Millions of dollars are lost annually by unsuspecting consumers who don’t manage to catch the signs of a financial predator looking to take whatever they’ve got. Whether you use personal checks or secured credit cards, you need to be aware of financial threats so you can stay vigilant.

Here are five common scams with tips on how to protect yourself.

“419” Fraud

419 Fraud refers to bogus spam e-mails originating from Nigeria that promise mass amounts of wealth if you help someone with an advance payment. The e-mails usually claim to be from a Nigerian lawyer or nobleman who has isolated money in a forfeited account and needs financial help to secure it and transfer it out of the country.

It then promises you millions of dollars in return from this isolated account if you send your banking information so this person can secure and transfer the fortune out of Nigeria. These are always completely fabricated; not a single part of these e-mails is true. If you receive one these e-mails, never reply with personal information or download any attachment. Just delete it.

Advance Fee Schemes

These occur when a con artist convinces you to make an investment to get a return for something of greater value. Victims are often asked to sign a contract to connect the investee with the investor’s financing source and pay an advance fee.

The problem is that there’s a clause hidden in the fine print that rules the signing party ineligible to receive anything in return for their contribution. So long as the person who asks you to sign it actually secures something of value with your fee, the contract is legally binding. If you ever encounter an opportunity like this, it’s too good to be true. Decline the offer and, if you can, gain enough information to report this person to the police.

Identity Theft

If you’ve ever looked at your bank statement and seen random charges you know you didn’t execute, you’ve probably been a victim of identity theft. Hackers and con artists steal enough personal information from an individual to access financial information and use it to make purchases or drain bank accounts.

If you notice anything like this on your statement, notify your bank immediately. Otherwise, you risk losing a lot of money and end up having to rebuild bad credit. You can help prevent identify theft by always tearing or shredding any sensitive papers you have (even something like an ATM receipt) before throwing them out. Also, when making purchases online, make sure you can see a closed lock icon with a URL starting with https:// before submitting any credit card information.

Redemption Fraud

Remember those old TV commercials where the old man in the question mark suit offered to sell you a giant manual on how to retrieve redemption funds from the federal government? He claimed that he wrote the book the Treasury didn’t want you to know about. Well, surprise, that was a giant scam.

Redemption fraud happens when someone like this offers you a kit or manual that tells you how to legally secure funds from the treasury. They’ll use pseudo-legal terms, customer reviews claiming success, and even a notary to convince you that the offer is legitimate. However, once victims receive their kits, they do not get results because they use federal forms outside of their intended purposes.

Perhaps someone did have success with these methods, but the legal loophole has been closed by the time the book is written and offered to you. Never buy any kit or manual that promises to give you information on how to secure funds from the government.

Telemarketing Fraud

Have you ever received a phone call from a telemarketer saying you’ve won a special offer and if you don’t act now, it will be gone? Chances are that was a scammer trying to rip you off.

They usually entice you with a bogus offer and get your credit card information for an advance payment of some sort. They then give you faulty contact information in case you don’t receive your offer in the near future. By the time you realize you’ve been had, they’re impossible to track. If you get an offer like this over the phone and they ask for any personal information, simply hang up.

A wise man once told me “life is what happens when you’re busy making other plans.”  Or maybe that’s just a popular saying? In any event, unforeseen situations can spring up at any moment, and sometimes they force you to reach for your credit card at the least opportune times.

While it’s impossible to predict emergency situations before they happen, at the very least you can arm yourself with knowledge of the pros and cons of using your credit card to charge your way out of life’s little mishaps.

Here’s a run-down of a common sticky situation, and how credit cards can and cannot help.

Emergency Car Maintenance

Let’s say you’re driving merrily down the highway, not a care in the world until all of the sudden your engine starts to sound like a dying rhinoceros.  You shut off your car just as black smoke begins to billow out your front end, and by that point you’ve put two and two together and determined there is something amiss in your car’s engine.

Unless you want to continue your car trip sans car, you’ll have to shell out some pretty pennies to get your car back in working order.  Unfortunately, you’re not sitting on a pile of emergency cash that can afford an engine replacement on the spot.

The question now becomes, should you use one of your credit cards?

Of course, you may not have much of a choice.  But there are some very important factors that you should consider before breaking out the plastic.

