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Apache is functioning normally

August 3, 2024 by Brett Tams

In addition to spoiling them with toys and ice cream, many grandparents also want to help secure a solid financial future for their grandkids. That can mean setting up a custodial account, considering tax-advantaged savings options, and exploring other ways to start building a child’s wealth.

Below, you’ll learn about the different ways to save money for your grandkids, plus the pros and cons of each.

Why Open an Account for Grandchildren?

Sure, your grandkids might prefer a new video game or Lego set, but you’ll do them a favor, today and tomorrow, by opening a savings account for them. Here are a couple of good reasons to open a savings account for your grandchildren.

Teaching Financial Literacy Early

Money management skills are crucial, but personal finance education can be virtually nonexistent during school. It’s not typical for schools to teach kids how to balance a checkbook, how to invest in stocks, how to save for a down payment on a house, and how to file taxes.

Thus, it’s up to parents — and grandparents — to equip the next generation with financial literacy. Opening an account for your grandchildren can help teach them concepts such as interest, budgeting, and investing.

Getting a Head Start for College and Life

While teaching children how to manage money can give them a head start on the path to financial wellness, so too can providing them with a nest egg that can grow over time through various savings and investing accounts. Consider these options:

• When you open a savings account for grandchildren early on, they could wind up having a sizable chunk of cash in young adulthood to put toward their first car or even a house down payment.

• A 529 college savings plan could help them avoid taking on too much debt from student loans.

• Retirement accounts, such as a Roth IRA, can help them achieve their retirement goals, even if those are more than half a century away. Remember, the earlier someone starts investing, the more they stand to earn in the long run.

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Types of Accounts to Consider

Grandparents have many options when it comes to opening an account for their grandchildren, including:

Savings, CDs, and Bonds

Many banks and credit unions offer savings accounts designed for kids. Do a quick search for “best savings accounts for grandchildren” or you could start by seeing if your own bank offers such an account.

Having money in savings at an early age will let your grandkids benefit from compounding interest, especially if you find a high-yield savings account for kids.

You can also consider opening a certificate of deposit (CD) or purchasing savings bonds for your grandchildren. CDs are savings accounts that typically provide a higher interest rate than a standard savings account in exchange for keeping your money in the account for a fixed period of time. Savings bonds, issued by the U.S. Department of Treasury, are a very low risk, longer-term investment that provides interest in return for lending the government money.

With both of these options, the money is less liquid, but if the CD or bond matures when your grandchild is older, they stand to have a reliable source of funds they can use in future years.

Custodial Accounts (UGMA/UTMA)

Beyond savings accounts for grandchildren, you can consider helping your grandkids actually start investing with a custodial account, through the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Once your grandchild is between 18 and 25 (the exact age varies by state), they’ll take control of the account.

These accounts are taxable (meaning you will owe taxes on interest earned) and have no contribution limits. They’re an easy way to purchase stocks, mutual funds, and other securities for your grandchild — and you can even transfer your own securities into the custodial account.

529 College Savings Plans

The cost of college tuition continues to skyrocket, meaning it’s never too early to start saving. There are several benefits of a 529 college savings plan: While the contributions to this qualified tuition plan aren’t tax-deductible, your grandchild’s distributions from the account tax-free at the federal level, as long as the money is used for qualifying expenses.

A 529 college savings may have “college” in the name, but your grandchild can also use it for other higher education programs, such as a trade or vocational school. You can also roll over 529 funds into a Roth IRA if your grandkids don’t use all (or any) of the funds.

Contributions to a grandchild’s 529 account are not deductible on your federal income tax return. However, close to 30 states offer either a deduction or credit for this kind of contribution.
Another consideration: There’s an annual limit to how much you can give as a gift without triggering taxes. For 2024, for instance, the figure is $18,000 per giftee. If you were to put more than that into a 529 for a grandchild, you would have to pay a gift tax bill.

IRAs for Minors

Similar to custodial investment accounts, you can open custodial retirement accounts for your grandchildren, including a traditional IRA and a Roth IRA. While your grandkid won’t benefit from this account for decades, starting them early on the path to retirement savings means they could have considerably more money to work with when they reach retirement age.

However, it’s important to note that opening an IRA requires the child to have earned income in a given year. For teens, this can make sense. For a newborn, it is unlikely to be a viable option.

