A sluggish economy brings out more than just long unemployment lines and frustrated citizens. It brings with it a host of predators who seek out individuals who are at the end of their rope. It can be really tempting to buy into some of the options that are often marketed to the average consumer. In order to get through tough economic times, you’ll need to be even more diligent in weeding out those opportunities that seem a bit too good to be true. Here are some common recession “traps” that make their way into the media (and even your neighborhoods)-ideas that seem logical, but may end up costing you money (or much more) in the long run.
Car Title Pawns
No one can tell you how to feed your family when your back is up against the wall. But it seems that everywhere you turn, there are car title pawn commercials beckoning you to ease your financial woes. Companies like TitleMax can be a bonus for emergencies (especially minor household “catastrophes.”) But it is extremely important to evaluate your financial situation before entering into this kind of agreement. Be sure that you completely understand the terms of your agreement, and will be able to handle the payments. These kinds of companies have the right to repossess your vehicle if you are seriously delinquent, but would actually prefer not to. In short, these commercials run day and night, hoping that frantic consumers will take the bait. Be certain that your needs actually warrant this kind of financing option.
Loan Modification Scams
Those who have managed to hold onto their homes in the face of job loss are typically concerned with keeping their homes. You’ll probably also see many more “loan modification” ads (in print and on TV) than you might imagine. These companies know that people are seeking out all sorts of survival options during the recession. As such, many of these options are scams. If a company seems to good to be true, it probably is. Do your homework before signing any paperwork, or making any arrangements. You should also never offer any money upfront to an organization that claims it could help you reduce mortgage payments or erase debt in any way. In fact, you may even want to attempt renegotiating with your lender. This is always the best place to start to avoid getting into a position where you could be evicted for failing to meet “new loan” agreements.
Grocery Store “Sales”
For the most part, you can easily tell when you’re being “taken” at the supermarket. But lately, you might find that some supermarkets offer sales on certain items after you have spent a particular amount of money. For those who are already in the store, spending their unemployment checks on a huge basket of items, this might be beneficial. But some who don’t read the fine print on the labels in the store might not realize that the items they’re picking up will not be reduced unless the spend say, $25 or more. Always read the fine print when a sale seems exceptionally juicy. If you’re one of those people who doesn’t always check out his grocery receipts, you’ll return home to find that you’ve spent more than you planned on items that you don’t really need.
Credit Cards (Pre-paid or otherwise)
One might think that offering credit cards to consumers during a recession isn’t a smart move. But you would be surprised by the number of people who lean toward this option as a way of paying off debts or surviving during a slow economy. Some companies offering pre-paid credit/debit cards are completely legitimate. But there are so many organizations in existence that you’ll really need to do your homework. For instance, you may find one Visa card option that seems great for your budget and financial situation. But in the fine print, you may have failed to realize that the card holds a $10 monthly fee that you’ll be responsible for–whether you use the card or not. Thus, you have just created a new bill for yourself where there was none before. These kinds of cards can really help to improve your credit score if they are used properly. But if you’re seeking out one of them merely to get through a financial crunch, you may want to re-evaluate your application.
There are millions of scam artists who supply people with fraudulent checks to cash, in exchange for returning a small portion of “lottery winnings.” In the same vein, beware of those predators who rely on distraught job seekers to become unwilling participants in their money scams. Those using the Internet to find employment are particularly susceptible. The scammers place ads placed on various career websites, hoping to reel people in. They provide information that looks legitimate, and will ask for typical contact information, including an email address. But the ad (with contact request) is merely a ploy to get your email information. They will then send to you correspondence that looks like a job offer, but is in actuality-an advertisement for their business. Some scammers will even ask for money for “training programs”, etc. These are usually easy to spot. But with a flimsy economy, the scammers are becoming savvier in concealing their true intent. Some of them seem like real companies.
Basically, you should be wary of any job offer that has arrived too quickly after contacting the “employer.” A good rule of thumb is to investigate every single company that you’re considering for employment. Do so before providing any contact information. Check career forums and blogs; you may be surprised that there are other people who have fallen prey and are willing to share their experiences with others.