Tag Archives: consumers
Why Apply for a Loan?
There are many reasons why consumers take out loans. Two of the most common types of loans used by most consumers at some point during their lives are homeowner loans and motor loans. Mortgages are required by most home buyers who need financing to help cover the costs of purchasing property. Some existing homeowners also rely on their property to secure second charges for various purposes. Most car buyers also obtain lender financing to help cover the costs of the vehicle purchase.
While property purchases are among the more common loans types, borrowers rely on financing or credit various reasons. Some borrowers use personal loans, or the second charges mentioned, to consolidate debt created by other loans, renovate or upgrade property, go on a vacation, make a large purchase, or other important needs. Loans that are secured by property usually come with more favorable rates and terms because they pose less risk to the creditor. This is why secured loans are popular for consolidating debt from higher rate loan and credit balances.
Another type of loan used by some budget-oriented consumers is pay day loans. These are loans that are awarded in advance of a pay period. They are used by consumers who rely on paycheck income to cover basic expense requirements. Some borrowers use these loans to cover financial needs in advance of a pay period. These loans are often secured by personal property, such as a vehicle. They are generally short term loans.
Along with the aforementioned loans, many consumers regularly shop with credit cards. Credit cards are commonly used to cover basic purchases using a ‘Buy now, pay later’ mentality. They are useful at times to cover important purchases, by consumers are often irresponsible with credit cards.
The key with any type of loan is to only take out an amount that is needed and no more. Some consumers do not fully understand the risk posed by taking on debt. Taking on too much in loan debt can create significant financial burdens for consumers. Not meeting monthly debt obligations can lead to a poor credit score, which ultimately makes it more difficult to acquire a loan when it is needed for an important home or auto purchase, or even insolvency and foreclosure in extreme cases. Consumers need to take out loans responsibly, when it makes financial sense to do so. Taking out a loan for discretionary spending or non-essential purchases is generally not advised.
Cash Back Credit Cards – Solutions With "Catches" (Page 1 of 2)
Cash back credit cards are now being made available in a variety of new options. However, it is important for consumers not to skip over the process of researching all details of a card before applying. Cash back credit cards, although useful credit card solutions, also frequently carry with them several “catches” (targeted reward categories, high credit necessary to apply, potentially capped rewards) that consumers need to inform themselves about in order to maximize their effective use of the cards.
In a world of rising gas prices and falling employee compensation, it’s more true than ever that a small amount of cash can go a very long way. This, at least, is the logic behind the variety of new cash back credit cards that now flood the market from many major providers. These cards offer a number of different cash back plans for several types of purchases: cash back for retirement, for charity, for affiliate products. All are designed, at least in part, to encourage credit card use by returning some percentage of the purchase price to the consumer at the end of the year. It sounds like–and can be–a good deal, the literal truth of the classic adage “spend money to make money.”
But in addition to the good deal, cash back credit cards carry with them hidden hooks and lines. The card application always lists these plainly, but customers who just want to cash in on the promise of quick percentage rewards can often overlook the most crucial caveats of all. More savvy customers, however, should ask themselves maybe the most important question anyone can ask when considering a new credit card: what’s the catch?
The first catch is that the high-end cash back rewards don’t usually apply to entertainment, housing, or luxury items. Since these make up a large portion of most people’s paychecks, anyone who believes that a hypothetical 5% cash back guarantee will apply to everything purchased with that cash back credit card will be in for a rude surprise. The higher fees are typically targeted toward fundamental goods in our society: supermarket purchases, drugstore runs, gasoline. Most of the best cash back credit cards offer a flat 1% fee on other purchases, which can be substantial by the end of a year, but still possibly not what the customer who only glanced through the brochure expects.
Another big catch is the high credit rating necessary to get one’s hands on any of the best cash back credit cards. The most popular cards all require at least a good credit rating, with many asking for excellent. The effect of this is to push the target market of typical cash back credit card consumers toward two groups: first-time credit card applicants and the very financially prudent. And it is a nice bonus for people with good credit (or at least no bad credit) to be able to earn typically 1% of the purchase of price back on most goods, but for anyone in dire financial straits looking to put together some extra money through cash back rewards, it would be wise to look elsewhere.