learned this year, but to make this happen, we've got to hear from you.

Sean: That's right. Hit us up on the Nerd hotline to share your stories. You can always write us over email or text us whenever you want, but I'd really love to include as many of your actual voices in this as possible. So please leave us a voicemail or email us a voice memo so we can really bring this thing to life.

Liz: �We really can't wait to hear from you. OK, let's get onto the episode. This week Sean and I answer a listener's questions about what they can do to protect themselves against identity theft, with the help of Bev O'Shea, our go-to Nerd on the subject.

Sean: Firstly, though, in our This Week in Your Money segment, Liz and I are talking about how to find financial stability when the world feels anything but stable.

Liz: Oh boy, I think this is going to hit a chord with a lot of people.

Sean: �It's been quite a year to say the least, from the pandemic to the various natural disasters that we've had, to the wild and tumultuous election season that is almost over somehow " I can't even believe it. So that's what got me thinking about the subject, which was actually something that I wrote about in a recent column. It was about how to find stability in your finances when everything else can feel like it's out of your control. It's really about focusing on what you can control. There are so many different ways that you can approach this. I really view financial stability as a state of money and as a state of mind.

Liz: �Mm-hmm. And what did you tell people?

Sean: �A lot of different things. I love to tell people things to do. But let's start by talking about the state of mind. I think this involves first, finding your own personal definition of what financial stability might mean. It obviously requires some self-reflection " spend some time thinking, and talking with your partner if you have one, about what stability means to you. Or maybe you want to know that you're on track for a comfortable retirement, or maybe you just want to be able to check your bank account without feeling a certain pang of anxiety that I've felt before.

Liz: �Yeah.

Sean: �It really is so subjective.

Liz: �I like the idea that you're focusing on emotions, because that really gets to the core of what you think financial stability is and what the benefit is " why it's worth all this hassle to learn about money and change your behavior and all that. It's having that feeling of control. It's having that feeling of calm.

Sean: �And one thing that I found really helpful in this process is if you think through all the various aspects of your finances, your spending, your retirement, your investments. If there's any area where, as you think through them, that you begin to get a little nervous and you have any kind of temptation to bury your head in the sand, that is actually a sign that you should be digging into that subject further, because that's an area where you feel unstable. And if you can address that, it will help you feel a little bit less anxiety when everything else is already so anxiety-inducing.

I should say, this is generally geared toward folks who still have a steady income or are pretty financially sound. Because a lot of people right now aren't in a steady place financially because they've lost their job. And for people like that, there's a lot of aid that we've discussed on previous episodes of the podcast that they should tap. But in general, for people who still have a somewhat stable sense of their finances, a steady income, this is what you should be doing. If you have a more dire situation, you can take more extreme steps.

Liz: And as we've mentioned before, 211.org is a wonderful resource if you're in that situation where financial stability just seems like a mirage on the horizon.

Sean: �I talked with a financial therapist, and this woman I spoke with was discussing if people are feeling like they're in a pretty rough financial place right now because of the pandemic, maybe they aren't on track to retire, they've had a loss of income, whatever it may be. She suggested that people try to reframe the situation. Try to think about what could be the worst possible thing that could happen because of their current situation. Maybe they need to move back in with their parents or get a roommate, and think about where that might lead. I think that can help people stop catastrophizing their current situation and think about how they can actually move past this. Maybe they're not on their ideal path at the moment, but they can move forward in some productive way.

Liz: �This is amazingly helpful because you take that catastrophic thinking and you just take it to this absurd end, or you realize that you have more resources than you think. If you worry about losing your house, OK, you do lose your house, what do you do then? Well, I could move in with the sisters-in-law. Here we go. But no, seriously, it's a way to walk through all the possibilities. Another thing I've found has been really helpful is to think about what we're grateful for, what I'm grateful for. I heard somebody say once you can't be fearful and feel gratitude at the same time. I think you can. But in general, I think that is a really good thing to think about is what you focus on can really help dictate your thought patterns and how you feel about the world.

Sean: �And help you feel, again, a little more stable because that's what this is about, is getting rid of some of the million panicky feelings that you might feel rising up inside of you and focusing on what you can change and what is good in your life right now.

Liz: �And I always like to take action too. Putting something into action makes you feel like you do have control, whether bumping up your savings rate or your 401(k) contribution, something like that.