For one, you need to take into account what your spending limit is. If the expense is going to take you to over 30% of your spending limit, you should remember that your credit score will likely take a hit.

Another important factor to consider is your ability to pay your debt back.  Car repairs are usually pricey, so expect to pay a lot in extra interest if you plan to pay it back incrementally over a period of many months.  Of course, if you have a no interest credit card on hand at all times, you’ll be in much better shape.

If either of these factors apply to you, it’s a good idea to try to pay as much of the repair as you can in cash before using your card.

As always, there are always reasons why using a credit card in these situations can be advantageous to you.  If you have rewards cards, the repair payment could yield a serious chunk of miles towards your next free airline ticket.  And if you don’t have a lengthy credit history, it can be a great opportunity to demonstrate your reliability to credit issuers and improve your FICO scores.

In any event, we certainly hope that an emergency situation doesn’t happen to you anytime soon.  If it does, however, you’ll at least have the knowledge necessary for making a wise decision on how to pay for it!

These are strange economic times we live in. I’ve heard others refer to it as the “new abnormal”, alluding to the fact that their guess about where our economy’s headed is basically as good as anyone’s. And I have to agree—nothing seems to make sense anymore.

People are walking away from their homes yet still vacationing and buying up the latest expensive Apple gadgets. Unemployment continues to hover around ten percent, yet I can’t ever find a parking spot at the local mall. And the stock market…well, it’s all over the place. Absolutely nuts!

Federal Reserve Chairman, Ben Bernanke, may have said it best when he declared in July that our economic outlook is “unusually uncertain.” Way to go out on a limb there Mr. Bernanke.  I don’t know about you, but I’ve felt unusually uncertain for almost two years now.

Well, if you’re looking for a little more certainty somewhere in your financial life, why not start with what you can actually control? Spending is always a good place to begin.

Here’s something that’s been on my mind this past week. Citi and MasterCard recently announced that they’re teaming up to offer a new service for consumers called inControl in late 2010. Touted by MasterCard as a platform designed to “give cardholders the ability to set spending controls and receive real-time information about their accounts”, inControl will supposedly empower you to actually cut off your spending at predetermined limits.

For example, let’s say you don’t want to spend more than $250 per month eating out. That’s the max your budget can afford. So, you login to your Citi account and set up a limit on your credit card for restaurant purchases. inControl will then make sure your card is denied if you ever try to make a purchase in excess of your monthly cap. It’s that simple, although it sounds like there are plenty of other bells and whistles that Citi may eventually offer cardholders.

So believe it or not, credit cards, long blamed for making it too easy to spend more money than we have, may soon become a powerful tool to actually curb overspending. But will consumers use inControl the way it’s intended to a be used? I have my doubts; however, these are the days of the “new abnormal”. Who knows how consumers will react?

What do you think? Would you utilize a service like InControl if it was added to your credit card account?

A recent TransUnion study found that the percentage of Americans behind on their mortgage but current on their credit cards increased nearly 55 percent between early 2008 and the third quarter of 2009.

And while the amount of consumers we’re talking about is still relatively small (6.6%), I find the overall trend to be quite compelling. Clearly, consumers are beginning to think differently about the priority of their debts.

When I bought my first home in 2005 (at the peak of the market in my area- grrhh!), it was ingrained in my mind that no matter what, I would always strive to pay my mortgage first. It seemed logical to me that the house would take priority over other debt, and it still does, but a lot more people obviously feel different these days.

I’ve had several conversations with personal friends as they’ve tried to decide if they should keep paying their mortgage or simply walk away while staying current on other debts like their credit cards. In each case, for those that did choose to walk away from their mortgage, their reasoning was the same. They couldn’t see the sense in sinking more money into a home that had lost so much value it might never recover. They just wanted out, once and for all.

Their Credit cards, on the other hand, could be a lifesaver if times got even worse during a longer period of unemployment. Credit cards could help finance their basic necessities, and the house couldn’t do that. In addition, they really didn’t care much at all about their credit scores anymore, so the negative effects of a foreclosure didn’t scare them. All they cared about was keeping what credit cards they did have, while hoping that the foreclosure process would take a “really long time”, essentially rewarding them with free rent.