When making contributions to an IRA for a grandchild, note that the amount you deposit is subject to a gift tax exclusion before it becomes taxable. For 2024, this allows up to $18,000 per giftee. Funds given beyond that amount might mean you, the donor, are liable for taxes, though other factors will need to be considered to determine any tax burden.

Choosing the Right Account

Not sure how to choose the right savings account for your grandchildren? Here are some things to consider:

Comparing Interest Rates and Fees

If you’re opening a savings account, compare interest rates — you want an account with a high yield so that the money compounds more quickly over time. For example, currently the average interest rate for standard savings accounts is 0.45%, while the figure for high-yield savings accounts (often from online-only banks) can be several times that number.

For custodial accounts, you’ll want options with low or no fees. It can be wise to shop around and see what options you have from different banks and brokerage firms.

Recommended: How Old Do You Have to Be to Open a Bank Account?

Accessibility and Withdrawal Rules

Certain accounts allow your grandchildren to access funds sooner, while others (like IRAs) have strict rules about when they can withdraw funds and what the funds can be used for (as is the case with 529 plans). Think about the specific timeline and use case you envision for your grandchildren. Sometimes, opening more than one type of account makes sense, depending on how many goals you want to enable for your children’s kids.

Tax Implications and Benefits

Some accounts have tax-deductible contributions; others have tax-free withdrawals. For example, withdrawals from a 529 account are not usually taxable, provided they are used for qualified educational expenses. With a Roth IRA, withdrawals made after your child is older than 59 ½ (as hard as that may be to imagine) are not taxable. With a traditional IRA, taxes are paid when the money is withdrawn, usually in retirement, and are taxable.

Speaking with a financial advisor can help you understand the tax implications of each type of account you’re considering to better understand what you might pay — and what your grandchild might pay.

Setting up and Contributing to the Account

Ready to open a savings account for your grandchildren? Here’s how it works:

Opening and Funding the Account

Follow the bank’s or investment firm’s guidelines for opening the account. You will likely need some specific information from the grandchild’s parents to open the account. You’ll also need to deposit money into the account to start the nest egg. Custodial accounts may even let you transfer your own assets into the account.

Automatic Transfers and Recurring Contributions

If you’d like, you may be able to set up recurring transfers into the account. Perhaps you want a recurring transfer every holiday season or on your grandchild’s birthday. Work with the financial institution to set up these contributions — and perhaps find out how other loved ones might be able to contribute as well.

Monitoring and Managing the Account

After opening an account, it’s important to monitor it and see how the funds grow over time. Just as importantly, once your grandchild is a little older, it’s a good idea to sit down and review the account with them:

• If it’s a savings account, walk them through how compound interest works.

• If it’s a 529 plan, talk to them about college costs and how student loans work.

• If it’s a custodial account, talk to them about the basics of investing and the importance of saving for retirement.

The Takeaway

It’s never too early to start thinking about your grandchild’s future. Savings accounts, 529 plans, and custodial accounts offer several ways for you to give them money that will help them with college, general expenses, and even retirement.

While saving for grandkids is important, it’s also crucial that you take care of your own finances.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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FAQ

What are the contribution limits for custodial accounts?

There are no contribution limits for UGMA/UTMA custodial accounts, but you can only contribute up to a certain amount to avoid gift-tax implications (this changes each year). Contribution limits apply for custodial IRAs just as they would for regular IRAs.

Can grandparents open a 529 plan for grandchildren?

Yes, grandparents can open a 529 plan for grandchildren. If the grandchild’s parents have already set up a 529 plan, grandparents can also contribute to that plan directly. This will simplify account management and withdrawals for the recipient of the funds.

What happens to the account if the grandchild doesn’t need the funds?

If a grandchild doesn’t need funds from a 529 plan for college, they can still use them for trade or vocational schools or roll them into an IRA. Grandparents can also reassign the 529 plan to another grandchild.