Sean: �You have absolutely read my mind. So we talked about the first part of this, which is the state of mind of financial stability. Now let's talk about the state-of-money aspect of this. There are certain things that you can dig into. The first one being, getting a grasp on your spending if you haven't done that already. We talk a lot about the 50-30-20 budgeting tool �" super helpful, really easy way to lay out your spending.

That's one great option for people. Think about other areas of your finances where you can make improvements so that you feel more financially sound. If you have debt, maybe it's a mortgage or a private student loan and you can refinance them to get a lower interest rate. Or, even if you have credit card debt, try to get a 0% APR card and transfer that over if you have a higher credit score. There are some steps that you can take to make it so that your finances are at a better and more sound position than they were at the beginning of the pandemic, even.

Liz: �I like all those suggestions. And I would add one more is, if you aren't already, donating to a cause that can help people with the pandemic. I think that does a lot toward reminding yourself that there are people who are worse off. There are people that you can help. And I think that can help you deal with the anxiety as well.

Sean: �Even a small amount, monthly. I've set up regular $50-a-month donations to a local food bank for exactly that reason. Because I know so many people are having a hard time right now. $50 may not seem like a lot of money, but it can go very far. And thinking about the people that you know that need help right now, and the steps that you can take to help them can make you feel more financially sound, and also help people who aren't financially sound feel a little bit better about their life. So those are a few areas that I think people should focus on to shore up their finances and make them a little bit more sound. Liz, do you have any other suggestions for where people can focus?

Liz: �Well, if the pandemic has taught us anything, it's about the importance of having an emergency fund, or at least some financial flexibility. It's not always possible to save this fat emergency fund. You hear people say, "Oh, you should have three to six months' expenses." You know, the average family would take about two years to accumulate one months' worth of expenses. We've talked about that before. But having access to credit can help be a backfill as you're saving money for the future. If you are able to save, if you can put aside money, obviously that's a really good idea. If you can work on your credit score and get better access to credit, that also can be helpful.

Sean: �And for folks who are in a position to build up their emergency funds, we know a lot of people have been saving more because they're not going out, they're not traveling as much. ... When I was talking with a financial planner for that column that I wrote, he actually recommended including maximum out-of-pocket health care expenses in your emergency fund " in that three to six months of nondiscretionary expenses amount that people should, ideally in the magical world, have saved up. That way you can cover any medical expenses you may incur, which during a pandemic, could pop up.

Liz: �That's a great idea. If you can do it, definitely try.

Sean: �Let's move on to this episode's money question, which comes from David in Florida. He says, "I've been very concerned about identity theft these days. So what can we do to protect our identities and accounts? What should we do if we find our identity and/or accounts are compromised? Thanks."

Liz: �Yeah. This is a question that affects just about everybody, because just about everybody's been compromised.

Sean: �Right. There were over 650,000 reports of identity theft in 2019, according to the [Federal Trade Commission]. And I'm sure that there are many more that weren't even reported. So this is something that we all need to be concerned about.

Liz: �Yeah, absolutely.

Sean: �And to help us answer David's question and give us some information about how we can protect ourselves, on this episode of the podcast, we're talking once again with Bev O'Shea, our go-to identity theft writer at NerdWallet.

Liz: �Yay. Hey Bev, welcome back to the podcast.

Bev O'Shea: �Thanks, Liz. I'm happy to be here.

Sean: �We're happy to have you. It's always good to talk with you, Bev. So first off, David, our listener, is concerned about identity theft, which is great to hear because many people, I don't think, are as concerned as they maybe should be. So to start off, he's wondering what he can do to protect his accounts and identity. Where do you think he should start?

Bev: �The first thing I would do is to freeze my credit. Even if you're not worried about credit per se, if somebody has those digits for your Social Security number, they can use it to open credit in your name. They can use your child's Social Security number even before it's assigned to open credit. What they do is they form what Eva Velasquez at the Identity Theft Resource Center calls a "Frankenstein monster of identity." They put it together with one number, a name, an address, and they may have that for years before you find out.

Sean: �And that's called synthetic identity theft, right? Where they make this mishmash of different bits of information to form some sort of new identity that can still affect multiple different people.

Bev: �Right. And that can happen to anybody, but it won't happen to you if your credit's frozen.

Sean: �But one important caveat that you like to get across to readers and listeners is that it's important to freeze your credit at all three bureaus. I think you've likened only freezing it at one bureau to locking your front door while leaving your back door unlocked. And anyone can just walk in there, right?

Bev: �Right. Exactly right, Sean.

