September 2007

Over the past few weeks, I have been getting increasing number of messages from readers about some Bank of America scam emails and related fake websites. As such, I though it would be in order to discuss some of these issues by the way of a dedicated post. Although, the content below is by no means a comprehensive compilation of methods of financial fraud, it should be a fairly useful starting point to generate awareness about this topic.

Also, since most people who read this blog (and other personal finance blogs) are probably financially savvy to some extent - that is, they probably conduct a lot of financial transactions online, are aware of the risk of identity theft, etc - it’s all the more important that they are aware of the information discussed below.

This post became a bit too lengthy for my taste, so here is a little table of contents to help you navigate if you don’t like scrolling too much:

Phishing

This is an internet-based activity in which attempts are made to fraudulently extract sensitive financial and personal information from unsuspecting victims. The most common method for perpetrating this criminal activity is generating fake emails that direct readers to counterfeit websites designed to look like authentic ones. The thieves pursue pieces of information like: credit card numbers, CVV or CVC codes (those three digit numbers at the back of your card), ATM card numbers and passwords, and login ids and passwords to transaction sites like eBay, Paypal, bank accounts, etc.

Here is an example of a Bank of America phishing email that I received several months ago - since then, there have been many instances of people almost being fooled by similar BoA emails (check the comments in that post).

Here is an YouTube video that explains a bit more about phishing using a specific example:

A rich source of information on phishing and related issues is the Anti-Phishing Working Group. Some essential guidelines from this website to avoid being a victim of a phishing scam are as below:

• Be suspicious of any email with urgent requests for personal financial information.
• Don’t use the links in an email, instant message, or chat to get to any web page if you suspect the message might not be authentic or you don’t know the sender or user’s handle.
• Avoid filling out forms in email messages that ask for personal financial information.
• Regularly log into your online accounts.
• Regularly check your bank, credit and debit card satements to ensure that all transactions are legitimate.
• Always report “phishing” or “spoofed” e-mails to the following groups:
  1. Forward the email to reportphishing@antiphishing.org
  2. Forward the email to the Federal Trade Commission at: spam@uce.gov
  3. forward the email to the “abuse” email address at the company that is being spoofed (e.g. “spoof@ebay.com”)
  4. When forwarding spoofed messages, always include the entire original email with its original header information intact
  5. Notify The Internet Crime Complaint Center of the FBI by filing a complaint on their website: www.ic3.gov/

In addition to these measures, read below about protection against spoofing and ransomware - all the measures should go together for increased effectiveness.

Spoofing

There are different types of spoofing, but for our purposes, let’s restrict to website spoofing - that is, the creation of fake financial websites designed to imitate authentic ones… again for the purpose of stealing financial information. Spoofing goes hand in hand with phishing - a phishing email, with all it’s fake links, is designed to lure the recipients to a spoof website.

Here are links to two sample images: 1. Bank of America Spoof Site, and 2. Bank of America Authentic Site. You can see how good this spoofing business can get.

Two quick ways of catching most spoof sites are:

• Look at the URL in the address bar of your browser. Authentic financial websites are secured and their URLs must start with “https” not with “http”.

• Look for the padlock image in the status bar of your browser - no padlock image means site is not secured. In fact, go ahead and click on the padlock image and see if it displays a valid security certificate - in all probability, spoof sites won’t have one.

If you are looking for automatic protection, Firefox 2.0 and Internet Explorer 7.0 have some built-in spoof/phishing detection measures in them. To add an additional level of security, you can use browser extensions or other programs that will do the job for you. Here are a couple of such free programs that can be really valuable:

• Comodo Verification Engine (supports all major browsers)

• McAfee Site Advisor (for Firefox and IE)

Vishing

This is an offshoot of phishing, specifically coined to describe the attempts to steal financial information using voice plus phishing - with the “voice” term coming from VoIP (Voice over Internet Protocol) technology. Criminals are attracted to this method of scamming because VoIP offers a good measure of caller ID spoofing - calls made from VoIP terminals are difficult to trace back to their origins (protects the identity of identity thieves!), which is unlike calls made from a land line or a cell phone.

Here is the modus operandi according to Wiki:

When the victim answers the call, an automated recording, often generated with a text to speech synthesizer, is played to alert the consumer that their credit card has had fraudulent activity or that their bank account has had unusual activity. The message instructs the consumer to call the following phone number immediately. The same phone number is often shown in the spoofed caller ID and given the same name as the financial company they are pretending to represent. When the victim calls the number, it is answered by automated instructions to enter their credit card number or bank account number on the key pad.

