Lesson 3 - Monitor Credit/Debt Transactions

Objective: Implement a system to monitor debt and credit transaction that improves personal financial organization and decreases the potential financial loss of falling victim to identity theft.

An important part of managing your credit and debts, which we haven’t discussed yet, is proper monitoring. Why is this important? In addition to keeping your finances organized, monitoring is crucial in order to reduce or prevent the damage of identity theft and fraudulent purchases. What are some beneficial approaches to monitoring? Especially for things like credit card, it can be a little difficult to keep up with your financial situation when you have a certain amount of money in your bank account, but also owe money on your credit card. By keeping track of purchases made on your credit card, you can help ensure you’re staying within your intended budget. Another benefit is detecting potential fraud. If someone gains access to your social security number and opens up a loan or credit account in your name, there aren’t tons of ways to detect that. One way to detect these fraudulent activities is to regularly check your credit reports for accounts opened using your social security number. Since the passing of the Fair and Accurate Credit Transaction Act in 2003, consumers are able to get a free credit report once every 12 months for each of the three major credit bureaus – Equifax, Experian, and Transunion. To fulfill this federal law, the three credit bureaus decided to create and jointly operate the website www.annualcreditreport.com to make it easier for consumers to request their free credit report. By monitoring your credit card spending and checking your credit reports annually, you can help to reduce overspending and catch fraudulently opened accounts.

Example

Carlos has implemented a system to better monitor his credit and debt accounts. In addition to tracking all of his expenses using spending logs, like the ones in the My Money series, he is also monitoring his flexible spending made on his credit card by using the pocket spending guide. To check for fraudulently opened credit accounts, Carlos also uses www.annualcreditreport.com. So that he can check his credit reports a little more regularly, Carlos checks one of his three free credit reports every four months on a rotating basis instead of checking all three at the same time.

Assignment

Use your own personal financial debt and credit situation. Identify a system to monitor debt and credit transactions that improves personal financial organization and decreases the potential financial loss of falling victim to identity theft.

Complete this assignment in Microsoft Word - if you do not have access to Microsoft Word, contact your course facilitator. Once you've completed the assignment, email the Word document with the assignment to your course facilitator, who will provide feedback via email.