High Interest Lending Traps to Avoid in 2017

Living from paycheck to paycheck is one circumstance that many of us are familiar with. To help make ends meet, many people turn to lending traps. This can be anything from a new credit card to car title loans. These quick fixes may help you if your rent is past due. But, they can also turn into a vicious cycle where you pay off a loan only to renew it once again.

There are dozens of resources that we all use to help us get out of debt. Here some of the most dangerous financial lending traps that you should avoid this year.

Borrowing From Your 401 k

You enrolled in your 401k to help you save for your retirement years. It is a convenient benefit having that money available to you as needed. But, at the same time, you are taking money away from your future. Save this option as a last resort or for emergencies only and allow your investment to grow.

Don’t Co-Sign a Loan

Co-signing a loan may seem like a noble thing to do for a friend or family member. But in reality, you are taking on someone’s else’s debt. Unless you are secure with your financial situation, you should avoid this situation.

High-Interest Loans

Lenders that offer high-interest loans will target people who are in debt often. They make it sound like you are getting a great deal. Only you are falling back into a never-ending cycle of debt. This category can include everything from pawn shop loans to payday loans. And you should avoid them if you want to steer clear of lending traps.

New Credit Card Offers

Have you received an email letting you know that you’re approved for a new credit card? You may have even received a card in the mail ready for you to use. These are some of the biggest debt traps out there. They offer you a small balance, usually around $300. And when you are in need of cash, it can be very easy to spend that money fast. Then you have the bill to look forward to with the high-interest rates attached.

The Trap of Student Loans

Your education is important, but did you know that the student loan debt in the U.S. is currently at $1.4 trillion dollars? Student loans are very easy to get out of hand. Be sure to only borrow the amount of money you need for school. You can also look for helpful alternatives that can save you from years of debt.

Credit Repair Companies

If you have a mountain of debt hanging over your head, it may be tempting to sign up with a credit repair company. But the experts say that you should resist giving in to this temptation. Many of these companies end up charging their customers high-interest rates. Making it impossible for you to pay off your bills.

It may be difficult to avoid every debt trap there is out there. Especially if you find yourself low on cash often. But, avoiding these troublesome lending resources can help keep your finances stable.

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