You’d be surprised just how fast you can find yourself in serious debt, so it’s important to always be vigilant. Your financial decisions can have dire consequences that can land you in trouble, and it can be difficult to know where the dangers lie. To help you stay on track with your finances, here are 4 common debt traps that you should avoid at all costs.
Quick Fix Loans
There are a range of quick fix loans on offer, also known as payday loans. These are very short term loans designed to provide quick cash to those who need it in between pays. While this might sound good in theory, they often have cripplingly high interest and fees which can quickly mount up. If for any reason you can’t pay the loan back on the due date, you will be hit by even more charges making it very hard to get the balance down and pay off your debt. Many people have found themselves disastrously deep in debt thanks to these quick fix loans.
Credit Card Addiction
While a credit card can be a useful financial tool, it’s easy to let it take over and become addicted to using it for things you simply can’t afford. The lure of credit cards is that they let you buy now then pay later, however you should always remember that every time you make a purchase, you are in debt. Each subsequent purchase simply exacerbates the problem, and by the time you add high interests into the mix, you can see how quickly credit card addiction can lead to serious debt.
Loans to Cover Debt
When you are in debt, it can be tempting to get out more credit in order to try and keep your head above water financially. However, taking out new loans to cover old debt can be a disastrous decision that will see you slipping further and further into financial hardship. The only time you should consider getting a loan for debt is when in consultation with a qualified debt solutions specialist such as Fox Symes. They can organise a debt consolidation loan which is low interest, and has the benefit of combining all of your debt into one simple monthly payment. Unless you are being guided by a professional, loans for debt are usually far more trouble than they are worth.
The “Interest Free” Trap
Anything that is offered with an interest free period sounds great, and can be a seriously tempting proposition. Whether it’s a car loan, credit card, or electronic goods, this can make buying now and paying later seem like an attractive option. You should always keep in mind that while interest free can be great, you need to understand how your loan will change once the period is over. Often, you will be faced with cripplingly high interest rates and elevated charges once the interest free period has ended, leaving you facing even more debt.
By being aware of these common traps, you are far more likely to be successful in avoiding debt. If at any time you feel like you are experiencing financial difficulty, don’t be afraid to seek expert assistance. As a leading Australian debt solutions specialist, Fox Symes are dedicated to helping their clients overcome any financial challenges and build a stronger and more secure future. Contact them today to see how they can assist you to take control of your finances for good.