Photo credit: iStock/gorodenkoff

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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Source: sofi.com

Apache is functioning normally

August 3, 2024 by Brett Tams

Net interest income was also on the rise on a quarterly basis thanks to increases in deferred guaranty fee income and interest income from portfolios. The single-family conventional side formed the bulk of Fannie’s acquisition volume in Q2, rising from $62.3 billion in the first quarter to $85.9 billion this time around. The GSE said … [Read more…]

Apache is functioning normally

August 2, 2024 by Brett Tams

Medical debt is an unfortunate reality for millions of Americans. As healthcare costs continue to rise, it becomes increasingly important to understand the financial implications of medical debt and its impact on your credit score.

This article explores the topic of medical debt and provides you with strategies to manage and minimize its effects on your credit score.

How Medical Bills Affect Credit Scores

Unpaid medical debt can have a significant impact on your credit scores, especially when it becomes delinquent or goes to collections. Here are some key points to consider:

The role of medical debt in credit score calculations: Medical bills, like other types of debt, factor into your credit score calculations. Late or missed payments and unpaid bills can lower your credit scores, making it more challenging to obtain loans, credit cards, or favorable interest rates.
Late payments and unpaid medical bills: Late payments on medical bills can be reported to the three major credit bureaus, which may negatively affect your credit scores. If unpaid, medical bills can eventually be sent to collections, further damaging your credit.
Impact of medical debt on different credit scoring models: Unpaid medical debt can affect your credit score differently, depending on the credit scoring model being used. For example, newer credit scoring models like FICO Score 9 and VantageScore 4.0 give less weight to medical debt compared to other types of debt, while older models treat medical debt more harshly.

The Medical Debt Collection Process

Understanding the medical debt collection process can help you take control of the situation and potentially minimize its impact on your credit scores.

How medical debt becomes a collection account: When a medical bill remains unpaid for an extended period, the medical provider may sell the debt to a collection agency. The collection agency then reports the debt to credit bureaus, which can cause a significant drop in your credit scores.
The role of collection agencies: Collection agencies are responsible for recovering unpaid medical debts. They may contact you through phone calls, letters, or even legal actions to collect the outstanding balance.
Statute of limitations on medical debt: The statute of limitations for medical debt varies by state, ranging from three to ten years. This is the time frame within which a collector can sue you for the unpaid debt. It’s important to know the statute of limitations in your state, as it can help you strategize your approach to dealing with unpaid medical debt.

Medical Bills Grace Period and Reporting

A grace period can provide some relief when dealing with medical bills, but it’s important to understand its impact on credit reporting.

How grace periods work with medical bills: Some medical providers may offer a grace period, typically 30 to 180 days, during which they will not report late or missed payments to credit bureaus. This gives you time to resolve any disputes, work with your health insurance company, or make arrangements to pay the bill.
Impact of grace periods on credit reporting: Even if your medical provider offers a grace period, it’s essential to pay your medical bills promptly. Once the grace period ends, late payments can be reported to credit bureaus, negatively impacting your credit.
Changes in medical debt reporting rules: Recent changes to credit reporting rules have made it more difficult for medical debt to impact your credit scores. These changes include a 180-day waiting period before medical debt can be reported to credit bureaus and the removal of medical collections paid or settled by insurance.

Can medical bills be removed from my credit report?

If you believe a medical collection on your credit report is inaccurate or unfair, you are entitled to dispute it. To dispute a medical collection, you’ll need to contact the credit bureau reporting the debt and provide supporting documentation to prove that the collection is inaccurate or unjust.

First, you’ll need to gather all relevant documents, such as medical bills, insurance Explanation of Benefits (EOB), payment records, and any correspondence with the medical provider or collection agency. This evidence will help you build a strong case when disputing the collection.

Then, once the credit bureau receives your dispute, they typically have 30 days to investigate the matter. If the dispute is resolved in your favor, the medical collection will be removed from your credit report, which may result in a boost to your credit score.

Does paying off medical collections improve my credit?

Paying off medical collections can have a positive impact on your credit, but the extent of the improvement depends on various factors.

The importance of paying medical debt: Paying off medical debt shows financial responsibility and can help prevent further damage to your credit.
How payment history affects credit scores: Your payment history makes up a significant portion of your credit score calculation. Settling medical debts can have a positive effect on your payment history, potentially improving your credit.
Settling medical debt for less than the full amount: In some cases, collection agencies may be willing to accept a lower amount to settle the debt. While this can help you save money, keep in mind that the partial payment may still be reported to credit bureaus, which could have a less favorable impact on your credit score compared to paying the debt in full.

