Receivingmoneyas a present is a wonderful thing.
Receiving money as a loan?
Still great, but it doesn’t come with nearly as much freedom.
Don’t get us wrong, signing up for a loan isn’t a bad idea.
Nearly 45% of Americans took out a personal loan last year (perFinder).
Here are a few types of loans you should think twice about signing up for.
Yourcredit cardacts as an upfront loan when purchasing goods.
And not being able to pay off that loan quickly can result in credit card debt.
The average credit card interest rate is a whooping 14.58% for existing customers (viaPureWow).
So even if you are paying off the requested minimum balance every month, your debt is still increasing.
This is a pop in of debt that can feel like you’re in never-ending quicksand.
But consider the math.
An example of a standard payday loan of $200 would commonly come with a $30 fee.
This amounts to a nearly 400% annual interest rate (viaWisebread).
And finally, stay away from the rent-to-own loans if you’re free to.
But oftentimes you will end up paying more than the original price through hidden costs and late fees.
