Paying Fees for Guaranteed Loan or Credit Cards - Bargaineering

Paying Fees for Guaranteed Loan or Credit Cards

Posted: 13 Oct 2010 09:07 AM PDT

There are very few things in this world that I know for certain – New York sports teams will always be near the top of payroll lists and there’s no such thing as a guaranteed loan or a guaranteed credit card. So when I read about this scam, the scam sirens were going off like crazy in my head. Banks can’t offer pre-approved guaranteed loans because it’s simply not possible to underwrite a loan without know the borrower. The same is true for credit cards. Any company that offers to do that is lying!

This falls under the class of scams where the scammer gets you to pay them first, up front, with promises of benefits down the road. Whether it’s a job with an application fee or sending $5,000 to a Nigerian Prince so he can wire you $5 million, it’s a new wrinkle on an old scam. I think people succumb to the idea that by paying a few extra dollars, they can get access to something they otherwise couldn’t get. For consumers with poor credit, it’s very tempting to think that you can pay $500 and get access to a credit card. The reality is that once you pay, the scammer disappears.

One word of warning – there are credit cards, known as secured credit cards, that will charge you an application fee. Unfortunately for some consumers, those are the only cards they can get access to. That’s the only case in which an application fee makes sense and you’ll never see an application fee for an unsecured card.

If you see an offer like this, run the other way. If you are in need of credit or a loan, consider going to your local credit union or bank and talk to a loan officer. They are usually very accommodating and can work with you to get you a loan or credit card. It might not be today, it might not be tomorrow, but they can set you on the path towards what you need and you won’t be meeting in a back ally.

Paying Fees for Guaranteed Loan or Credit Cards from personal finance blog Bargaineering.com.

5 Smart Ways to Use Debt to Improve Your Life

Posted: 13 Oct 2010 04:05 AM PDT

Kimberly Palmer is the author of Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back, which was published by Ten Speed Press this week. The following post has been adapted from the book. She's also the author of the Alpha Consumer blog at USNews.com, where she'll be hosting book giveaways all week.

Shortly after meeting my husband, he tried to convince me that debt was a good thing. His student loans, after all, were not only funding his tuition but also many of our first dates. Using something called the "income smoothing theory," he argued that it was better to borrow now, when we had little money, so we could live better than we otherwise would, and then pay it back later, when we (hopefully) had steady incomes. (Of course, to us at the time, living well meant being able to buy cheap Thai food and beer.)

While his theory falls apart if it's taken to extremes, for the most part it makes sense. Debt can be a very good thing, as long as you use it wisely. Here are five ways you can use debt to improve your life.

For those of you expecting another installment of Scam Week, I thought we’d take a little break mid-week. I’ve been friends with Kim for a while and with her book coming out, I thought having a guest post by her would be a nice change of pace. I hope you enjoy it!

Take out certain kinds of student loans.

Students loans are often referred to as "good" debt because they allow you to earn more money later. Plus, subsidies from the federal government often allow borrowers to lock in low interest rates. And it's true, using student loans to get new skills that allow you to pursue the career you want can drastically improve your life. In fact, research from the College Board shows that a college degree plays a huge rule in how much money you can expect to earn: The median income for college grads over age 25 is $55,700; for those with high school diplomas, it's $33,800.

Just don't use the "good debt" argument to fool yourself into pursuing a degree in a field you don't really enjoy, or one with less-than-promising job prospects. Many unemployed MBA-holders are probably wishing they weren't carrying $200,000 of so-called "good" debt right now.

Invest in professional expenses.

Putting money into a new suit for your first day of work or a certification program that lets you get a promotion can also help you earn more money in the long run. If you recently graduated and have no cash to buy your new work wardrobe, or any other essentials to your new career, then it's okay to charge them on a low-interest rate credit card. Just make sure a big chunk of your first paycheck is dedicated to paying down the debt so it goes away quickly.

Take advantage of auto loan subsidies.

Auto dealers often offer special subsidies on auto loans or other kinds of discounts when they're trying to move certain models (especially older or less popular ones) off their lots. If you're flexible on what you buy, consider shopping based on the subsidies available. It could mean the difference between a five percent interest rate and a seven percent one, and if you need the car for work or your family, that could be a good investment.

Manipulate credit cards to your advantage.

Credit cards often come with some perks hard to find elsewhere: Automatic ID theft protection. Travel insurance. Zero percent financing for limited periods. Rewards points, even when you pay off your bill each month. Many companies are now also offering free software that allows you to quickly analyze your spending from your online account. If you can pay off your balance each month, then you essentially get all those benefits for free (just make sure your card carries no annual fee).

Avoid the dark side.

Overspending on credit cards means fees, high interest rates, and lots of financial stress. The new credit card rules require card companies to feature more information on monthly statements, including how long it would take to pay off the debt if you make only minimum payments, or how much you have to pay to unload the debt in three years. Paying attention to those numbers – and to any changes to your card policy that arrives in the mail – can help you avoid falling into a debt trap.

For more details on Kimberly's book, visit www.generationearn.com.

5 Smart Ways to Use Debt to Improve Your Life from personal finance blog Bargaineering.com.