A simplest thing to do to avoid being a victim of this scam is to make sure that you never give your personal information on the phone to unsolicited callers. Don’t compromise on this for any reason.

Pharming

This is essentially phishing, but it goes beyond simple tricks like fake emails filled with bogus links. Phishing can be remedied by simple security measures that you can observe while using your computer, however, pharming is not that easy to contain.

Here, the fraudsters attack the flow of information on the internet - such that, even if you type in the real authentic URL for a financial institution in your computer, you will be illegally redirected to a scam website designed to steal your information. Due to the technical complexity involved in rigging up such a system, pharming scams are not as popular as phishing scams - as of yet; but fraudsters become smarter by the minute, so this will be something to watch out for in future.

A particularly ominous pharming tactic is known as domain name system poisoning (DNS poisoning), in which the domain name system table in a server is modified so that someone who thinks they are accessing legitimate Web sites is actually directed toward fraudulent ones. In this method of pharming, individual personal computer host files need not be corrupted. Instead, the problem occurs in the DNS server, which handles thousands or millions of Internet users’ requests for URLs. Victims end up at the bogus site without any visible indicator of a discrepancy. Spyware removal programs cannot deal with this type of pharming because nothing need be technically wrong with the end users’ computers. (source)

Ransomware-ing

This is a relatively new beast. In this, attackers remotely access your computer and steal photos, documents, or encrypt all the data (so that you can’t access anything). Then they send you a ransom note demanding money if you want your data back or you want access to your computer again. Call it “data kidnapping” if you want.

Here is a video that explains it all:

The malicious programs or “ransomware” that is used in these cases, comes via some stupid email attachments or automatic downloads from untrusted websites. The best defense against such attack is to have your computer security updated with the latest antivirus, spyware, and firewall protections. Some popular free security tools are listed below:

• AVG Antivirus

• Windows Defender (anti-spyware)
  

• ZoneAlarm Firewall

Dumpster Diving

On yeah! low tech means to achieve rich results. This has nothing to do with computers or internet, but it can be equally damaging in terms of losing valuable financial information. And the sole reason why this is still going on? people have still not learned to shred their financial documents before disposing them in the trash.

If you don’t yet have a shredder, go get one right now. Now-a-days, you can get a shredder in the cost of a couple of burgers.

There is a technological side to dumpster diving which raises it’s head occasionally. It’s dumpster diving for electronic data. Don’t throw your used hard drives in the trash without wiping them off (completely stripping them of residual data). Simply deleting data or formatting a drive is just not enough. Read this article to learn more about this issue - wiping your hard drive clean before disposing it. Personal finance enthusiasts who maintain spreadsheets, or software programs to manage their finances should especially be aware of how they dispose their hard drives.

Social Engineering

This is defined as follows:

… social engineering is generally a hacker’s clever manipulation of the natural human tendency to trust. The hacker’s goal is to obtain information that will allow him/her to gain unauthorized access to a valued system and the information that resides on that system. (source)

“Hacker” means any unauthorized person wishing to steal your sensitive information - not restricted to just computer hackers.

From this definition, it is obvious that all the methods used to perpetrate financial fraud, as discussed above, are subsets of this huge thing called social engineering. Be very wary of social engineering - it inevitably ends in identity theft and loss of valuable and sensitive financial information.

~$$~

Apart from using the technological tools to fight social engineering, the best thing we can do is to train ourselves to look at things with a critical eye. Knowledge and awareness are your best friends towards mitigating the risk of becoming a victim of social engineering and financial fraud. Hope this post gives you a head start in that respect.

Additional useful resources:

• McAfee Phishing Quiz

• SonicWALL Phishing IQ Test

Many times, the blame for mindless consumerism falls squarely on the “social pressure” to spend. Here are just a couple of examples (out of many available) of how the “pressure” comes into play.

From a TIME magazine article “What America Buys and Why“, published in October 2006:

Status also drives us to shop. It’s what motivates us to buy televisions larger than our neighbors’, Compeau says. And as America grows more populated, we’ll only feel more pressure to spend, says Elizabeth Goldsmith, a Florida State University professor of consumer economics. “A lot of it is watching what other people buy. The more crammed in we are, the more we watch each other.”

According to Matt at One Million and Beyond:

The pressure to keep up with the proverbial Jones’ is in my opinion so strong in our society is hamstrings us financially from a young age.