I’ve often wondered what I would do if I was faced with the same situation. My gut feeling is I would pay the mortgage first. That said, I’m a huge advocate of not only holding an emergency fund large enough to cover the mortgage and other living expenses for at least twelve months, but also never carrying a balance on credit cards. So, theoretically, I should never have to choose between the two, unless I found myself out of work for much longer than a year.

However, I’m interested to hear what the majority of you would do. If you had to choose one over the other, would you pay your mortgage or your credit card bill?

At its most basic level, economics is really the science of trying to explain and predict human nature. Everything we do throughout a day, every decision we make, is based on supply, demand and price.

Even things we do that seemingly have nothing to do with money can be boiled down to these principles. Where you sit at lunch, the friends you choose and even whom you married can be explained through economic terms. (A word of advice—don’t tell your spouse you married him/her because of supply, demand and price. Trust me, that conversation doesn’t go over well.)

In addition, I believe it is human nature to avoid making fundamental changes in our lives until we are forced to do so. It often requires some dramatic occurrence or series of events to make us genuinely take a critical look at who we are and the decisions we make.

And at this time, the US economy is certainly trudging through a slow and sometimes painful transformation that is giving us all a chance to reflect upon our past decisions. Hopefully this transformation is one that will lead our economy to stability and positive growth once again.

For too long we based our lives and our economic growth on cheap gas, cheap imports, cheap loans and a strong dollar. We got used to the good life, but the good life was unsustainable. Those days are gone.

As our government is feverishly using monetary and fiscal policy to ease the burdens we feel during the economic downturn, I would venture to say that some pain is actually good for us. That’s what it takes for us to learn. That’s what makes us really change.

Or as Adam Smith might have put it, this is the invisible hand smacking us in the face.

If you haven’t already lost a job and/or a home to this monumental economic shift, then you probably know someone who has. These types of events are devastating, and I don’t want to minimize the havoc they wreak upon our lives and our families in any way.  That said, I think America and Americans are at their best when they’re challenged by adversity. Crisis breeds innovation, and innovation is what we do best.

In recent months there have been some glimmers of hope in our economic news—positive GDP figures, signs of easing unemployment and increasing consumer consumption.  And while it looks like the worst of this recession may be behind us, we must make sure the decisions we make going forward don’t lead us back to where this all began.

It’s been a long nine months since the CARD Act was signed into law, but the wait is finally over. Today is the day! The Credit Card Accountability and Disclosure Act of 2009 is now officially in effect.

Unfortunately, there’s nothing really new and exciting to talk about. Everyone, including myself, has beaten this topic to death for almost a year now. However, I just couldn’t let the day pass by without at least mentioning the significance of the new rules taking effect.

While the CARD Act is by no means perfect, it does mark a major turning point in the credit card industry and is arguably the most consumer-friendly piece of legislation Congress has ever passed. But rather than rehash all the new rules, which you’ve more than likely read numerous times before (if not, spend a few minutes and read my brief overview, ““The Credit CARD Act of 2009: 5 Must-Know Nuggets”), I thought I might take this opportunity to provide one last warning for anyone who may feel inclined to let their guard down just a bit from this point forward.

Yes, the CARD Act may put a little more power back in the hands of the consumer, but rest assured there will still be plenty of ways to get yourself caught up in an unexpected credit card mess.  Here’s my top 3 to watch out for in the coming months:

1. Don’t Get Trapped in a Deferred-Interest Nightmare

Much to the dismay of many consumer advocates, the CARD Act doesn’t ban deferred-interest plans (e.g. no interest for 12-month deals).

If you’re tempted to take advantage of one of these credit card offers, be sure the entire balance is paid on time and in full prior to the end of the promotional period. Otherwise the credit card company can still charge all interest retroactively and really make for a crappy day.

2. Opt Out of Opting In

Many consumers still seem to get confused by what it means to opt out of over-the-limit fees. So let’s keep it very simple here.

If you make a charge that exceeds your credit limit, would you rather pay a big fat fee or have the charge denied? Your answer should be hands down, “have the charge denied.” There’s absolutely no reason whatsoever for agreeing to pay over-the-limit fees. Besides, if your credit card is maxed out, you shouldn’t be making the purchase in the first place.