Liz: �Do you think people don't freeze their credit because they don't know they can, or because they think it's going to be a hassle?

Bev: �I think because they think it's going to be a hassle. The other thing that I hear pretty frequently is, "I don't want to freeze my credit because I still need my credit cards." And I think people confuse freezing credit with not being able to use credit anymore.

Liz: �Yeah. And you're not cutting yourself off from credit. You're just making sure that nobody can open new accounts in your name.

Bev: �Exactly right. And it's not going to protect your old accounts. That's your job. You've got to read your statements. What I do is I have alerts set up so that anytime my card is used, I get a message about it. And for me that works. That might annoy other people, but I like to know every time.

Sean: �I like using those alerts as well to kind of shame myself when I've made a big purchase that's outside of what I usually do. Getting all of those alerts and having to verify it again, having the mere prospect of that can deter me, personally. But that's a whole different conversation. But around freezing credit and the hassle around it, I thought when I was first getting into this, that it would be a little bit of a pain. You have to get a PIN. And if you forget it, sometimes the credit bureaus want to mail it to you. And that seems like a big ordeal.

I will say that you actually don't need to get it mailed to you. There are ways that you can get someone on the phone and get that PIN if you do lose it. And that might make this a little bit less intimidating for folks who want to freeze their credit but don't want to worry about another thing that they have to memorize " another password, another PIN. So that's one way where even if you do forget what your PIN is, you can still get it pretty easily.

Bev: �Uh-huh. And two out of three of the credit bureaus now have a password, so that you go to a website and you sign on that way. And it's just like losing any other password, you just reset it.

Liz: �And I think in their early days it was a bit more of a hassle. It took longer to unfreeze your credit, to thaw your credit, and to get it frozen again. And now it seems like it's seconds or minutes and you're good to go.

Bev: �It is. And it's a lot easier than it was before. And it's also free.

Liz: �Have we made the point that freezing credit is not permanent?

Sean: �No, but you just did. Can you elaborate on that a little bit?

Bev: �Yeah. Freezing credit is not permanent. You can freeze and unfreeze your credit.

Sean: �One thing I like to do whenever I am applying for a new line of credit is do a temporary unfreeze. Where you can have it unfrozen for maybe just a couple of weeks, just so you know that whoever's going to be pulling your file, has time to get it. And then once that's done, you don't even have to think about going back and refreezing it because after the short period of time that you put in there, it's automatically refrozen. And so that takes another step out of this process so that you can continue to have your credit frozen pretty easily.

But I want to talk about credit freezes versus credit locks. Because there is a pretty big difference. And credit locks, I think, may seem more appealing to consumers because they're even easier to do than a credit freeze. But they don't have the same security, right?

Bev: �They're supposed to, but they're offered by the bureaus. And because they're offered by the bureaus, it's not federal law that's protecting you, it's the bureaus. And everybody has something that you have to sign that holds them harmless if it doesn't work.

Liz: � �So you're basically signing away your rights, in a way.

Bev: �You're exactly signing away your rights.

Liz: OK.

Sean: �Personally, I'm not willing to sign away my rights when all I can do is click a few more buttons, maybe write down what my PIN is, and make sure that I have that extra protection of having my frozen credit versus my locked credit.

Liz: �Yeah.

Bev: �Mm-hmm.

Liz: �One thing I wanted to talk about a little bit has to do with passwords, because I've gotten some of those phishing emails. It was actually a blackmail email. So they put my password that had been compromised in some breach " they put that in the subject line " and basically said, "I have all your passwords. I'm going to expose you for whatever if you don't send money to this address." And I have heard of that particular scam, I knew it was baloney. They got more and more aggressive. "I'm going to do this. You're ignoring me." Blah, blah, blah. But I think people don't still take seriously enough the fact that everything that you have that you think is protecting you has been compromised. So you need to do that hygiene stuff like using complex and unique passwords, changing them frequently, all that sort of security hygiene stuff.

Sean: �Two-factor authentication.

Liz: �Yes.

Bev: �Yeah.

Liz: �Yes.

Sean: �Right.

Bev: �Yeah, two-step identification is good. Also, be careful of easily guessable passwords. If you post pictures of your dog on Facebook, and you've said his name, people are going to guess that. Your mother's maiden name " if, when she died, you posted her obituary, they know that too. Don't use something really simple and guessable. If it's easy for you to remember, it may be easy to guess.

Liz: �So, Bev, what are good practices for social media?

