Let's face it. The money industry is out to make money. Money is what the industry is all about, obviously.
A disturbing thing that you may not be aware of is that your local banks and lending institutions are marketing products to you that they are hoping will cause you financial trouble. In a recent article, I quoted the New York Times saying "the rapid spread of [overdraft programs] has turned overdrafts, and the fees that come with them, into one of the largest sources of profit for banks, according to consultants and statistics compiled by government bank regulators. Washington Mutual, the nation's seventh-largest financial institution and the largest to promote overdraft protection, charged customers more than an estimated $1 billion in overdraft fees last year."
There are loans out there that only exist to make your lenders more money. So how do you avoid this?
By being a responsible consumer, an educated borrower. Do your own calculations of interest and payments and fees to see if the loan you are taking is going to kill you in the end if you ever run into a bit of trouble with it.
Some people have now heard that when you make a late payment to your credit card issuer, that your interest rate jumps up ridiculously high. We see that there are ways for these institutions to make more money off of our stupidity.
Now I am not saying that people who have financial troubles are all stupid but we, as a whole, are a mindless nation that consumes, and consumes and consumes. It is time to wake up and take accountability for the trouble we find ourselves in.
Just because there are people making money off of others mistakes, doesn't mean that you have to be in that rat race.
All it takes is the power of awareness. Evaluate the different kinds of loans that exist and then evaluate several lenders. It can be time consuming but you will thank yourself later when you have found a good lender with decent products that help you keep on top of your repayment. Keeping your credit score high is good for you and having happy customers that may return is good for the lender.
This can be a symbiotic relationship. Think about it this way too; if more people were responsible with their money and didn't allow companies the opportunities to charge them ridiculous fees, then they would have to find another way to make money.
Maybe eventually lending institutions would find a way to make money that would benefit our society, not ruin it by keeping it in a black cycle of debt, repossession and despair.
Take stock of your finances; get help if you need it. There also programs in nearly every city that offer everything from basic budget knowledge, to how to invest your money.
Imagine a close friend of yours who saw a golden idol sitting on the ground in front of him. It had a sign that stated it was free to take. You friend wants this idol so badly and decides he will take it and he will be so much better off because now he has gold!
Your friend takes it and even though it feels hollow to you, your friend is convinced it is real gold. A sticker on the bottom of the idol says that in taking this idol, the owner has to burn his house down to the ground and live on the streets.
You show your friend but it is too late and he is compelled by the spell of the idol to do what he must because he leaped before he looked. He has to burn down his dear home and he can't do anything to stop it.
Loans can be the same way; the small print might not be noticed till the contract is signed. You may have trouble on your hands and find yourself drowning.
Moral of the story...don't be the sucker!
Michael New Jr. is an authority in the financial industry. He has written hundreds of articles relating to consumer services and Payday Loans Nevada.