3 Money Traps That Seem Safe

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Posted by Money Tips Staff

You’ll be shocked to learn that the following three items, which are generally deemed safe investments, are actually money pits that waste thousands of consumers’ dollars each year.

1. Mortgage Refinancing

While mortgage refinancing appeals to consumers because it allows them to gain a lower interest rate on their home, many people are unaware that it can actually cost them money. There may be thousands of dollars in refinancing fees charged to you or added to your mortgage, known as capitalization, if you choose to refinance your home. Before deciding to refinance, ask your lending company how much their refinancing fees are, and see if you will really be saving enough in interest to justify paying the large one-time refinancing fee.

2. Credit Card Consolidation Programs

Credit card consolidation programs may seem like an amazing gift at first, allowing you to combine all of your credit card debt into one low monthly payment. However, beware – some debt consolidation companies are actually elaborate scams that will cost you money by charging you a higher interest rate than your card. You can do it yourself simply by doing some research into the best interest rate credit card, such as a chase rewards card, and consolidating it yourself.

Additionally, many people who take out a debt consolidation loan only max out their credit cards again. This means that their amount of debt has actually doubled due to poor spending choices. While this may seem like an obviously bad choice, many people report that it simply happens without them knowing how they even spent all the money. Do not let this happen to you.

3. 401(k) Plans

401(k) plans seem like a great form of investment. Plus, so many employers sponsor them that they have to be a good choice, right? Wrong! Millions of people across the United States have recently lost money due to their 401(k) plans and bad investments. It is better to just keep your money in a high yielding savings account.

Avoiding the Traps

Now that you know all about the top 3 consumer money traps, you are able to avoid them. There is no reason for you to fall prey to one of these traps. Just say no to these scams and continue to work towards living a healthy, wealthy, debt-free life.

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