Don’t be surprised if your credit issuer presents the question about these fees with less clarity, but now you know better—make the right decision and say no to painful over-the-limit charges!

3. Parent Cosigners Beware!

Are you prepared to be a co-signer on your kid’s student credit card for the next 20 years or more?

The CARD Act requires a parent’s co-signature when a child under 21 doesn’t have documentable income to prove their “ability to pay”, but it doesn’t let you off the hook when your child eventually turns 21.

That decision will be left up to the creditors, so make sure you’re willing to be in it for long haul before signing on the bottom line.  As long as your child keeps the card active, your credit score could still be at risk.

The Credit CARD Act of 2009, signed into law by President Obama on May 22nd, just cleared a major hurdle in its path to early adoption.

As reported on CNNMoney.com last week, the House of Representatives overwhelmingly passed a new bill which would move the effective date for credit card reforms from February 2010 to December 1st. That’s just under three weeks from today!

The bill still needs to make its way through the Senate before it gets to Obama’s desk, but I think there’s a good chance legislators will be able to push this through just in time for the holidays. And while the CARD Act certainly brings with it some much needed consumer protections, there’s reason for young adults to pay special attention to how the new rules could affect their future access to credit.

If you’re under 21 and have no credit history, you may just get hung out to dry. Here’s why:

The CARD Act bans credit cards (including student credit cards) for anyone under 21, unless you’re able to secure a parent’s co-signature or prove you have “sufficient” income to support the level of credit offered. That’s not a bad idea in theory, but the problem is there are a lot of hard-working responsible students who don’t have good relationships with their parents or documentable income. Shouldn’t they have the right to build credit too? I think so.

In addition, we still don’t know what “sufficient” income actually means yet. So, your part-time job that gets you through school and pays the bills may not even be enough to qualify you for a card with a minimal credit limit. And believe me, you don’t want to be that person who graduates from school, takes his first job, and can’t even get an apartment or a car loan because he has no credit. No credit history is basically the same thing as a bad credit history. It will put you at a significant financial disadvantage in your young adult life.

So, if you don’t already have a card, you should seriously consider applying for a no annual fee credit card now – before it’s too late! All you need is one card in your wallet to use sparingly for necessary living expenses while you pay the balance in full each month. That way, when you need to rely on your credit history for something much more important (think home, your own business) in your post-graduation life, it’ll be there for you.

Part of you may still want to procrastinate and put this off just a little bit longer, but do your best to fight the urge. Your credit score, whether you like it or not, will be your financial reputation in the real world – don’t ignore it any longer.

Barney Frank, Chair of the House Financial Services Committee, and Rep. Carolyn Maloney (D-NY) are tired of waiting for their new bill to take effect. In fact, last week they announced new legislation that would move the effective date for the remaining provisions of the Credit CARD Act from next February to Dec. 1, 2009 – exactly two months from today.

In a press release issued by the House Financial Services Committee on 9/24, Maloney claimed that “credit card companies are taking advantage of this period between the signing of the bill and the current effective date.” There’s no doubt about that. As you may have experienced yourself, millions of consumers have been forced to deal with reduced credit limits and interest rate hikes averaging 20% ever since the bill was passed, and Maloney believes the “breadth and depth of the rate hikes happening now point to the need for faster consumer protections.”

Dubbed the “Expedited CARD Reform for Consumers Act of 2009″, the bill will force credit issuers to comply with the new rules at least three months before the original deadline, which is bound to be met with disdain from major banks throughout the country. However, Maloney and Frank seem confident that they can get it done with the support of the American people, just as they did with the Credit CARD Act last May. It certainly sounds like they have good intentions, but can the deadline really change in the middle of the whole implementation process? We’ll have to wait and see.

Photo by Kevin Collins

The US personal savings rate has been in the news a lot recently because Americans seem to be saving more than ever.  According to the Bureau of Economic Analysis, the personal savings rate reached a 15-year high in May at 6.9%.  This means that for every dollar an American earns, he or she is putting a whopping $0.069 in the bank for a rainy day.

While that may still seem pretty low, believe it or not, since 2000 the personal savings rate has been much lower- even dipping below zero at times.   The average American was living well beyond their means through maxing out credit cards and taking advantage of readily available home equity loans to spend, spend, spend.