Strategies for Managing Medical Bills

Effectively managing your medical bills can help prevent them from damaging your credit scores.

Negotiating medical bills with healthcare providers: Before a bill goes to collections, you may be able to negotiate with your healthcare provider to lower the cost, set up a payment plan, or request financial assistance.
Repayment plans and options: Many medical providers offer payment plans that allow you to pay your medical bills over time. This can make it more manageable to handle large medical expenses without hurting your credit scores.
Hiring a medical billing advocate: A medical billing advocate can help you review your medical bills for errors, negotiate with medical providers, and even guide you through the insurance claim process.
Seeking financial assistance and grants: Look for financial assistance programs, grants, or charities that may help cover the cost of your medical bills. Some hospitals and clinics also have programs for eligible patients.
Weighing the pros and cons of personal loans or credit cards: Using personal loans or credit cards to pay off medical debt can be an option, but consider the potential impact on your credit scores, as well as the interest rates and fees associated with these forms of borrowing.

What to do if You Can’t Pay Your Medical Bills

You have certain rights under the Fair Debt Collection Practices Act (FDCPA), which protects you from abusive or deceptive debt collection practices. Make sure you understand your rights and options when dealing with medical debt.

Keep an open line of communication with your medical provider and debt collectors. Discuss your financial situation, ask for assistance, or negotiate a payment plan to help manage your medical bills.

In extreme cases, bankruptcy may be a viable option to address overwhelming medical debt. However, it’s essential to consider the long-term implications, as bankruptcy can have a significant and lasting impact on your credit.

Preventing Medical Debt from Damaging Your Credit

Taking a proactive approach to managing medical expenses can help protect your credit score. Review your medical bill and insurance statement carefully for errors, and address any discrepancies promptly. Keep track of due dates and submit insurance claims as soon as possible to avoid late payments or collections.

Maintaining a record of your medical expenses can help you budget effectively and ensure you don’t miss any payments. Consider using financial management tools, apps, or a simple spreadsheet to stay organized.

You should also regularly review your credit report for any inaccuracies. By catching errors early, you can dispute them and potentially prevent damage to your credit score.

Keeping Your Credit Score Healthy

Some strategies for maintaining a healthy credit score include making timely payments on all your debts, keeping your credit utilization low, and diversifying your credit mix by using different types of credit responsibly.

Establishing a solid credit history takes time and consistent effort. By using credit responsibly, making timely payments, and avoiding high levels of debt, you can build a strong credit history that will serve you well in the long run.

Having a financial plan and an emergency fund can help you handle unexpected medical expenses without relying on credit, which could negatively impact your credit. Aim to save at least three to six months’ worth of living expenses in an emergency fund.

Conclusion

Unpaid medical debt can have a substantial impact on your credit, but understanding how it works and taking proactive steps to manage it can help you minimize its effects. Stay on top of your medical expenses, communicate with medical providers and debt collectors, and maintain a healthy credit score by following the strategies outlined in this article.

Remember, your financial health is just as important as your physical health, and taking control of your medical debt is a significant step toward financial well-being.

Frequently Asked Questions

What happens when medical debt is sold to a collection agency?

When medical debt is sold to a collection agency, the agency becomes responsible for recovering the unpaid debt. They may contact you through phone calls, letters, or even legal actions to collect the outstanding balance. The collection agency also reports the debt to credit bureaus, which can cause a significant drop in your credit score.

What are the consequences of unpaid medical collections over $500?

Unpaid medical collection accounts over $500 can stay on your credit reports for up to seven years and have serious consequences, such as:

Significant damage to your credit score
Difficulty obtaining loans, credit cards, or favorable interest rates
Potential legal actions or wage garnishments
Increased stress and financial burden

It’s essential to address unpaid medical debt promptly to minimize these consequences.

What should you do if you can’t pay a medical bill on time?

If you can’t pay a medical bill on time, consider the following options:

Communicate with your medical provider about your financial situation and ask for assistance or a payment plan.
Explore financial assistance programs, grants, or charities that may help cover the cost of your medical bill.
Negotiate with the medical provider to lower the cost or set up a payment plan.
Hire a medical billing advocate to help you review your bills and negotiate with the medical provider.

How can you negotiate medical bills?

