Recession here, recession there. In spite of some people saying that we are not in a “real” recession, we all know that the economy is on a downturn. If that is not a recession then what is it? And when we are faced with such problems, sometimes we panic and grab onto whatever help we can get. Sometimes, we don’t do anything at all. In any case, it would be wise to know that there are some pitfalls out there. As much as I would like to hang on to my belief in the inherent goodness of man, I cannot overlook the fact that there are unscrupulous individuals in existence; individuals who will not hesitate to take advantage of those who are looking for solutions to their economic situations. Here are some pitfalls that you should veer away from.

Modern loan sharks
Now this term can be used very loosely, and I do not think it applies to some groups. However, modern day loan sharks do exist, and usually they are those “informal” set ups that you can find in your neighborhood. They might not even be real companies, just individuals or groups of individuals who prey on those who have bad credit and those who do not normally approach banks and other lenders for assistance. With these loan sharks, it is very easy to obtain a loan. They might not even ask for proper documentation. While it is very easy to obtain money from them, you will end up paying more than double what you originally owe due to their exorbitant interest rates.

Bad credit plastic
Again, people behind these credit cards prey on those who have bad credit and who would normally be denied for a regular credit card. On the surface, it looks good – they are giving you the chance to have a credit card despite your bad credit record, right? However, once you get down to the details, you will realise that a 200% APR is such a BAD thing. Take a look around, because there are credit cards which are meant for those with bad credit and which have only 20 to 30 percent APR.

Debt management experts who put you in more debt
Anyone can call himself an expert. Just put a few credentials together, offer your services, and you have a business. In this time of prevailing debt problems, it seems that debt management experts have more than doubled. You will see a lot of ads and web sites offering their services to help you get rid of your debt. At the end of the day, however, you know that there is only one way to get rid of debt – stop spending and start paying. Of course, you might need professional help in certain circumstances. Your best bet in these cases would be to approach non-profit organisations which offer the same help – and more. Compared to those so-called debt management experts, these organisations will not charge your for their services.

Be smart. Stay away from these pitfalls, and survive the recession.

This entry was posted on Tuesday, March 24th, 2009 at 11:20 pm and is filed under Debt, Banking, Credit Cards, Loans, Personal Finance, Advice . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.