Now, in light of such pressure plays, I have some thoughts:

• Who is forcing you to spend? Analyze what kind of answers you come up with - friends? peers? relatives? neighbors? or that idiotic bodybuilder on the television?

• How have they pressurized you? Did someone convey to you - either by words or by deeds that you are inferior because you spend less?

After contemplating on this for sometime and following stories about “Keeping up with the Joneses“, I have to admit that I don’t really see the origin of social pressure. I prefer to break this Joneses concept into two distinct features:

1. The desire to keep up with the Joneses.
2. The pressure to keep up with the Joneses.

In my opinion, it’s the desire part that’s playing a major role in increased spending - not the pressure.

My idea of “pressure” is when you are actively forced by someone to do something - when you don’t like doing it. For example, pressure is when my professor tells me: “I don’t see you in the lab often, you must spend more time in the lab if you want to accomplish something” - here, my professor is actively forcing me to spend more time in the lab - against my wishes. That is pressure.

I haven’t really seen or felt such pressure when it comes to spending money. No one (in real life) has ever told me that I am stingy, nor has anyone expressed displeasure over the fact that we live in a 600 sq. feet apartment, or made me feel lowly about the fact that I don’t have cable, or that I walk to school, or eat fruits for lunch. And, no one compliments me when I indulge in stupid splurges.

It doesn’t bother anyone else about how I choose to live my life and honestly, I don’t think anyone cares that much [just my experience - probably people in the corporate world have a different experience].

Think about it. If you buy an outrageously unaffordable car just because your neighbor bought one, would you say that your neighbor forced you into buying that car - while you were against buying it? OR is it because you wanted that car anyways - and the neighbor’s actions just provided you with an excuse?

Acting under social pressure is understandable when you are a teen and haven’t really developed an independent thought process - that’s precisely why endorsements by adults are needed (almost always) when teens deal with financial transactions. But 25~30~40 year olds succumbing to social pressure? I don’t think that’s quite social pressure.

So my question is, when people talk about the “pressure” to spend, where exactly is it coming from?

Have you felt it in anyway? Do you think you feel it more when you force yourself to “blend” with whatever is around you?

Am I mistaken in thinking that such spending pressures are nothing more than imaginary consumerism standards that we set in our own heads?

On this note, take a moment to understand this relatively new term “Affluenza“:

Affluenza is a social condition arising from the desire to be more wealthy, successful or to “Keep up with the Joneses.” Affluenza is symptomatic of a culture that prides financial success as one of the highest pursuits to be achieved. People who are said to be affected by Affluenza typically find that the very economic success they have been so vigorously chasing, ends up leaving them feeling unfulfilled, and wishing for yet more wealth - sometimes addicted to their economic pursuits.

Affluenza is arguably present in the United States, where the culture is one that prides itself on possessions and financial success. Mainstream media outlets, such as television broadcasts, tend to show how pervasive the idea has become. Affluenza also tends to bring with it very high social costs and strains already diminishing environmental and natural resources. (source: Wiki)

Seems to me that more people might be suffering with Affluenza, than feeling the proverbial “pressure” to spend (?)

~$$~

A Thought Experiment

Here is a two-scenario thought experiment that I am toying with.

• Scenario #1: suppose there is a group of 10 people who usually drive to work. Let’s say that 4 of them dump their cars and start walking to work - do you think the other 6 would take to walking because they perceive some kind of a social pressure from the 4 who walk?

• Scenario #2: suppose there are 10 people who usually walk to work. Now, let’s say that 4 of them get new cars and start driving to work - what’s the probability that the other 6 would feel socially “pressurized” to get new cars and drive to work?

I am pretty sure that the perception of social pressure will be noticed in only one of the above scenarios. I think you can guess which one it will be. The concept of trying to “blend” with your surroundings may fall flat on it’s face with such an example. This is just an hypothesis, so I won’t attach too much weight to it… but it’s interesting nevertheless.

Other related articles on this issue by fellow bloggers:

• Which Jones Family Are You Trying To Keep Up With? by David @ My Two Dollars. Read this and try answering the question in light of the above discussion: is it the advertising “pressure”?
• Climbing the Consumption Ladder Together by KMC @ Advanced Personal Finance. Same issue of consumption looked at from a totally different perspective.

