Stay Away From These Financial Services

Now that the recession is in full force, there’s no denying that thousands of jobs are lost, hiring of new employees as well as salaries of old ones are frozen, and stock and housing markets are running significantly lower than they have in decades. Given this array of depressing news, it can be terribly tempting to look for quick cash to address your immediate financial needs. If you’ve been tempted lately, it’s okay; you’re not alone. However, don’t just call the next advertisement you see in the paper because a lot of these so-called financiers can really drain your pockets with their unreasonable timeframes and interest rates. Below is a rundown on the financial services you must avoid at all times.

Credit card cash advances

These work much like a debit card, wherein you swipe your card at an ATM, type in your PIN and you can withdraw cash subject to the limits established by your credit card issuer. It sounds really easy and convenient, but it’s one of the worst ways to get quick cash for many reasons. First, the ATM will charge a fee immediately upon withdrawing the money. Second, the interest stars accruing at once. Unlike most loans, credit card cash advances do not have a grace period. Third, not only do they charge you aggressively, they also put extremely high interest rates, sometimes reaching up to 36% APR. Whether you pay on time or not, this type of loan will charge you with unreasonable fees and interest rates and you’ll find yourself having less money than before.

Title loans

This is not one of the most common forms of a loan, but the real desperate ones always consider this an option even though they’re fully aware of all its disadvantages. If you own something that has your title in it, you can take out a loan using the title as collateral. For instance, a desperate person takes out a loan and uses his car as security to the creditor. In all cases, the amount he’ll be given will be far less than the actual worth of his car, and he can be assured that the interest rates will be higher than any standard loan. Even worse, should the desperate person lose his car, the creditor can sell the car at full amount, and the original owner of the car will not get a single cent of the profit. If the creditor decided not to sell the car, however, he’d have the option to take you to court and hit you with more court fees because he has possession of the title, and in the US, possession is 9/10 of the law. There’s really no upside in this kind of loan. It’s best to avoid this all your life.

Pay day loans

At first glance, pay day loans seem like a brilliant idea. There’s no collateral and no credit checks. More importantly, you can walk out with any amount from $50 to $3000 depending on the amount of your pay stub. Given this information, a pay day loan does not sound so bad after all. That’s true, if you only do it once. In reality, people who decide to go down this path find themselves rolling the amount over and over again because of the simplicity and immediate satisfaction it brings to them. What they don’t know is the interest rates continue to pile up to their loan until the lender changes its mind about advancing the money and they are left with an empty wallet and hundreds or even thousands in administrative fees and interest charges. So the next time you’re thinking about taking out a pay day loan, think again. You’d be better off borrowing from a close friend or a family member, even if it is somewhat embarrassing. GP