Which Financial Services To Avoid

Nearly everyone can say that they wish they had a little extra cash around.  Maybe you have a family holiday coming up or a series of birthdays and you could use some extra spending money.  This is especially true in tough economic times.  Often one can find themselves considering financial services they would have never given a second thought to otherwise.  There is a saying that says, “There’s no such thing as a free lunch” and this can be true of financial services as well.

Payday loans seem like a good idea when you need one.  All you have to do is walk in, hand them your pay stub and walk out with cash.  Get $200 today and pay $225 in a few weeks.  Sounds easy doesn’t it?  It is, unless you don’t have the money come pay day and have to pay the $50 to advance that $200, then add more interest of $20.  And the cycle begins.  Then you will reach a point where the company won’t extend the loan anymore and you end up paying $500 that you didn’t have in the first place.  Then what?  You can get another payday loan, or just deal with the empty wallet.  Payday loan companies charge an interest of 300-400% per year.  That is outrageous just to get a little extra cash.

Credit card cash advance can also seem like a good idea.  Simply swipe your card at the ATM and there you have it, cash.  First, you will likely get charged a fee for using the ATM.  And there is no grace period on cash advances so it starts earning interest right that second.  Usually a cash advance interest rate is about double your normal interest rate, this is really not a situation you need to get yourself into.

Title loans are not a very common type of loan, but when things are really bleak there is always someone who will offer it.  Basically this is just like a normal loan, but you’re using your car as collateral.  Just based on statistics this is a bad idea, a large majority of people taking out title loans end up losing their car.  The loan amount is normally far less than what the car is worth and the fees and interest only make this an even worse deal.  And if you do lose your car, they will sell it at full price and keep the profit entirely for themselves.  Should the car not cover the full amount of the loan, the company may then take you to court for the rest.  It’s best to just say no.