Avoiding Financial Pitfalls This Holiday Season

With the traditional holiday season at its peak between Thanksgiving and Christmas, many people are hard pressed to get badly needed cash for holiday spending. However, not all spending is holiday-based.

Home repairs, medical bills and the unexpected water heater demise all help to add more pressure to the American pocket-book.

Consequently, it becomes vitally important for the public to avoid common financial pitfalls and booby traps waiting to happen. Some financial landmines come in the way of quick cash loans such as:

•Payday Loans
•Auto Title Loans
•Credit Card Offers

Both temporarily resolve financial pressure but both also are prone to ensure financial entrapment if borrowers do not use wisdom and choose wisely.
Payday Loans

Typically promoted as short-term two-week solutions, the facts indicate otherwise. One study from Pew Charitable Trusts clearly showed borrowers end up in long-term debt bondage. When the expiration date for paying off the loan comes due, the average person can only pay off $50.00 of average loan amounts.

Further examination shows that almost 60 percent of loan borrowers struggle to make the monthly amount of payments required—at least half the time. When all is said and done, entrapped borrowers resort to traditional means of borrowing money just to simply pay off these kinds of loans. In the end, loans from family or friends, the sales of personal belongings and taking out other loans are called on to help pay off the loan.

Although payday loans do serve a purpose, they should be used as a last resort and only with a trusted company. If a payday loan is REALLY needed, then find out which company is better to use. TopTenReviews has done the research for people seeking payday loans, and list some of the better companies to use. There are some listed with much lower interest rates than the average 400%.

Auto Title Loans

Another commonly used quick-cash loan used by many people for the holidays, or any other time of year, is known as an auto title loan or pink slip loan. Lured by well written ads that promise: “quick cash, no credit needed, loans granted in less than five minutes and no questions asked,” people fall victims to what they didn't expect--interest rates and hidden fees that sometimes reach up to 300%. Most customers do not repay their loan in 30 days, and the average person will renew their loan 8 times.

The borrower may not have to give too much information about the purpose the loan, but he/she does have to typically present for verification:

1) Proof of income
2) Government backed form of ID
3) The title of the lien free auto
4) Proof of residence in the continental US

Are all payday loans and auto title loans necessarily bad? Not all. It simply depends on a person's ability to repay the loan in time. However, often the borrower cannot repay it on a short-term basis. This triggers another series of catastrophic financial dilemmas including the repossession of the car--or worse in some cases. It was used as collateral, you’ll remember.

Credit Card Offers

Other financial pitfalls generally awaiting consumers are special credit card offers with no interest for six months or even a year. Likewise, waived balance transfer fees also have hidden fees and stipulations lurking about. It is wise to remember that "the devil is many times in the details," as the saying goes.

Consequently, it behooves borrowers to carefully research alternate options to resolve their needs for quick cash during this time of year.