To negotiate medical bills, follow these steps:

Review your bills and insurance statements for errors or discrepancies.
Research the average cost of the medical service in your area.
Prepare a case, explaining why you believe the bill should be reduced.
Contact your medical provider’s billing department and discuss your concerns.
Be prepared to provide documentation and evidence to support your case.
Remain polite and persistent throughout the negotiation process.

How can I get medical bills off my credit report?

To get medical bills off your credit report, the first step is to review your credit report for inaccuracies and verify the legitimacy of the medical collections listed. Inaccurate or unjust collections can be disputed, and if the dispute is resolved in your favor, the medical debt will be removed from your credit report.

To dispute a medical collection, contact the credit bureau reporting the debt and provide supporting documentation, such as insurance Explanation of Benefits (EOB), payment records, and any correspondence with the healthcare provider or collection agency. The credit bureau typically has 30 days to investigate the dispute, and if successful, the medical collection will be removed, potentially improving your credit score.

Another approach to getting medical debt off your credit report is by negotiating a “pay-for-delete” agreement with the collection agency. In a pay-for-delete agreement, you offer to pay the outstanding medical debt in exchange for the collection agency removing the collection from your credit report. This strategy, however, isn’t always successful, as collection agencies are not obligated to agree to such terms.

Source: crediful.com

Apache is functioning normally

August 2, 2024 by Brett Tams

Every debit card comes with its own unique number imprinted on the front or back of the card. This number, typically 16-digits long, is used by a merchant or card processor to identify your specific account, ensuring that your transactions are approved and processed correctly.

Understanding the numbers on your debit card can be crucial for managing your finances effectively. Here’s a closer look at what your debit card number means, how to find it (even if you don’t have your debit card on you), plus how to keep your debit card numbers from falling into the wrong hands.

What Do the Numbers On a Debit Card Mean?

When you open a checking account, you typically receive a debit card that features a long number — referred to as a primary account number, or PAN — often spaced into four groups of four digits. While these numbers may seem random, they actually contain critical information in a specific format that identifies your bank, as well as your specific account. Below, we decode the typical 16-digit debit card number, though keep in mind the length of this number and its parts may vary.

Digit 1

The very first number in your debit card number is called the major industry identifier (MII). It indicates the category of the card issuer, such as bank, card network, airline, or the government.

Recommended: How to Use a Debit Card

Digits 2 to 6

The next five digits (typically) represent the financial institution that issued the debit card. Together with the MII, the first six digits of the debit card number make up the bank identification number (BIN), also referred to as the issuer identification number (IIN). This number helps the merchant identify the financial institution that issued the card and tells them how the transaction should be processed.

Digits 7 to 15

lose your debit card or it gets stolen, but often stays the same if the card is replaced due to expiration or damage.

Last Digit

The very last digit of your debit card number is known as the check digit. This number has a mathematical relationship to the previous numbers on the card. Using a specific equation (called the Luhn algorithm), this last digit can immediately detect whether or not a card number is valid. It is used to catch user typing errors as well as certain types of fraud.

Recommended: Different Types of Bank Account Fraud to Look Out For

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Where to Find Your Debit Card Number

You can usually find your debit card number, or PAN, embossed on the front of the card, commonly around the center. In some cases, the number may be featured on the back of the card.

If you don’t have your debit card on you and want to make a transaction, you may also be able to find your debit card number by logging into your account online or using your bank’s mobile app. Look for an option such as “View Account Information.”

You may also be able to find your debit card number by looking at your electronic or paper bank statements. Your debit card may be included in the details of any debit card transactions you made during the statement period.

Keep in mind, however, that many banks do not display the full card number online or in print for security reasons.

If you can’t find your debit card number online, another option is to call your bank. A representative may provide your debit card number over the phone if you are able to correctly answer a series of security questions.

Other Parts of a Debit Card

In addition to the debit card number, there are some other key pieces of information on your debit card. Here’s a closer look.

Bank Logo

The logo of your bank is typically displayed on the front of the card and identifies the issuing bank. This logo helps cardholders and merchants quickly recognize which financial institution issued the card.

Your Name

Debit cards typically feature the cardholder’s name on the front of the card below the debit card number. This identifies you as the authorized user of the card.