• Making A Major Life Change: Is It Time For Kathy To Abandon The City? by Trent @ The Simple Dollar. Don’t forget to go over the comments on this one.
• Moving Is Going To Save Us A Ton Of Money And Improve Our Quality Of Life by David @ My Two Dollars. More on moving as David discusses the factors he considered before deciding to move.
• More Buffet Strategies: Olive Garden’s Never-Ending Pasta Bowl by Nick @ Punny Money.
• Determine Your Retirement Needs In 3 Easy Steps by Pinyo @ Moolanomy.
• Rich People Are Crazy! by Jim @ Blueprint for Financial Prosperity.
• Save Money on the Web by Lazy @ Lazy Man and Money.
• Emotional Impact of Temporary Setbacks @ I’ve Paid For This Twice Already.
• Analyze Your Broker Using BrokerCheck by Sun @ The Sun’s Financial Diary.
• Are You Motivated Enough To Be Financially Free? by David @ MoneyNing.
• Don’t Let Pride Ruin Your Life @ Clever Dude.

Carnivals and Festivals:

• Carnival of Personal Finance #119 hosted @ Blunt Money.
• Festival of Frugality #93 hosted @ Money and Values.
• Carnival of Capitalists @ The Virtual Handshake.

A few days ago, this news on BBC just wouldn’t let me concentrate elsewhere (source):

Zimbabwe’s annual inflation rate slowed in August to 6,592.8% from July’s record of 7,634.8%, according to the Central Statistical Office (CSO).
…
At the end of August, President Mugabe introduced jail terms of up to six months for anyone caught trying to raise prices or wages.

What? 6592.8% inflation! That’s crazy. I think you can actually feel the money becoming lighter and less valuable with the minute. To keep up with this rate of inflation, a person earning $10,000 now, would have to earn $659,280 a year from now in order to maintain his/her lifestyle!

Everything becomes 65.92 times more expensive within a year. If your salary doesn’t increase for whatever reason, you stand become 65.92 times poorer than the previous year without spending a dime!

Man, that just doesn’t sound quite right.

We are so used to a relatively *stable* economy, that we have come to accept certain ideas by default (sort of, “taken for granted” - although we pretend that we look at the historical data and try to predict the future) - for example, inflation rate around 2~4%, interest rates between 0~6%, stock market returns between 8% and 12%, etc. - it almost gives a feeling of complacency at times.

I wonder how our investing minds would react to a Zimbabwe-like economy. If, by some misfortune, we are ever caught in this type of an economic atmosphere, I wonder if we will have the ability to think outside the box.

Anyways, to see how other characteristics of this 6000% inflation economy look like, I checked up some data on the Reserve Bank of Zimbabwe. Here is what I got:

• Exchange rate: 30,000 Zimbabwe Dollars (ZWD) = 1 US Dollar (can currencies fall any lower?)

• Interest rate: Overnight Rate (analogous to Federal Funds Rate in US) = 600% (at this interest rate you will arithmetically “double” your initial investment in about 4 months! - although that doubled amount will only be a fraction of it’s original *value* in the same amount of time.)

It’s obvious that the inflation will override the growth of funds in a savings account by about 10 times (assuming if you get a full 600% on the savings account) - makes a simple savings account an invalid option to park your money, even at that interest rate.

Next, I tried to look for some data on the Zimbabwe stock market. I recently explained how the interest rate cycle and market sentiments go hand-in-hand. With that picture in mind, the 600% interest rate in the background, and with the knowledge that the economy was falling apart, I was expecting terrible scene at the stock market.

However, I was in for a big surprise here. This is what I found about the Zimbabwean stock market (source):

Zimbabwe is in the middle of an economic disintegration, with GDP declining for the seventh consecutive year, half what it was in 2000. Ever since President Mugabe’s disastrous land-reform campaign, the country’s farming, tourism, and gold sectors have collapsed. Unemployment is said to be near 80%.Yet something odd is happening.

The Zimbabwe Stock Exchange (the ZSE) is the best performing stock exchange in the world, the key Zimbabwe Industrials Index up some 595% since the beginning of the year and 12,000% over twelve months. This jump in share prices is far in excess of increases in consumer prices. While the country is crumbling, the Zimbabwean share speculator is keeping up much better than the typical Zimbabwean on the street.

This is probably going to cause a paradigm shift in my thinking about how stock markets react to economic conditions - I was expecting the graph to be exactly opposite! On the basis of conventional investing knowledge in US, there is no way anyone could have predicted that kind of stock market performance - in an economy that’s just out of control, and with lending rates that should be absolutely out of whack with that kind of inflation.

