Picture this: You're relaxing on vacation and hand over your credit card to pay for the tasty meal you've just consumed. Then you get the embarrassing news that your card company denied payment. It's enough to cause indigestion.
If you haven't maxed out your credit limit or failed to pay your bills, you most likely have been caught in a net designed to stop credit card thieves.
As banks that issue cards become more aggressive preventing fraud, more card holders will unexpectedly find their cards don't work. It happened recently to my daughter, who is in London for a summer study program. A call to the bank confirmed her card had been suspended for potential fraud. A Floridian charging train tickets in London set off the alarm bells.
"Did you call to tell us she was going out of the country?" the bank asked me. They wanted to know when she left, when she was coming back and what my mother's maiden name was.
I'm glad that banks are being vigilant about fraud, but consumers need more information so we don't become casualties of their efforts. Here are some tips that might benefit you, particularly if you will be traveling:
- Make sure credit card issuers have your correct phone numbers so they can call to verify any charges that appear questionable. When we moved, we updated our address but not our phone number with card issuers and none of them ever asked.
- If you are planning a foreign trip, it can't hurt to inform the card issuer of your plans. Some may not care, but others will appreciate a head's up. When you call, ask if there is a toll-free number you can call from abroad if you have problems.
- Keep your credit card number and your card issuer's phone number in a safe place separate from your card so you can report a lost or stolen card.
- Carry two credit cards in case you have a problem with one of them, but don't take a wallet full of cards along on your trip. If you travel with another person, you might each carry a different card.
- Don't use your card for small charges ($5 or less) in places where you don't usually shop. This raises a red flag with some fraud detection systems.
- Keep your receipts to reconcile with your statement. It can be difficult to remember all your purchases when traveling.
Avoiding AMT
Q. We have a nice profit of about $500,000 in a mutual fund and would like to take some or all of it as a capital gain this year. How much can we take and avoid the alternative minimum tax?
Congratulations on your gain. The good news is that even if your other income is subject to the alternative minimum tax, it will not apply to your capital gains or your dividends, both of which will continue to be taxed at lower rates.
The bad news is that I cannot do tax calculations for you so I cannot tell you whether your other income might be subject to the AMT. Your best bet is to ask a tax preparer to run the numbers for you.
If you are charitable, consider making your larger donations this year in shares instead of cash. Just check first to find out if the brokerage or mutual fund company that holds your shares will charge a transfer fee.
Consumer Price Index
Q. I would like information on the Consumer Price Index. What is it? Is it published monthly? Does it in any way include wage gains or losses?
The CPI is an index the government developed to measure changes in the price of a market basket of goods and services purchased by households. It does not reflect changes in wages. There actually is more than one CPI. The one usually quoted is the CPI for Urban Consumers, which was 188.0 in April. The important thing is not the number, but how much it goes up or down.
Although the index is published monthly, the percentage changes are quoted at an annual rate. For example, the government reported that the first four months of this year the CPI rose at a 4.4 percent seasonally adjusted annual rate, compared with 1.9 percent for all of 2003. This tells you that we have had more inflation in 2004 than we had in 2003.
If you are interested in knowing more, your best resource is the Bureau of Labor Statistics Web site (www.bls.gov/cpi/)
- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to huntley@sptimes.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.
