Sometimes we are strapped for cash or get roped into shady car loans where the details in the fine print cause us to succumb to mountains of debt. However, in any situation of desperation, we are likely to make more bad decisions that will hurt our financial standing in the long run. Here are three common credit traps to avoid that will help you stay out of that bad credit pit.
Fast Cash Loans
This includes accepting money from payday loan businesses, pawn shops or any side business that offers to get you quick cash. These companies prey on people with bad credit and charge extremely high interest rates. This means you will be paying double, triple or quadruple the money back that they loaned you in the first place. Defaulting on these payments will just suck you into deeper and deeper debt and bad credit.
Paying the minimum balance on your credit card means taking a very small percentage of the full balance and paying that off for the month. However, keep in mind the credit card company is charging you interest on top of your balance if you do not pay in full, and sometimes, the minimum balance just covers the interest. In this case, it can take you an astronomical amount of time to pay off as the interest will keep building and building. Only charge purchases to your credit card that you can afford to pay in full that month to avoid a bad credit score.
The only thing special about these offers is the amount of extra money the business will be making off you and their products. These include schemes with jewellery or electronics, for instance, that allow you to again make small payments (plus BIG interest) to be able to afford something you are unable to pay for outright. Check the fine print for hidden fees and do some simple math to calculate if paying the interest required over the full term is really worth that diamond ring when, in the end, you will have paid for it 5 times over.
If you have already made some of the mentioned mistakes and are sitting with a bad credit score, it’s okay. There are always ways to turn your debt around and start making smart choices through accredited lenders. Companies like Finance Today and Auto Loans Calgary are a great choice especially if you already have bad credit as they approve everyone. Regardless of how bad your past or present credit is – you are guaranteed approval.