Smart Money Podcast: COVID Scams and Small Goals

Sean Pyles
Liz Weston, CFP®
By Liz Weston, CFP® and  Sean Pyles 
Edited by Kathy Hinson

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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a discussion of COVID-related scams, how to avoid them and what to do if you’re victimized —including freezing your credit if you’ve revealed personal financial information.

Then we pivot to talking about small money goals and changes that can have an immediate positive impact on your finances.

Check out this episode on any of these platforms:

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See your spending breakdown and spot opportunities to save money.

Our take

Ambitious money goals, like buying a house or saving for retirement, can take a long time to reach. But there are plenty of smaller money goals that can improve your finances quickly.

Start with your savings account. Opening a high-yield savings account isn’t hard and can help you squeeze a bit more interest from your money. Many of the banks that offer these accounts don’t require minimum balances or charge monthly fees. You could set up multiple accounts and dedicate them to different purposes. You could have one account for emergencies, for example, and others for vacations, holiday shopping and similar big-ticket expenses.

Automating your savings can help you magnify small moves into bigger results. Even a few dollars transferred from your checking account to your savings can build up over time. Also investigate apps that track your spending and that can help you budget so you can save more.

You can set up savings accounts at different banks without having to move or change your primary checking account. But you may want to consider changing banks if you’re not happy with your current one or you want to switch to one that better supports your local community. You can start that process by opening a savings account first to see how you like the new institution. Assuming you do, you then can start the more time-consuming task of switching over your checking account.

Our tips

Small is good. Making small changes doesn’t require a lot of money or time.

Automation is good. Automating small money moves can help them have a bigger impact.

Local is good. Think about choosing a local bank or credit union where you can make a difference locally.

More about small money goals on NerdWallet:

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Sean: Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Pyles.

Liz: And I'm Liz Weston. Here's the deal: You have questions about how to manage your money, and we're here to help you answer them. Call or text us on the Nerd hotline at 901-730-6373 that's 901-730-NERD, or email us at [email protected].

Sean: And hit that subscribe button to get new episodes delivered to your devices every Monday. And if you like what you hear, leave us a review. Also, before we move on, I just wanted to acknowledge all of the amazing questions that we've received from you our dear listeners, over the past few weeks. You all spent your winter holiday sending us so many insightful questions about how to manage your money, and that, to me, is truly nerdy. So thank you so much. And please keep them coming.

Liz: This episode, Sean and I are continuing our #newmoneygoals with a conversation with banking Nerd, Margarette Burnette, about small money moves that can have a big impact on your finances. But first in our This Week in Your Money segment, Sean and I are talking about the scams popping up around the recent COVID relief bill and the vaccine rollout.

Sean: Yeah, unfortunately you can pretty much count on scammers to cook up new schemes to rip you off any chance they get, and massive confusing government programs with a lot of uncertainty like the one Congress passed in late December are just the kind of thing that scammers love to exploit.

Liz: This discussion was inspired by a recent article written by our colleague Bev O'Shea. And we wanted to share some of the potential scams she found in her reporting.

Sean: So let's go through a few of them. One that I think will be top of mind for a lot of people are COVID relief check scams. There's confusion around how much people are going to get when and how they'll get their money if they haven't received it already. So the IRS actually put out a few notes around this. So first off, the IRS is not going to overpay you and then ask you to return that money. Some people actually received more than they "should have received." And there's been confusion around that. Similarly, the IRS is not going to contact you over email, text message or social media to get your personal information, to "verify your account." And if you do receive an email from the IRS that seems fishy, you can forward suspected email scams to [email protected].

Liz: You can't overemphasize the fact that the IRS is not going to text you. And they're probably not going to call you either. Typically, the first outreach from the IRS is going to be a letter in good old-fashioned snail mail. So if you're being contacted in any other way, that should raise huge red flags.

Sean: And just to expand that out a little bit further, the same goes for other government agencies too, like Social Security. They're not going to call you up and have you confirm your information. They already have your info, and again, they're going to send you a letter if they really need to get in contact with you.

Liz: Yeah. The other thing you should watch out for is anyone asking you to pay them with gift cards. It's amazing how often people fall for this, but the reason they like gift cards is that they are untraceable and you can't get the money back. So if you do fall for one of these scams, you are out of luck. Maybe the best way to deal with this is to just promise yourself that you will never, ever, ever buy a gift card for a stranger.

