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Credit Building Scams - Part IIICheck Cashing LoansCheck cashing stores provide a service - getting money to people who need it fast. But as a loan, it's always a bad deal. How it works is an individual will go to a check cashing store to obtain a loan. They write a check for an amount, say $115, to get $100 loan. On payday, they either return to exchange the check for cash, or the store deposits it. The longest length of time for this fee is 14 days—to the next payday. Consequently, the BEST interest rate you are getting for this loan, if you take it for the full 14 days, is over 1% interest A DAY! Speedy Tax RefundsNo one can force the federal government to process your tax return faster. When you are getting a speedy refund, it's because the tax preparation company is making a loan to you. There is a flat fee for this service, so if your refund is small, you wind up paying an enormous annualized rate for this loan. Business Credit Building ScamsIncreasingly I am seeing offers in the mail from companies that claim they can guarantee you immediate business or corporate credit. They sometimes offer corporations with already established lines of credit. They claim to have credit cards and lines of credit that you will be eligible for just by being their client. Further investigation usually reveals that they have lines of credit that only work when you buy their products through their catalogue, often at very high markups. You may have to make a large down payment on your purchase to cover the actual cost of the goods, then you are left financing the high amount that you shouldn't have paid in the first place—usually at high interest rates. Finally, while you may get credit through them, these companies rarely report to the credit bureaus, so you are doing nothing to build your credit. |
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