SMART MONEY: Credit card investigation is likely to be brief
DEAR BRUCE: I recently was notified by my bank that my credit card was compromised by someone in another state. They charged $600 to my card. I called the bank and they canceled my credit card and issued me a new one. In the meantime, they are going to investigate and return my money into my account in five business days.
My question is, will they just return the money or will they really do an investigation? Or do I need to notify my local police? — Ben
DEAR BEN: You did the proper thing. You canceled your card and will be sent a new one, and your money will be refunded. Most likely, with the small amount of money involved, the bank won’t spend a lot of time investigating. You certainly should consider filling out a local police report, just to protect yourself.
In any case, the fact that you notified the credit card issuer quickly discharges $550 of the cost automatically. The maximum you can be held responsible for is $50, and issuers very seldom do that.
DEAR BRUCE: I have an IRA with approximately $25,000. I am 41 years old and in need of cash due to bad credit card mistakes. I am wondering how much I can take out. What would be the penalties and the taxes? — S.D.
DEAR S.D.: You can take it all out, however, there will be penalties. Because of your relatively young age, there will be a 10 percent penalty for taking the money out, and you will have to figure out the taxes.
The amount that you withdraw will simply be added to your ordinary income for the tax year. It should be a simple matter to compute your taxes, but if you are unable to handle that, a tax preparing company can do it for a very modest amount.