Sean: Another common scam that is popping up more and more are around vaccines and treatments.

Liz: Yeah. The FTC has put out some warnings about this. They want you to know that you can't pay to put your name on a list to get the vaccine any earlier. So, if somebody is promising to do just that for you, that's a scam. Also no one from a vaccine center or your insurer is going to reach out to record your Social Security number or get your bank account information. That's also a scam. And finally, just be careful of anybody who's offering products or services or treatments to prevent the virus other than the official vaccine programs that are going on. Those are all scams.

Sean: Yeah. And again, scammers here are trying to play on our own desires. I actually would love to pay for a vaccine right now, but fact of the matter is that healthcare workers need it. And I'm happy to just sit at home for the time being. But similarly, apparently fake vaccines are popping up on shady websites. And if people see something like that, I think it helps to apply some common sense. We know that these vaccines, many of them need to be stored at very, very cold temperatures and some random website likely doesn't have the refrigeration required to make that vaccine stable and get it to you on time. So it's just not a feasible option.

Liz: Yeah. And your state's health department has information about who's getting the vaccines, the order that people are getting the vaccines and where you can get the vaccine. So rely on the official government websites rather than on social media or texts or phone calls you're getting from complete strangers.

Sean: Right. We're also seeing scams around employment because there are so many people that are out of work right now that scammers are trying to entice people to give them money with the prospect that they might be able to see some job listings or get supplies for a work-at-home job, or maybe even get a certification that will help them get a job. And people are so desperate right now that they're willing to do these things, which is heartbreaking. But again, if someone's pressuring you to do this, wait a second, think about it, do some investigating and see if these people are legitimate. And if they're not, really do report them to the FTC so they can investigate this.

Liz: Yeah, we're used to being persuaded by money-back guarantees or testimonials, things like that. And obviously the scam artists are using those to fake their way into legitimacy.

Sean: Right. And there were a couple other scams that Bev pointed out in her article. One was a demand from a stranger to pay for medical care for a relative or a friend. There are criminals posing as healthcare professionals that alleged to be treating someone that you know, and in order to continue treatment, they're demanding immediate payment.

Liz: Wow, this is kind of like a version of the hostage. I've taken your grandchild hostage.

Sean: Yeah. Right. But it's your friend who is on an imaginary ventilator or something like that. Again, don't provide your own financial information to a stranger over the phone.

Liz: We also should talk about scams involving COVID contract tracers, because those are proliferating as well. The short version of this is that a real contact tracer is not going to ask for things like your Social Security number, your insurance card number, or ask you for a payment.

Sean: That's exactly right. A legitimate tracer is going to ask for things like your name and address, your date of birth, your whereabouts on certain dates and possibly even questions about your health and whether you've experienced any symptoms. But again, they're not going to ask for your insurance policy number or even your immigration status or financial account numbers, things that would make you vulnerable to identity theft.

Liz: Yeah. The best practice, if you are contacted by someone who says they're a contact tracer, is to take their name and phone number and then contact your county or state health department to make sure they're legit.

Sean: So, those are a few of the scams that we're seeing right now. And again, if you think that you've come across one, contact the FTC, if you think that you've been a victim of identity theft to go to identity And also please, please freeze your credit. This can help make sure that people aren't able to open new lines of credit in your name.

Liz: Yeah. And I'll include information in the show notes about how to freeze your credit and where to go.

Sean: All right, well now let's get into our conversation with banking nerd, Margarette Burnette, about the small money moves that can have a big impact on your finances.

Liz: OK, cool.

Sean: Hey, Margarette. Welcome back to the show.

Margarette: Hey, Sean. Hey, Liz. Thank you for having me. I'm glad to be back.

Sean: Well, we are so glad you're here because we have some questions for you about banking specifically. This week, Liz and I are doing a series about different kinds of money goals, some of which are really ambitious and take a while to achieve like buying a house or paying off debt. But there are some smaller money goals that folks can achieve that will have a pretty immediate impact on their finances. And I think banking is one of those areas where people can make fast changes that really do add up quickly. So one that immediately comes to mind is setting up dedicated savings accounts for specific goals. Can you talk with me about what someone should consider if they're thinking about doing that?

