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Protecting Yourself From Personal Finance ScamsMoney is an extremely tempting object. Being short of money can be very stressful making the acquiring of easy money even more tempting. So when a finance company or other credit card company offers you an easy loan or credit card with no credit check, it may be difficult to see this offer for what it really is. The temptation to have easy access to money or credit cards may cloud your vision from seeing that this offer is nothing more than a scam to relieve you of some much needed money. If you have had difficulty getting credit in the past, it may seem like someone finally cares about your financial needs. But these types of scams are professionally crafted to appeal to those who need money the most. Be careful not to be fooled by them by taking steps to learn how to protect yourself from personal finance scams.
Easy Credit Terms and Up Front FeesSome easy credit term offers are actually businesses wanting to sell for a fee information about other finance companies that offer high risk loans or credit cards. You may think that you are actually going to get a loan from that business, when in fact, you will simply be directed to a list of finance companies. Now you are no better off than you were, actually worse because you had to pay for this list. With some of these types of offers, you will actually be receiving a debit card that you will have to load with money, again all this for a fee. Asking for a fee up front when you apply for credit should be a red flag for you to be able to determine that what they were offering was actually too good to be true. No Credit Check ?A few other signs that a finance company is not legitimate are the fact that they don’t seem to be interested in your past credit history, the name of the company sounds very much like other well known institutions, they offer you a loan over the phone after you pay a fee and there seems to be no record of this business being registered in your state. A reputable lending company that is extending you a real offer of credit will always be interested in whether or not you are likely to pay them back by checking your credit history. If the company wants you to think they are something they are not by calling themselves “Tank of America”, they are probably not reputable. And it is against the law to offer a loan over the phone and ask for money up front as well as the fact that lending institutions are required to register in the states where they do business. Secured Credit Card OffersAnother trap that many credit card seeking consumers fall into is the secured credit card offers. Some shady credit card companies will send you a letter stating that you can own a credit card to help rebuild your credit if you make a $300 deposit into their savings account plan to secure the credit card that they are going to send you. What they don’t tell you is that there is a one time application fee of $150, a $90 annual fee and an account surcharge fee of $30 along with 35% finance charges and all due immediately when you receive the card leaving you less than $30 to spend on your credit card. Remember too that this new bill is secured by your $300 and all for receiving nothing but meaningless charges. In other cases, you may see a 900 number advertising an easy to get credit card and these are nothing more than scams to sell lists of companies where you can apply for credit. Other Personal Finance ScamsStill other personal finance scams consist of companies offering to rescue you from foreclosure or bankruptcy, but in actuality are planning to take you to the cleaners. There are several different forms of these scams, but they all have a personal agenda of making quick money from you. They may promise to be able to negotiate with your lender for a fee, only to take off with your money. They will likely tell you not to contact your lender while they are negotiating for you. They may drag this out for a few months telling you to make payments to them during this period and then they will disappear with your money. They may file bankruptcy in your name without you realizing it or they may tell you to sign over the title to them so they can secure financing for you and they will rent the house to you while you are regaining financial strength and then you can buy it back in a few years. The idea may sound good to you because you’re thinking at least you get to stay in your home. That is, until the bank goes ahead with foreclosure because no payments have been made to the bank by the scam artists and you get evicted. Payday Loans and Cash AdvanceAnd if this isn’t enough, there are always the payday loans or cash advance type of offers that amount to nothing more than loan sharking. Most people do not realize that they are paying in effect approximately 391% interest on this type of loan if they continue to roll over the debt for any length of time at all. These companies offer to hold a check for two weeks until payday and the fee to process this loan is included in the check. At the end of the two weeks, if money is still tight for these people and it usually is or else they wouldn’t have sought this recourse to begin with, the payday loan company will offer to hold the check for two more weeks for a fee. This is such a easy way of getting out of paying the debt back that many fall for it. Two weeks turns into two more weeks and so on until eventually you have paid them in fees more that you ever borrowed and you still owe the original amount. The FTC now requires these types of cash advance companies to clearly post their fees and interest rates in plain sight so people will better understand what they are getting into. Scams GaloreThere are many personal finance scams out there and this article only touches on a few. If you believe that you have been a victim of a personal finance scam, contact the Federal Trade Commission or your state’s Attorney General to report it. For further help and information on avoiding finance scams, follow the links below. Federal Trade Commission Website - Advance-Fee Loan Scams Secured Credit Card Marketing Scams Counterfeit Check Scams |
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