To most people, an increasing savings rate seems like a good thing, and it is in many ways.  That said, our rampant spending helped to fuel the economy, and in boom times spending more created more jobs which, at least in theory, put more money in everyone’s pockets.

This principle falls apart when people start borrowing more money than they can pay back (think housing crisis). Combine that with the increasing dependence of the US economy on foreign products and foreign companies (think buying products from China, but people in China not buying products from America), and an extremely low savings rate is unsustainable.

The same principles that govern personal debt apply to our national economy.  What we are experiencing right now in the US economy is the result of spending beyond our means and banking on unrealistic capital gains.  People acted as though the good times would never end and began to spend money they did not have.

I’m reminded of a buddy I had in college who loved to party.  While at a party, he lived it up like the night wasn’t going to end.  Unfortunately, sometimes his decisions while the good times were rolling resulted in paying the price the next day in the form of physical illness and embarrassment.  As a nation, we are now waking up and paying the price for decisions made while the spending party was going on.

Although spending less can potentially extend the recession, we need to be more conservative with how we use our money.   In the end, saving more money helps us be prepared for the unexpected and provide for ourselves and our loved ones.

Additionally, whenever the recession is over, our economy will hopefully be weaned from its addiction to out of control spending.   The only way for this to happen is for us as individuals to wean ourselves from making unwise purchases.

He had his heart set on purchasing this car, and he just couldn’t figure out why the bank would decline his loan. He even tried a different bank where he had some family connections; however, the result was the same – declined due to “insufficient credit mix”.

“What does this mean? Isn’t my income and good credit score enough to qualify me for the loan?”, he asked.

To gain a better understanding of his financial situation, I responded with a few questions of my own before answering. Here’s what I learned.

Alex is married, in his late twenties, boasts a 780 credit score, and has a good job in the dental profession. He has one credit card, uses it to pay for everything that he possibly can, and he rarely carries a balance. Unlike most people his age, he has never had any debt. No credit card debt, student loans, auto loans, home loans, or equity lines of credit. He’s always paid for his cars in cash, and he’s currently saving for a down payment to buy his first home within the next few years. Unless he wins the lottery, he expects that won’t be an all-cash deal.

The used car he wanted to purchase was in the $15,000 range, and he planned to make a $5,000 down payment while financing the remaining $10,000. Let’s just assume the interest rate for this loan might have been 4.99%. If so, the monthly payment for a 48-month auto loan would be $230.25. Given his current debt to income ratio, he should have been able to easily qualify for this loan. However, the answer was still a “no” – twice. Why?

I explained to Alex that he shouldn’t be too worried, and he certainly shouldn’t give up on his hunt for an auto loan. We then discussed how “insufficient credit mix” essentially means the bank’s underwriters want to see more proof that he has experience handling multiple types of credit before they will be ready to lend him any sum of money.

He may have a great credit score and good income, but since his credit reports don’t include a history of other installment loans, such as a car or home loan, it’s unfortunately not enough these days. In a way, Alex was being penalized for the fact that he’s tried to live within his means and only buy big-ticket items that he can afford to pay for in cash. As a result, he basically hasn’t had enough debt to prove that he’s a good credit risk.

My recommendation to Alex was to approach a local credit union regarding his loan before going to another large bank. While less than one in five auto loans are made by credit unions, they are becoming increasingly popular due to their competitive rates, low-cost loans, and the ability to make quick underwriting decisions at a local level. Throw in the fact that they haven’t literally forgotten how to say the words “Yes, you’re approved”, like many larger banks, and credit unions can make a great alternative option for your financing needs.

Just a few days later, Alex sent me an email to let me know that he had been approved for his auto loan by a local credit union. The process was apparently quite smooth, and he was able to speak directly with the individuals working on his loan regarding his lack of a sufficient credit mix.  The personal level of service was something he had never experienced before with a larger bank, and he was very impressed by the speed at which the loan process progressed.

Hopefully, this will be the last time Alex has to deal with a rejection due to insufficient credit mix. The new auto loan, in conjunction with a few new credit cards and his excellent credit history, should put him in a great position to qualify for the home loan he’ll need in just a few years.