Margarette: Absolutely. One of the first things you should consider when choosing any kind of savings account is to look at the interest rate. You could be looking at a high-yield account that pays more than 10 times the national average. I will tell you a lot of those are online-based accounts. Some are from credit unions. So, you might want to look outside of the larger banks, the larger accounts that are out there. There's some good federally insured, safe accounts that can have your money work a little bit harder for you.

Sean: One thing that's been a little bit frustrating for me personally, is seeing the APY on my high-yield savings account go lower and lower and lower over the past few months. And I'm wondering if you have any ideas for how I can maybe get around that or other folks can, so they can get that higher yield that they maybe were hoping to have when they initially signed up for those accounts, speaking for myself, at least,

Margarette: Right? It's never any fun getting that message that the yield is going down. First off, your bank isn't doing this because they don't like you. The way the market's rates are — when the Fed did the emergency rate drop last year, it had a domino effect — and [for] a lot of savings accounts, their yields did go down. What we've seen at NerdWallet is that the accounts that tend to have the higher yields in the first place still seem to have the above-average rates. So if you can stick with one of those that have had historically good rates, then you probably are getting about the best that you can find.

Liz: This is kind of the flip side of the lower mortgage rates that a lot of refinancers and home buyers have been enjoying. Right, Margarette?

Margarette: Yes, that's exactly correct. So if you're borrowing, the low rates are a welcome sign. If you're saving, you kind of want a little bit higher rates, or at least the highest that you can find.

Sean: I've actually been thinking about shopping around a little bit more because the bank that I have, well, previously had a pretty good high yield rate, but now it's one of the lowest among the high-yield accounts. So I'm thinking about actually shopping around again and getting maybe a new account. And I think other people might be in the same boat of thinking that maybe they should get a new or a different high-yield account. And if that's the case, what other things do you think people should consider beyond just the yield rate?

Margarette: That's a good question. You also want to look at the fees. If a bank charges a monthly fee, would it be possible for you to have that fee waived? Many banks will waive the fee if you keep a certain minimum balance, maybe $300 or $500. Other banks don't charge a monthly fee at all. So, you want to look at that. You also want to look and see how easy it is to check your balance or how often you might be looking to transfer money from checking to savings. Now, I will say, if you were putting it in for a goal, a vacation fund or something that's specific, perhaps you don't want it to be as easy to withdraw. Maybe you want something where there can be an online transfer and that's just put into the separate account. And then you know that your money is safe and it's there. But interest rate and fees, I would say are the main two things to look for in a savings account.

Sean: You mentioned something around having a different account for different goals. I have a friend who actually has five different bank accounts for different goals.

Liz: I have 12.

Sean: No way! Please tell me why you have 12.

Liz: Because there are so many — not irregular, but they're not monthly expenses — and I don't want to be caught unprepared when the property tax bill rolls in or the life insurance needs to be paid, or Christmas happens. It happens every year. It's not a surprise. So I set up these sub-accounts or nicknamed accounts, or however you want to say it with my online bank. I set up different streams that go into them every month. And the process of figuring out how much money you're going to need is fairly simple. You look at what you spent last year, you divide it by the number of paychecks you have until then you set up the automatic payments and boom, the money's waiting there for you. I also have an account that is titled, "Oh, crap." And that is for the stuff I don't anticipate, like, I don't know, parking fines, things like that.

Sean: And do you ever lose track of all of these accounts? A dozen is a lot.

Liz: No, because it's all at one bank and I can see them in one screen.

Sean: That's good to know. My friend has these different accounts at different banks. And I think that to me seems like a lot to manage.

Liz: Yeah.

Margarette: Yes, some good banks let you open many, many sub-accounts, 12 or more, and you can even give them the names of whatever their purposes are. So "vacation fund," or "oh, crap" or whatever else that you might have in mind. And it's very funny. Ally Bank recently released some information about what some of their customers were naming their savings accounts. And one was named "tattoo."

Liz: I love that people are saving for tattoos. That's awesome.

Sean: They're expensive.

Liz: Yeah.

Sean: I have a number of friends that get them impulsively and then they regret it when they can't go out for the rest of the month after that, so. OK, so it seems like setting up dedicated savings accounts for specific goals is a pretty easy way to make sure that you're managing your money in a smarter way. And Liz, on top of that, your approach of having different amounts deposited monthly is super smart and also takes, what, maybe 15 minutes to set up. So I think those are two really complementary smaller goals that people can approach in the new year.

