It’s Friday again, so back into the mailbag we go to answer a few questions that came in through our contact page. Today we’ve got questions on what to do about unauthorized charges on a credit card, what should we hope for on our tax returns, is it worth investing in penny stocks.
So I have a Citi credit card and I just noticed a bunch of charges that aren’t mine. These are several hundred dollars and there is no way that I can pay that much off. I contact the card and got it cancelled and filed a fraud report, but the money auto-swept from my checking account to pay it off before I could do anything. What should I do? I need that money back.
This is a tough one. Citi Bank will definitely get your fraud sorted out, however, this can take a while and if you need that money then waiting for weeks isn’t going to be a satisfactory option. I would suggest you take the following steps:
- Contact Citi again and see if they can give you a tighter estimate on when the fraud charges may be reversed – often these things can be cleared up in a day or two.
- When you are talking with them, explain that they auto-withdrew a full payment for paying off the card at the end of month and that since there were fraudulent charges it withdrew more than you were expecting. Ask them to reverse a portion of the payment. If they tell you this isn’t possible, ask them to escalate this.
- Change your credit-card auto-pay options. Set it so that only the minimum charge gets auto-payed. Yes, this means you will have to pay it off manually every month, but it is the only way to make sure you don’t get bitten.
Although it is too late for this time around, set up a contact. I get notified by text every time a purchase more than $50 is made with my card, which means that I can stop fraud from happening on my account before it gets too out of hand.
Good luck with it!
I recently saw that I should hope for a tax return of zero? Shouldn’t I want a refund?
True, getting a refund is nice, and having to pay sucks, so let me explain why owing zero and not getting a refund is desirable. Getting a refund means that you overpaid on your taxes, essentially giving the government a zero interest loan. If you paid $25k in taxes over the year, and are getting a refund of $5k, then you just loaned the government $5k and got nothing for it. If you had put that money in a CD at 3% interest you would have made about $150 risk free. Now, do that every year for 30 or 40 working years and you’ve cost yourself a lot of money, especially if you take the miracle of compound interest into account.
You should try to adjust your withholdings so that you come out close to zero, or even owe a little bit in taxes. Note, that I say owe a little bit as if you owe too much at year end you may be subject to penalties from the IRS.
I’ve read a couple of articles saying that investing in penny stock is a good idea, others say is a bad idea. Have you had any experience investing in penny stocks?
Tim, I haven’t had any experience with penny stocks – and the reason for that is because most of them are worthless. First, anything you read about them you need to be wary of – there are lots of pump and dump schemes out there where a paid analyst or story writer will do an article (or several) on how stock XYZ has a great new product/drug/whatever that is going to be worth billions and it is completely under the radar. The person writing the stock is basically just pumping the stock up so that someone else (the owner of the company, someone who owns a lot of the stock) can drive the price up and then sell it onto you. You may see the same or nearly identical articles pop up on multiple sites, Twitter blasts about it, and more faux-media coverage.
The issue with these stocks is that they often still only trade on paper (yes, you buy online, but the order gets filled on paper) and at incredibly low volumes meaning you can’t actually sell it very easily. This means even if it looks like you have a gain you may have to sell at a substantial discount or, even worse, may never be able to really sell it.
I won’t go as far as to say that all of these are frauds, but I will say that they are incredibly unregulated, have exceedingly high-risk profiles, and often lead to 100% losses when the companies simply go out of business. You are better off looking putting your pennies into companies that are known entities and listed on a reputable exchange.
That’s all for this week. Keep the questions coming and I’ll answer them as I can. Until, keep saving!
Have questions? Drop us a message with questions about your finances and we’ll do our best to get them answered during our Friday Q&A.
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