Smart Chip or Magnetic Stripe

Debit cards feature a magnetic stripe (on the back of the card) or, more commonly, a smart chip (on the front) that encrypts your account information. This enhances the security of in-person transactions, making it more difficult for fraudsters to clone the card.

Security Code (CVV)

The security code, also known as the CVV (card verification value) is a three-digit number found on the back of the card. It’s also sometimes referred to as the card verification code (CVC) or the card security code (CSC). This code is used to verify that you have physical possession of the card when making online or over-the-phone transactions.

Bank’s Contact Information

Information about how to contact your bank, such as its mailing address, website, and phone number, is typically printed on the back of your debit card.

Payment Network Logo/Hologram

If your debit card allows you to process transactions through a credit card network, the credit card’s logo and, often, hologram, will be printed on the card, usually in the corner.

Keep in mind, however, that choosing “credit” rather than “debit” during a transaction doesn’t turn your debit card into a credit card. The money will still be withdrawn from your checking account. The key difference is that a transaction processed as “credit” could take several days to authorize and complete, while a “debit” transaction is deducted from your account almost immediately. With a “credit” transaction, you’ll also sign versus typing in a personal identification number (PIN).

Recommended: Guide to Using a Credit Card Like a Debit Card

A Signature Strip

The back of your debit card may contain a box for you to sign. A merchant may look at this if a debit transaction is processed through a credit card network and requires you to sign.

Expiration Date

The expiration date, typically printed on the front of the card, indicates the month and year when the card will expire. After this date, the card will no longer be valid for transactions.

Tips for Protecting Your Debit Card Number

Debit card numbers contain critical information about your financial account, so you generally don’t want anyone but you to have access to them. Here are six ways to protect your card information and help prevent debit card fraud.

1. Only make secure online transactions: Before using your debit card for an online transaction, you’ll want to make sure the website uses “https” not “http” in the URL. The “s” means that the website uses a secure sockets layer (SSL) that creates an encrypted link between a web server and a web browser.

2. Use a digital wallet: Consider linking your debit card to the digital wallet app on your smartphone. When you pay with your digital wallet instead of a physical card, your debit card numbers are encrypted and not visible to the merchant (or any nearby customers).

3. Only use ATMs at banks: ATMs located in gas stations, convenience stores, subway stations, and elsewhere generally run a higher risk of having a “skimming” device attached by a criminal that could steal your debit card data. While this can happen at a bank ATM as well, it tends to be less likely due to surveillance cameras.

4. Be wary of phishing scams: You’ll want to be cautious of any emails, texts, or calls requesting your debit card information. Banks will never ask for your card number or PIN via these methods.

5. Monitor your account: Time is of the essence when it comes to recouping any funds lost to debit card fraud. So be sure to regularly check your bank statements and transaction history for any unauthorized charges. If you spot any suspicious activity, report it to your bank immediately.

6. Report lost or stolen cards right away: If your debit card gets lost or stolen, it’s a good idea to contact your bank as soon as possible and have the card blocked.

Recommended: Pros & Cons of Using a Debit Card Online

The Takeaway

Your debit card number is a unique identifier linked to your bank account. You can use your card number, along with your CVV and PIN, to process a transaction even without a physical card. Understanding the numbers on your debit can help you safeguard your information and enjoy all the benefits that come with your card.

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FAQ

Should you write down your PIN number to remember it?

It’s generally not a good idea to write down your personal identification number (PIN), as this can compromise your account’s security should it get lost or stolen. You’re better off memorizing your PIN. If you have difficulty remembering it, consider using a number that has personal significance but isn’t easily guessed by others. If you must write your PIN down, be sure to store it in a secure, locked location separate from your debit card.

Can a scammer use your debit card without a PIN number?

A scammer may be able to use your debit card without a PIN number for fraudulent online or phone transactions, where only the card number, expiration date, and CVV (Card Verification Value) are required. It’s also possible to use a debit card without providing a PIN by choosing the “credit” rather than “debit” option during an in-person transaction.

What is the most important debit card number?

The most important debit card number is the 16-digit card number typically printed on the front of your card. This number is essential for identifying your account and processing transactions. It includes the bank identification number (BIN), which identifies the issuing bank, and the personal account number (PAN), which is unique to your account. Protecting this number is crucial to prevent unauthorized use and debit card fraud.

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