Liz: Yeah. And it's taking advantage of our psychological quirks, the way our brains work. Because when I had one big fund that was supposed to cover everything, emergencies and vacations and all that stuff, I never could figure out how much money I had left for other things. And by actually separating it that way, it makes it harder to dip into one account for another purpose. Like, if I've got money set aside for vacation, I'm really, really reluctant to dip into that. So it's actually helped me keep my hands off it.

Sean: And I think for emergency savings, this would also help you set and stick to a monthly savings target because you know how much you have going into that account.

Liz: Yeah, exactly.

Margarette: Automatic deposits, automatic transfers from whenever you get paid to go into a savings account or into multiple savings accounts, is just such an easy way to meet your savings goals and not have to worry, "Oh, do I need to do anything more to, to save for the things that I want?" Set it and forget it — that's one of the benefits that automatic deposits can give to you.

Liz: So, Margarette, I know some people are nervous about setting up automatic payments because they have to give up a little control when they're doing that. Are there ways to keep track of your balances and your transfers to make that easier?

Margarette: You can look online to look at your balance. You can go online to adjust a transfer if you need to see how it works for the first few paychecks or first few monthly cycles. And to see if that is something that fits within your budget, there are also apps that are out there that can help you keep up with your savings account, keep up with your spending, give you a breakdown of what you've spent in the past, which can help you kind of determine how you want to budget for saving in the future.

Liz: And we have reviews of those apps on the site, right?

Margarette: Yes, definitely. And we also, as we review banks and their savings accounts, we also review banking apps to determine if there are tools or services associated that can help you with your budgeting.

Sean: There is one app that I used for a year or so, a couple of years back, that would take certain amounts of my checking and put it into a savings account automatically based on my spending habits of the previous month. And for a while, I really liked that because it helped me get into the habit of saving. But then I realized that my money was just sitting in an account with this company that wasn't actually giving me any interest on it. And while it was sitting in their bank account of sorts, they could do whatever they wanted with it and make money on it. And I actually wasn't getting a lot out of it besides sort of the psychological benefit of seeing that I had some money saved. So I guess my point is, I would implore people to look into what their various apps are giving them or not, because just because you're getting a benefit of having your money sorted in one way or another, it doesn't mean you're actually earning anything on that.

Margarette: That's a good point, Sean. And when we do look at the money-saving apps that are out there, there are some that will take your money and put them into an investment fund. There are some that take them and put them into a separate account that does pay a little bit of interest, but it all kind of goes back to what your goals are, and also being able to look and see if the tool or if the app is giving you what you want.

Liz: And I would argue that app did exactly what it was supposed to do because it got you in the habit of saving and it made it very, very easy for you to do that. You probably didn't pass up that much interest, right?

Sean: That's a good point. I guess in retrospect, I looked back at that and thought, OK, I wished that I had had the understanding of savings and the habit of doing that beforehand, so I didn't have to use it. But I guess we're all learning lessons at our own rate, and you're right — I did get in the habit of saving, but I didn't earn any money from that. So I guess live and learn.

Liz: You can use the training wheels and then you take them off.

Sean: Yes.

Liz: And go on to the actual savings and actual interest.

Margarette: New year, new you, and we just move forward.

Sean: OK. Well, I want to talk about some different financial changes on the spending side that can have a big difference in your local economy. And one that I've been thinking about and actually have on my to-do for 2021 is finally, at long last, switching my checking account from a big major national bank to a local credit union or a smaller bank. I actually tried to do it over 2020, but because of the pandemic and everything being so backed up, it took my local credit union a really long time to process my application, it ended up not really going through. And the whole thing kind of fell apart. So Margarette, I'd love to hear from you about maybe some of the pros and cons of credit unions or smaller banks.

Margarette: So we talked about how many credit unions might offer better rates on the savings and deposit accounts. The smaller bank that is in your community — we're kind of in a time where it makes sense to kind of think locally, look at where you can make a difference locally — and your community bank is right there as a part of that. They're helping the small businesses in your area. They're helping your neighbors. And if it makes sense for you to be able to partner with them and give back and they have good accounts, then absolutely, look at some of the assets that are around you in terms of your local businesses and banks.