Perhaps, more than the money equations, it’s the geo-political situations that affect the market sentiments. Perhaps, there is more to stock markets than what my tiny brain can comprehend at the moment. Perhaps, it’s just the randomness that people talk about. Whatever.

Yeah.. whatever … I am just glad not to be in Zimbabwe .. I think I would have resorted to gold smuggling by now.

Stuff like this keeps reminding me of Warren Buffet’s ovarian lottery concept.

“To protect your credit card against misuse, remember to sign the back of your card before you start using it” - you will hear that every single time when you call your credit card company to activate a credit card (or a debit card for that matter).

Even the Federal Trade Commission (which, by the way, goes with the tag line of “protecting America’s consumers”) highlights that as the first tip towards guarding against credit card fraud:

Sign your cards as soon as they arrive.

Exactly how is this supposed to protect the card against misuse?

Mastercard tries to explain this on it’s website with this argument:

Sign all your payment cards as soon as you get them. This way when salespeople check the signature on the back of your card against the signature on the sales receipt, you will be protecting yourself if your card is lost or stolen.

I don’t get this for many reasons:

• Salespeople hardly ever check the signatures on the back of credit cards. This is especially true with those “self-checkout” counters found at many retail stores.
• For someone who is determined to use a stolen credit card for purchases, it’s really not difficult to forge the card’s signature on the sales receipt. So, even in the rare cases where salespeople do check the signatures, it’s very unlikely that they will detect any wrongdoing without a detailed scrutiny.
• For the above reason, just cross-checking the signature on the receipt against the one on the back of a credit card is not a sufficient deterrent; ideally, the signature on the sales receipt should be verified with a more concrete piece of evidence - like a driver’s license or a state identification card. I don’t remember when was the last time a salesman asked for my driver’s license to verify a signature - I am not even sure they are allowed to do that.
• If it turns out that an additional authentication source is required to verify the signature, then I don’t see the point of having the signature panel on credit cards in the first place.

Let’s look at these drawbacks in light of a scenario in which a fraudster tries to use a credit card that’s not signed at the back.

• In this case, the person who has stolen your card can generally sign your name (or something that looks like your name) on the back of the card (your name is printed on the front of the card, so this is a no-brainer) and recreate the same “signature” on the sales receipt.
• The only difference here is that the thief doesn’t have to practice the signature on the back of the credit card - he can create an arbitrary fake signature. So yeah, it makes it a little tiny bit easier.
• Like before, a salesperson who just verifies the signature on the sales receipt with the signature on the credit card can be easily fooled.
• Again, the only way to catch such a deceit is to verify the signatures on the sales receipt and the credit card with the signature on the driver’s license. Again, the objective is to stop the fraudulent transaction - so it just suffices to verify the signature on the sales receipt with the signature on the driver’s license (or state ID) and the signature on the credit card really doesn’t matter.

To me, there really isn’t a big difference between the two cases - whether you sign it or don’t, misusing a stolen credit card (or a debit card for non-PIN transactions) seems really easy. Makes the “sign the back of your cards” message a bit moot. I don’t think it’s enough deterrent for even a *casual* credit card thief.

Interestingly, in both cases (whether you have your signature on your credit cards or you don’t), even if you enforce sales receipt signature verification through a driver’s license, all a fraudster has to say is: “Oops, I forgot my driver’s license at home“, and he/she can easily walk away from the situation and try the scam on the next retailer.

One good piece of advice on this issue comes from The Straight Dope:

You should believe me, as I have worked in retail, for a company that issues its own credit cards. Here’s our official advice on signing the strip on the back: Don’t sign it. It’s useless as a deterrent, as anyone who takes your card then has a sample of your signature which they can not only use on any charge slip, but on your checks as well. However, do not leave the white strip blank. In that space, write: “Ask For Picture ID,” and be prepared to back that up someday when you’re in a hurry and the clerk wants to see a driver’s license as well as the card. It makes the charge transaction a little longer, but a lot safer.

Again, this point is moot if the salespeople don’t check the back of most credit cards in the first place - you can write whatever you want in the signature panel, it’s not going to make a difference if no one ever looks at it. However, in spite of this singular loophole, writing “Ask For Picture ID” may be the best thing you can do right now - while we wait for a better security measures (or other tricks as suggested by people who comment on this post).

I am not sure, how this issue can be effectively tackled in future, but printing photographs on the front side of credit cards might be one way to address it. Your signature stays safe and away from thieves, and your face provides instant “authentication”.

