There are many financial products out there that may seem helpful. They may promise increased money, discounts and more. However, many of these products are misleading and can be detrimental to your finances if you don’t fully understand them.
Payday Loans
A payday loan is a short-term loan in which a borrower writes a postdated check to a lender while the lender gives the borrower cash immediately. These loans have very high interest rates and in many cases the interest is more than the actual loan. You are also likely to fall into a vicious cycle of debt. In many cases, people find it necessary to use payday loans to pay back previous loans they’ve taken out. It can take months or even years to pay off a simple debt. Payday loans can also be damaging to your credit score which can make it difficult to get a regular loan. All in all, you should avoid payday loans.
Buy Term-Insurance
Eventually, everyone needs to consider getting life insurance. It’s a solid option for providing for your family after you die. At least 60% of people in the U.S. are covered by some kind of life insurance. However, there are many types of life insurance to choose from. One option is term-insurance. With this type you only pay for a set period of time. There is also whole or universal insurance. This type of insurance is one that should be avoided. Universal insurance is often very expensive and is not diversified. You are investing a large chunk of money that can’t always be depended upon. Term-insurance is much more reliable.
Store Cards
Many retail stores offer their own store cards. Often, you’ll hear convincing pitches about why these cards are worth it. However, you should know that these cards aren’t actually worth it. These store cards offer discounts only in that particular store, so you would need to spend a significant amount of money in that store to actually see returns. Store cards also have high APRs and it can quickly lead to an increase in debt. Lastly, you won’t see any major returns long-term. Overall, it is wiser to get a regular credit card than to invest in store cards.
When dealing with finances, you shouldn’t invest in anything unless you fully understand it. There are many products out there that make big promises, but they actually have hidden costs. Make sure you are fully aware of what investments are safe and worth it.
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