When money is involved, we all prefer treats not tricks. Sometimes what sounds like a good financial idea can turn out not to be. On the other hand, there are times when an idea that is as appealing as raw vegetables in our Halloween bag turn out to have real value. Following are some examples of tricks you will want to avoid:
You receive a “pre-approved” credit card offer. Many people think that this is guaranteed credit. If you read it carefully it probably states that you could be approved for credit up to a certain amount, or that your rate could be as low as a specific (attractive) annual percentage rate. What you have really received is an invitation to apply for a credit card.
You are going about your day and suddenly someone is telling you that they have just what you need to make your day much better. If you are being pressured into making a decision quickly or it sounds too good to be true, just walk away.
You get an offer to transfer your current credit card balance onto a new card with a zero percent APR. The offer is most likely for a specific period of time. If the balance is not paid in full by the end of this time you will pay a much higher interest rate from day one.
You want to refinance your home because interest rates are still low. You are going to need to have excellent credit to be approved for a refi. Also remember there will most likely be closing costs involved and you are starting the clock on payments all over again.
You decide to take out a Home Equity Line of Credit. Make sure that you know what the terms of that loan are. Many HELOCs have variable interest rates or other conditions that are not in your best interest. If you are using this loan to pay off high interest rate credit card debt, you need to be careful not to run up the balances on these cards again causing your total payments to be more than you can afford to make.
You are in the checkout line and are told that if you open a store credit card you will receive a 10% discount on all of you purchases today. When you open a new line of credit it lowers your credit score for a period of time. Many retail cards carry a higher interest rate than universal-use cards.
For more information on how to better manage your credit and avoid the “tricks” call Graceworks Consumer Credit Counseling Service at 937-643-2227 to set up an appointment to speak with one of our certified counselors.