Thursday, September 10, 2009

Financial Scams and Traps to Look Out For

By: Robert Katz

Today’s current economic recession is due to the fact that across the US there are more and more people buying too much, loosing there jobs, and then going into debt. With so many people in financial crisis there are many banks, credit companies, and organizations out there that say they want to help with your problem, but people don’t realize they are actually scams and traps.

The FTC, Federal Trade Commission, stated Advance-Fee Loan Scams, Credit Repair Scams, and Scholarship and Educational Finance Schemes and three most common being dealt with now. Yet they are easy to sniff out. Advance-Fee Loan Scams with promise you a loan for just a small upfront fee of $25 and then send you to talk to someone else or just never call back. I like to say when something does look to good to be true it usually is. An offer to pay some small upfront fee to get a huge loan, when no other bank will even talk to you, is one of those times. Credit Repair Scams are the most popular and there are a bunch of different kinds.

Some of the types of credit repair scams are: The Scam of Credit Counseling, Debt Relief Negotiation Firms, Debt Management Scams, Consolidation Scams, and Build Financial Trust. Credit counselors are meant to help clarify your financial situation and give you strategies to help manage it better. Upfront fees for such a service over $50 or requests for your financial information before being told what the service you are even being provided are two ways to sniff out this scam. Each of these other scams can be uncloaked in the same way. Upfront fees or interest charges and promises to fix all of your financial problems are the biggest signs that this company doesn’t really want to help you, but profit off your situation. Yet, the legal solutions banks offer with their “debt cards” might be just as bad, if not worse, than these scams.

Banks bring in over $7.8 billion is overdraft fees every year. You know those little fees they don’t tell you about that they hide in the fine print that turn your $2 stick of gum into a $35 gourmet meal. These banks need to stop acting like vultures and just deny these transactions in the first place. This is one of the reasons why the economy is in this poor situation because banks are in effect creating billions of dollars of consumer debt that we shouldn’t have to be paying. Illegal or legal these practices are despicable, so I’ll leave it up to you to decide which is worse. The important thing really is to just know how to prevent these vultures from duping you.


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