~$$~

Before you go, here is an excerpt from a funny story on this issue on Zug.com:

The manager, a guy about my age with a ponytail and a goatee, came over to see what was wrong. They exchanged some hushed words, and then he rang through my purchase again. “Can you sign the screen, please?” he asked. This guy was serious.

Again I signed NOT AUTHORIZED to my $16,800 Circuit City credit card payment.

“What is that?” he asked.

“That’s my signature,” I said.

“You can’t sign it NOT AUTHORIZED.”

“Why not?”

“Because you need to sign your name.”

“Well, I recently changed my signature,” I said hopefully. “It now looks a lot like NOT AUTHORIZED.”

“It’s got to match the back of your card,” the manager said.

“Oh,” I said. “No problem.” I took the card back from him and wrote NOT AUTHORIZED on the back of my credit card. I had heard that this trick sometimes works, but this guy was too smart for me.

“No, no,” he said as I started writing. “That doesn’t count.”

“It’s never had to match before,” I said. “No one has ever cared.”

Click here to read the rest of this prank.

I don’t know about you all, but I occasionally get tired of thinking about serious stuff - how to increase my income, how to live frugally, how to shop smartly, whether I am saving enough, whether I am spending too much, blah blah…

And then, there are days when my mind just wouldn’t process anymore information about net worth, debt, retirement, and other such financial topics. Generally, when this happens, I turn off the calculator in my brain and indulge in some wishful thoughts. It’s not productive in the conventional sense, but it’s sure refreshing.

Here are a few of my money fantasies. Some of them are things I wish happened (or will happen) to me, some are things I would do/buy if money was not a constraint, and some are just… er .. silly.

• I often fantasize about winning a *huge* lottery: Hearing about lottery winners on TV/internet provides the spark for such thoughts. Although, I keep revisiting this fantasy when I am tired of thinking/reading about serious financial stuff - this particular thought does throw me back into the numbers. I have often spent wasted time thinking about how I will invest/spend $200 million - and how I (and several succeeding generations of my family) will live “happily ever after” in the interest/dividend income that I earn on that kind of money. Money thoughts - but these are more entertaining than stressful.

• I would like to get an awesome motorcycle: Actually, I would like to be rich enough to buy *many* awesome motorcycles. For some unknown reason, I have a special attraction towards these things. Whenever, time permits, I often find myself browsing motorcycle websites - looking for “mean” machines. Earlier (when I was single) I used to be fascinated by the sports versions, but now-a-days I feel drawn towards cruiser styles. Here is one that I have my eye on (Yamaha Stratoliner - $16,580):

Perhaps, many years down the line, I might really get this one; but, for now, it’s just a fantasy. Strangely enough, I don’t have similar grand thoughts about what car I drive - I just don’t care. I would be perfectly happy with a Toyota/Honda even if I had insane amounts of money.

• I would like to go on a space flight: Richard Branson’s Virgin Galactic is selling tickets at $200,000 per head for a space flight and I would like to have one before I become too old to travel. For the two of us (me and my wife), $400,000 is a very long way to go - and by the time we reach that goal, there will be kids and then we would be probably looking at $800,000 (have pity on me and excuse the inflation). In fact, to extend this thought further, I would like to create my own space travel company, so that I won’t have to wait in line to travel into nothingness.

• I would like to have a few personal cooks: This thought often crosses our minds when we are back from particularly tiring days at school. There are very few pleasures in the world that are greater than getting freshly prepared, made to order, delicious food on your plate - without you having to cook it. On similar lines, I would love to have help with stuff like cleaning vessels, doing laundry, cleaning our house, etc. From a holistic point of view, all these things are eating valuable time away from the stuff I really would like to do.

• I would like to visit *all* the exotic places around the world: Here are two places that are on top of my list - 1. Kilimanjaro in Tanzania (I want to go there before the glacier there melts - which is probably within the next 20 years), and 2. Iguassu Falls in Brazil. Being tourists is an expensive proposition for us (I really hate to think about money when we go on a vacation or something) - so having a *lot* of money is critical to my tourism fantasies.

Apart from these, there are other minor money wishes that I harbor (or used to harbor):

• When I was a kid, I read a lot of Disney comics. A particular money fantasy in those days was to have as much money as Uncle Scrooge - which meant having a room full of gold coins and bank notes.
• Be wealthy enough to travel First Class on international flights. I don’t care about the status here - I just care about being able to sleep peacefully without cramping my legs.
• Be rich enough to blog without worrying about the money part. I enjoy blogging and hate it when it gets tied to my monetary temptations (which I often fail to resist). *cough* advertisements *cough*.
• Have enough money to give my wife whatever she asks for (this is included for *strategic* reasons ).

