Financial security is something everyone wants. But what happens when you’re doing everything right, and an offer that seems too good to be true comes along? You read the fine print and ensure that there are no catches involved.
There are two main financial instruments that have fine print that can get you in trouble quickly: credit cards and loans.
If you’re not careful, you can get yourself in a lot of trouble with both. There may be a time when you need a loan or credit card to pay for an unexpected bill. These tips will help you minimize your risks of falling even further into financial debt.
Preapproved Credit Cards
Preapproved credit cards are easy to get, and they can be difficult to pay off. Zero-percent interest cards are ideal because you won’t accrue more debt when you use the card. But, 0% interest is only short-term and an offer to get most people through the door.
Nerdwallet discusses credit card fine print in great detail, with some of the best tips being:
- Fees. A main concern when opening any credit card is the fees that will be attached. Black cards, you know those exclusive credit cards some people get, often have $500 annual fees. Look at the fine print to see if the $0 fee is just for the first year.
- Rates. The rates matter. You may have a 0% interest card for a month, or it may be a 12-month offer. What will the rate be afterward? How many billing cycles will the rate last for? This can be found in the fine print.
- Penalties. Harsh penalties can be put on an account even if it’s just minutes late on payment. Read these penalties, which often include a one-time fee and as much higher interest rate afterward.
Before choosing those preapproved credit cards, make sure you do your due diligence and compare card offers to find one that doesn’t include fees and absurd rates.
When you’ve exhausted all of your options and have a bill due or a car repair to make, quick loans might be your only option. These loans can be predatory in nature, and I recommend researching the company before you take a loan out with them. There are always loan providers in the news.
When you take out a quick loan, you need to be extra cautious and read about:
- Interest rates. A quick loan often means very high interest rates. Know the rate upfront so that you know exactly how much you’ll be charged if you don’t pay off your loan in one payment.
- Prepayment. There are some companies that charge high prepayment fees. Installment loans, for example, don’t come with high prepayment fees. Some other loan types will have a high prepayment fee that punishes you for paying off your debt too fast.
Keep in mind that any quick loan is not meant for a long-term solution. These loan types are designed to be short-term, so while they’re more flexible, they do have higher interest fees. The catch is that the credit demands are lower for these types of loans.