Bev: �Social media is dangerous because if you post almost anything personal, it can get into the wrong hands. Something that a lot of people do and a lot of people enjoy is post their birthdays on Facebook. You're giving pretty much everybody your birthdate. If you're cool with that, OK. And I know I've got friends who think that they're not really doing it because they're only posting the month and day, but it's not that hard to guess. You've got friends from high school.

Liz: �Yeah.

Sean: �Friends from high school that maybe have nothing better to do than look into your information and try to make a buck off of you.

Liz: �Yeah, and unfortunately a lot of financial services and other companies are still using security questions, which aren't secure at all. �But they do use, typically, information that's easily found if you're on social media and you've been posting anything personal.

Bev: �And be careful about those quizzes. You know, the 'I want to get to know you better' quizzes. Don't take them.

Sean: �Mm-hmm. Well, there are often companies behind those quizzes that are just gathering all of your information and then doing whatever they want with it. That's often selling it to other companies that are doing whatever they want with it. And it's pretty risky to do anything like that. Even though it seems totally innocuous, you have to weigh the pros and cons of what you're giving out there, how specific you're being. And I don't know, I guess, keeping your guard up if something does come back to bite you.

Bev: �And I've heard it said that if something is free, you're the product. Something to think about.

Sean: �Facebook.

Liz: �Yep.

Sean: �I want to turn now to the other part of David's question, which was, what should he do if he finds that his identity or accounts were compromised? What do you think should be the first step they take?

Bev: �Go to IdentityTheft.gov. It's a website set up by the government, and it has directions on what to do regardless of how your identity has been compromised. If somebody has filed a tax return with your name on it, it tells you what to do. If somebody has used your credit card, it tells you what to do. If you just saw that you were part of a breach and you're just worried, it tells you what to do. So, that's my favorite place to go.

Liz: �That's a great resource.

Sean: �And so far as an account, say someone charged something on your credit card, those are pretty easy to dispute. You can just call your company and say, "Hey, I didn't actually make this charge." And they'll get rid of that very easily. But what about for more complex compromised accounts? Are there any instances of that that you think people should be aware of?

Bev: �Well, what I would do with something like a 401(k), and what I have done, is use every layer of protection that they offer. The more of a hassle it is for me, the safer it is. So anytime that you're looking at something that's quicker and more convenient, think about that.

Sean: �Right.

Bev: �One type of identity theft that is particularly dangerous is health insurance identity theft. And just before the show, I was preparing and I was determined to find something stupid that I was doing that I should stop doing. And the stupid thing that I was doing is carrying my health insurance card in my wallet. And my logic was, if something happens to me, I need this at the hospital. Actually, I already had it in my Apple Wallet. I also already had it in the app that my health insurance has. There was no reason at all for me to have the paper card, but I had it. And so I've taken that out.

Sean: �Well, thank you for the reminder, because I have it in my wallet as well.

Liz: �Yeah.

Sean: �Even though I took a photo of my card so I could have it on my phone for insurance, for my insurance, basically. And there's no need for me to carry that around with me. Not that I'm leaving the house much nowadays anyway, but that's a really smart one. And I think so many people have that same line of thought where they think an emergency could happen at any time, it needs to be accessible. But that's not really the case. It's accessible in other ways, besides the physical card.

Bev: �Yeah. And I've done the same thing now with my auto insurance. And if you have a card that there's no way that you can put it in your wallet " and there are a few like that " all you really need to do is take a photograph of it. And if you've got Google Docs on your phone, just use that, as an illustration. And that way you've got it and other people don't.

Sean: �Well, your mention of medical cards got me thinking about COVID-specific identity theft risks, because that's been surging since the pandemic hit. There was a recent event held by the Consumer Financial Protection Bureau about COVID-related scams. And they mentioned that since the pandemic began, complaints to the CFPB had gone up 86%, which is enormous.

Liz: �Wow, yeah.

Sean: �And there are all sorts of scams that are popping up because of the pandemic. Scammers are very creative, and they also have to stay current with the times, apparently. So there are all these different things like miracle cure scams, vaccine scams. There are even scammers who are pretending to be contact tracers. So there are pretty scary things going on out there. I'm wondering if you can talk a bit about what you've seen and how people can continue to protect themselves.