From some the things I wish for, I think I am realizing that I probably just want to be a lazy bum if money wasn’t a constraint. Oh well!

Interestingly, there are things I will probably never wish for even if I had all the money in the world. These include: expensive clothes/shoes/watches, *big* house (or mansion), private jet, yacht, Hummer-like car, diamonds, gold, eating out in restaurants, etc - but I can understand that there must be a lot of people who wish for these things.

What are your financial fantasies? What things would you wish for if money was not a constraint? … and please don’t give us Miss America answers.

Want more inspiration? Check this out - scroll down to the dialogue between Lawrence and Peter Gibbons, starting with “What would you do if you had a million dollars?“

Some interesting reading material for a lazy Sunday.

• How to Quit Your Day Job in Six Not So Easy Steps by Ben @ Money Smart Life.
• Lazy Man and Jealousy by Lazy Man @ Lazy Man and Money.
• Why Have Americans Become so Overindulgent? by Lynnae @ Being Frugal.
• Are You a Better Investor? by Sun @ Sun’s Financial Diary.
• What Does it Mean to be ‘Wealthy’? by Jason @ Smart Money Daily.
• This is Just Too Good Not to Highlight by JLP @ All Financial Matters. An interesting story about a Robert Kiyosaki fan fanatic [such people exit (?)]
• Maximum Notary Fees By State: Don’t Get Ripped Off By Big Fat Notary Guys! by Nick @ Punny Money.
• How to Start Your Own Business by Cindy (as a guest blogger) @ Free Money Finance.
• A $503,000 Typo? by MBH @ Mighty Bargain Hunter.
• Shared Money: Combining Finances With Your Partner by Flexo @ Consumerism Commentary.
• Some Money Rules of Thumb I Use by Super Saver @ My Wealth Builder.

After the recent cut in the Federal Funds Rate, it is anticipated that most high yield savings accounts will follow suit and decrease the interest rates offered on deposits. In fact, a couple of fellow bloggers reported yesterday that ING Direct has already reduced it’s savings account interest rate from 4.50% (yawn) to 4.30% (longer yawn). It won’t be too long before other banks respond in a similar manner.

Although, ING’s 0.2% rate reduction can hardly be called as “significant”, for people who are used to earning interest at a higher rate, such a drop causes some discomfort. Consequently, they start looking around for other accounts that are offering better rates.

If you belong to such a group, here are some options you might want to consider.

The table below lists banks that are offering an interest rate (APY) of 5.00% or more on their respective online savings accounts as of 09/25/2007 (links are for information only - no referral links):

[Click on the column headings to sort in ascending or descending order]

The table has been compiled according to the following guidelines:

• All rates are regular, NOT introductory.
• Both, money market accounts (MMA) and savings accounts are considered.
• Accounts which offer tiered rates on deposits are NOT included [for example, accounts that offer 0% APY on balances below $5000 and 5% APY on balances above $5000 are not included]. The only exception is Presidential Online Bank which is offering the 5.25% APY for balances below $35,000.
• Accounts which charge monthly maintenance fees [based on average daily balance requirements] are NOT included. That means, none of the above banks carry a minimum balance requirement (may be $1 in some cases, but that shouldn’t be a problem).
• All accounts are FDIC insured.
• So basically, these are the top interest bearing banking accounts with low potential for surprises. Of course, you still have to read (and understand) the fine print before you sign anything.

Notes: It is very likely (but not guaranteed) that the rates in the above table will go down in the near future. However, keep the list handy - in all probability, even after a drop in the interest rates across the board, the top players will still be offering better interest rates than the rest of the herd.

Which type of accounts are better? Money market accounts or savings accounts?

Earlier, I wrote about the factors I would consider for choosing an online savings account. From the point of view of these factors, both money market accounts and savings accounts offer a similar deal. Both are FDIC insured and generally offer similar transaction facilities. However, typically, money market accounts tend to be tiered - different interest rates are offered on different amounts of deposits, unlike most savings accounts. Also, money market accounts tend to carry more fees (maintenance, minimum balance, etc.) than simple savings accounts. So watch out.

However, the two money market accounts that I included in the above table don’t have tiered structure (at present), and there are no maintenance fees involved. So, for all practical purposes, they are as good as the other savings accounts. However, keep in mind that these things are not set in stone and banks may change terms and conditions after you sign up for an account.