And one other thing I do want to point out because I know a lot of people have accounts at large national banks. If you open up a separate account, you don't necessarily have to make the switch, like a light switch overnight, you could start with maybe a savings account at the local credit union or at a community bank. You can start with that, and as you get used to doing business with them or you see how their account is, then you can make the change. If you are a little bit hesitant, I would encourage that, especially if you are maybe looking at opening up a couple of different savings accounts to meet a couple of savings goals for the year. So, that could be another option.

Liz: That's a great idea.

Sean: Part of what initially drove me to look into a local credit union is that I was shopping around for a car loan and I saw that they had better interest rates than some of the other banks that were offering me loans at the time. And I think that's a really an unsung advantage of having a credit union account is you get access to lower rates for things like that.

Margarette: Right. You're a member of the credit union. You kind of own the credit union. And sometimes you get some of the better rates or just some of the better perks. With a major bank, there may be other expenses that have to be covered. And some of those perks don't always go and flow to the customers. But with the credit union, with a smaller bank, there's a better chance that that can happen. I'm not saying that it happens all the time. Again, there are some online banks that might be able to offer better rates compared to either other type of bank, but it's worth looking and seeing what's in your community, who's in your community and see if it makes sense to do business with [them].

Sean: And that is a really big part of my incentive is I want to have my money be put back into my local community. We know that often people of color and the United States end up paying higher interest rates for things like mortgages and student loans. And that often is because they're getting them at larger banks. And I'm hoping that the money that I'm putting into my bank can help make these types of loans more equitably distributed in my community. And that means a lot to me. So that's one of the big incentives that I have going into this, but I also want to talk about some of the potential downsides of a credit union or a smaller bank. I think I mentioned one earlier, that it was a little bit slow to process my application. Maybe it was just the pandemic happening, but I'm wondering if you have any thoughts around some trade-offs that might be made with having a smaller bank.

Margarette: I think that you described one perfectly. A few minutes ago, we talked about apps and how some banks have really good apps that have good budgeting tools and maybe a smaller bank or a smaller credit union might not have some of the flashier tools to maybe help you predict what you can save or protect where your expenses are going. So that could be a trade-off to talk about the giving back to your community, participating in your community. It kind of goes to what your target is, what you're saving for and why. You want to do it to have a more fulfilling life or to feel good, staying local, supporting local businesses. These are some of the things that can help you do that as well, without hitting a large savings target in the future. These are things you can do now.

Liz: So we launched this talking about that small changes don't require a lot of money. How much money do you need to open an account in an online bank, a savings account, for example?

Margarette: Well, some banks don't have any minimum deposit requirement. So you can just put in your application, have the account open, and then when you're ready, put in a deposit of any amount. So it can really be small. The key is just to keep doing something in a dedicated manner. Say that with each paycheck, you have an automatic deposit that goes into an emergency fund of $50 and you get paid twice a month. Well, at the end of the year, you're going to have over a thousand dollars saved.

Liz: I used to tell people all the time to do this. And then I was changing some things about my automatic transfers and I had the money going from instead of to my savings account at one bank to this online bank that I've been talking about. And I forgot to end the first automatic transfer. So I had money going in two places and I never missed it. And by the time I realized what was going on, I did have over a thousand dollars saved up in this account. So, you do have to have some free money. This is not something everybody can do, especially if you're living really close to the wire. But for a lot of us, there's enough give and enough slack in our financial systems that we can do this and be surprised at how much money can pile up over time.

Margarette: Yes, it really can. And that thousand dollars that you can save is assuming there's no interest earned. So if you can get an account that earns as much interest as possible, it builds on top of that balance.

Sean: All right, well, Margarette, thank you so much for joining us.

Margarette: Again, thank you for having me. I've really enjoyed this conversation

Liz: With that, let's get to our takeaway tips. First, making small changes does not require a lot of money.

Sean: Next step: Automation can make small money moves have a big money impact.

Liz: Finally, think about choosing a local bank or credit union where you can make a difference locally. And that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373 that's 901-730-NERD. You can also email us at [email protected]. Visit for more info on this episode and remember to subscribe, rate and review us wherever you're getting this podcast.

Sean: And here is our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and may not apply it to your specific circumstances.

Liz: And with that said until next time, turn to the Nerds.