четверг, 17 декабря 2015 г.

How financial institutions encourage bad habits

In an ideal world, all banks, financial advisors, credit card companies, and other financial institutions would have your best interest in mind. But, that’s not the case.  Most of the time, these are the same institutions that would encourage you to breed bad habits.
Student loan debt
We were all made to think that student loan debt is responsible debt. A good education leads to jobs, right? Well, think again. This might be true, but you still have to evaluate your college spending plans. When going to college, be conscious of the debts that you’re taking. Remember that most fresh grads are still struggling with employment and that it may take years before you land into a career that can liberate you from the burdens of student loan.
Overdraft protection
If you’re the kind who shows tendencies of overdrawing your bank account, then banks are scouting for you. Banks would first allow you to spend more money than what you actually have in your account and then would cover your excess expenses for $35/advance. What’s wrong is that that $35/advance rate snowballs into a large burden, together with the amount of money advanced. Nowadays, laws are now in place to prevent banks from enrolling you to their overdraft protection program automatically.
High interest rate mortgages
Some mortgage brokers are out there to trick you. Their goal is to tempt you to get high rate mortgages through incentives. This kind of payment is referred to as yield spread premium. In the end, you have to remember two things: first, it’s in the broker’s interest that you pay more. When you pay more, your broker gets more as well. And second, do your homework: research and be an informed customer.

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