Especially this time of year when
consumer spending is at an all-time high, many Americans are looking for quick
and easy ways to add a little cash to their wallet to fill the gas tank, fit
all those bills in for the month, or simply put food on the table. If you are struggling to fit holiday shopping
in and still make ends meet, looking for some extra cash isn't a bad thing, but
here are a few traps to avoid*:
Payday loans – while getting a
small loan that you plan on paying back your next paycheck may sound simple
enough, there are usually HUGE catches.
The fees and interest rates on these types of loans can be massive,
leaving you in a bigger hole than you started in when you go to pay it back
with your next paycheck. These loans can
cycle out of control very quickly, so approaching your credit union for an
alternative that doesn't include those huge fees is a much safer bet. Low
balance loans, like Honor’s current Cash For Christmas loan special, can get
you the same result as a pay day loan with a better interest rate and a much
more reasonable repayment plan.
Car-title loans – like
payday loans, car title loans are small dollar amounts that can come with HUGE
interest and fees, but instead of holding your next paycheck hostage, they hold
your car title AND a set of keys hostage.
If when the amount of money you borrowed is due, you find yourself in
another situation, they can come and take possession of your car no questions
asked. Once again, come visit your
credit union if you find yourself even considering one of these types of loans
for a safer and smarter alternative.
Credit Card Advances – there is
a lot of confusion on the difference between
using your credit card for
purchases and taking cash advances on your credit card. Cash advances often come with a higher
interest rate and that interest starts accruing right away. If a credit card is your solution, it would
be wiser to make purchases with your card and make a plan to pay them back
quickly to avoid the cash advance trap.
If you find yourself in need of a few
extra bucks this Holiday season, or any season for that matter, make your local
credit union, like Honor Credit Union, your first stop. We can
help you assess your personal financial situation and come up with the best
scenario for you and your family!
Don’t forget
to follow us on twitter @honorcu and let us know what you want to hear about
next week using #askhonorcu!
Listen to 97.5 Y-Country's Wild Bill and Honor's Scott talk about cash traps on Mason Jar Monday!
*Source - http://www.bankrate.com/finance/debt/payday-loan.aspx
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