Bev: �The contact tracers is one because people will hear on the radio that it's important to cooperate with them. But a contact tracer should probably be giving you more information than they're asking for. Some do legitimately ask for your birth date. Somebody that I talked to with Health and Human Services said that you should respond with offering your birth year. They don't actually need your birth date, and they're not going to complain, and any information that you give them is more than they had before.

Sean: �Mm-hmm.

Bev: �But second, if somebody calls you and they want to "confirm information," they need to give you the information first. You don't need to be giving them information. The other thing about these people that are calling you is just, take a deep breath and think. If you stop and think, you will avoid the feeling at the end of the phone call going, "Oh, uh-oh, now what do I do because I gave information away?" Because almost anybody you can call back after you have independently confirmed the number or the email; people who are legit are not going to be troubled by this. But anybody who's offering you a COVID test, say, and needs your insurance information or needs your Medicare number ... they don't. You should hang up.

Sean: �And they're not going to be asking for your credit card number if they're a contact tracer, right?

Bev: �Never, never.

Liz: �They're really good at inventing the sense that you have to do something right now. They're trying to override that more skeptical part of your brain and get you to operate out of fear, which a lot of people are quite willing to do anyway. And one of the most ironic things is that they will exploit your fear of identity theft to steal your identity. I'm thinking of one woman that I was recently talking to who fell for the Social Security scam " the one that your Social Security number has been blocked because of identity theft.

Bev: �Mm-hmm.

Liz: �She lost $50,000.

Sean: Oh, no.

Liz: �Basically everything she had saved.

Sean: �It's awful.

Liz: �AARP actually has a really good fraud watch that most people should be signing up for, even if you're not AARP age. Because they stay on top of these evolving frauds and can alert you about the ones that are out there. And I think if she'd been on that list, she might've known what was happening and might have been able to avoid it.

Sean: �It's always worth repeating the fact that these government agencies " the IRS, Social Security " they're not going to be calling you. If they want to get in touch with you, they'll send you mail. But they're not going to ring you up and say, "Hey, I just wanted to check, what is your Social Security number?" They're not going to be doing that. And always remember that. That's something that I have family members fall for all the time, because it's scary. As you said, Liz, they prey on that urgency, and they want you to give your information. Just don't.

Bev: �Going back to something Liz said about the AARP. It is a misconception that this happens mostly to older people. It happens to people who think that they're too smart for this to happen to.

Liz: �Yep, exactly.

Sean: �Right. Because I think people have their guard down. They think, "Oh, I'm savvy. I know what a scam is like." But that's the thing, these scammers are continually refining their tactics to prey on people who do have their guard down.

Bev: �It's not always preventable. I don't want to blame the victim in all of these.

Sean: �Right.

Bev: �There have been people who have gone to apply for unemployment and discovered that somebody else has already applied for unemployment in their name. And that's not one they could have prevented.

Liz: �Yeah.

Sean: �Do you have any final tips for David in Florida who is concerned about identity?

Bev: �Nothing other than, do not underestimate the importance of freezing your credit. It's really easy to do, and it's easy to unfreeze when you need your credit. And it won't keep you from using your credit cards.

Sean: �And it's free.

Bev: �And it's free.

Sean: �All right. Well, thank you so much for talking with us.

Bev: �Sure. Anytime, Sean.

Sean: �Now, let's get on to our takeaway tips. Liz, you want to kick us off?

Liz: �It would be my pleasure. First and foremost, freeze your credit and freeze your kids' credit, if you have kids. That will make it harder for bad guys to open new accounts.

Sean: �Next step, be skeptical. Phishing emails, attachments and the like are used frequently by scammers because they work. Avoid giving people access to your personal information if they don't need it.

Liz: �Finally, know that scams are always evolving. Right now that means scammers are trying to leverage the pandemic to get your personal information. Don't fall for it.

Sean: �And that is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373, that's 901-730-NERD. You can also email us at podcast@nerdwallet.com. And visit nerdwallet.com/podcast for more info on this episode. And be sure to subscribe, rate and review us wherever you're getting this podcast.

Liz: �And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.

Sean: And with that said, until next time, turn to the Nerds.

More From NerdWallet

Identity Theft: What It Is, How to Prevent It, Warning Signs and Tips Identity Theft Protection You May Not Know You Already Have Do You Need Identity Theft Protection Services?

Liz Weston is a writer at NerdWallet. Email: lweston@nerdwallet.com. Twitter: @lizweston.

Sean Pyles is a writer at NerdWallet. Email: spyles@nerdwallet.com. Twitter: @SeanPyles.

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