Other thoughts on the subject

• Take it easy: In my opinion, there is no need to go all hyper on trying to switch bank accounts just because your bank dropped interest rates on savings by 0.2%. It helps to have a sense of proportion here. Just ask yourself: how much is this interest rate drop going to cost me?

Remember, for each 0.1% drop, you stand to lose $1 in interest per year on every $1000 you have in your savings account - before considering taxes. If you consider a 25% tax rate on the interest earned, then each 0.1% drop causes a $0.75 loss in interest on every $1000.

Following the above numbers (which I hope are correct - I just did it on the fly, so let me know if the math seems off), we can easily estimate (for example) that for the recent case of ING Direct’s interest rate cut (0.2%), a person who has $10,000 with ING will stand to lose about $15 a year in interest earnings.

At this point, it’s worth looking into the reasons why you have been doing business with your current bank. Sometimes, interest rate is not the only reason why people choose different banks. If those reasons aren’t worth $15 a year (or whatever loss you are looking at), sure go ahead and get a new account at different bank.

• Considering a CD? Certificate of Deposit (CD - also known as “Term Deposit” or “Fixed Deposit”) will be an area where people will tend to look into to lock in “good” rates, especially after the recent rate cut. However, make sure you do your homework well with CD rates and shop around. As of now, I don’t see any point in buying a long term CD that pays a much lower interest rate than some top savings account in the market. For example, take a look at ING Direct’s CD rates:

Personally, I would never consider these CDs if I am getting a better rate and more liquidity with a savings account with another bank.

Also, keep in mind that banks that give top rates for high yield savings accounts do not necessarily give top rates for CDs. Again, remember to shop around before deciding on switching to CDs with your current bank.

My experience with some of the banks

• My first online savings account was with ING Direct. Although, I hardly keep anything in it now-a-days, ING has always given me a “feel good” vibe. I have contacted their customer service on multiple occasions for various reasons and had a good experience each time. Plus, their multiple sub-accounts feature is just awesome - perfect for budgeting purposes. It’s a pity they don’t offer top interest rates anymore.

• Emigrant Direct is better now (as compared to their earlier interface), but it doesn’t appear as “appealing” as ING even though it has consistently offered better rates than ING. I have an account here, but it’s largely dormant.

• HSBC Direct is my central hub at present. In terms of functionality, and security, I am most comfortable with this account. There is no restriction on how many external accounts you can connect to HSBC’s account (and hence it can act a hub) - makes it easier to organize other accounts. Also, you can set up automatic weekly/monthly transfers to/from multiple accounts for a given period of time. The account also comes with an ATM card - awesome feature for emergencies. Login procedures suck, but I can live with that.

• iGobanking is the latest addition to our army of bank accounts. Account opening procedure was a breeze, and customer service was very helpful. However, I do have to point out that their online help documentation sucks - it’s just not adequate enough (hint: try finding their routing number). However, A 5.30% APY makes up for that.

Looks like Jeremy @ Generation X Finance has had death on this mind lately. Here is a series of informative articles he has published recently on post-death wealth management:

• Transferring Assets Upon Death Through a Will
• Transferring Assets Upon Death by Operation of Law or Contract
• Transferring Assets Upon Death With a Trust

Other interesting articles of the week:

• Shaking the New Car Itch: A Tale of Priorities by JD @ Get Rich Slowly.

• Who else is tired of hearing about the ‘latte factor?’ by KMC @ Advanced Personal Finance. Reminds me of my resistance to the latte factor idea.

• How to Get Ahead In America by Logan Flatt @ Power Wealth. Logan is creating a 12-part series on this subject and it seems pretty promising so far.

• An Analysis: Bit Off More Than He Could Chew by Mapgirl @ Mapgirl’s Fiscal Challenge.

• Dealing With Found Money, Followup by Nickel @ Five Cent Nickel.

• 12 Ways To Beat Inflation: Don’t Let Rising Prices Get You Down by SVB @ The Digerati Life.

• Beware On-Campus Credit Card Application Booths by Jim @ Blueprint for Financial Prosperity.

• Learning A Little Bit About Dividends by NCN @ No Credit Needed.

• What is “Short Selling” or “Shorting a Stock”? by Preet @ Where Does All My Money Go.

In other news, Mint.com is now live. Go ahead and check it out - it’s a online financial management portal that helps to put your credit cards and bank accounts in order.