Some financial pitfalls one should avoid falling into.

finance education

The financial decisions we take today build our tomorrow. If today, we decide to make smart money choices, we may save ourselves from unexpected financial crises later in life.

It takes a lot of effort and at times, tough decisions to build a robust financial footing upon which the entire family relies. But besides collecting and making a fortune, we also spend considerable time safeguarding and protecting our hard earned money. When it comes to finances, one can never be too careful. However prepared we could be, we may need to seek financial help from loans brokers or pals.

But how to protect ourselves from unannounced financial pitfalls and avoid spending our hard earned money? What are the most common financial pitfalls one can easily fall into? Find out here:

Overdraft fees

Getting charged with overdraft fees is very easy, and most of us might have faced overdraft fees at some point in our life. It is estimated that banks make a lot of money from overdraft fees annually. If you don’t know that you have already spent the overdraft limit set by your bank, it won’t be a long time till you own the bank in doubles.

It is not uncommon for people to rely on unauthorised overdraft to live off their life. But unauthorised overdraft can cost you more in terms of penalty fees and interest rates. Additionally, overdraft charges can damage your credit score and make it hard for you to borrow money in the future.

No matter how much we try, we can’t avoid unauthorised overdrafts every time. However, one can always speak to their bank authority and request to extend the overdraft till the time you have money to pay off.

Untrustworthy payday companies

Over the years, people who are in an urgent need for money have started relying on payday loans and loan brokers who offer payday loans like Wonga. Payday loan is a fast way to borrow money over a short time. Moreover, it is not required to have a credit score to quality for the loan. Lenders who offer loans make money on the interest rate they charge and penalty charges if any. However, it is essential to look for a lender who is trustworthy and have a good rapport in the market.

There are lenders out in the market who may try to trick you into buying services that you may not need or charge you additional fees. Be wary of such lenders at all cost. When looking for a lender, find someone who is transparent with the loan policies, open about the charges and fees, and considerate of your needs.

Dealing with unknowns

The money market is filled with all kinds of people, and not all are trustworthy. Since childhood, we are taught to be careful with strangers and unknowns. And when it comes to matters related to money, one should always be watchful of unknowns.

You may have had an encounter with unknowns over the phone or the internet claiming to be a credit card company representative or bank personnel. However, there are chances that they might be fraud or scammers who may trick you into disclosing your account details.

If you receive a call from a business that you know, make sure the call is affiliated. Banks already possess our personal and account information; however, if they ask you too much information, be aware.

Telemarketers are pro at convincing people to opt for a service or buy a product. However, they could be scammers wanting to steal personal information. If you ever receive such calls, have the person send you the information over the mail.

Insist on checking their website to validate the claims made by the caller. Most sites have the option to make donations via the website itself.

When making an online purchase or applying for a loan or credit card online, ensure that the website is secure. There should be a lock sign near the URL, which indicates that the site is secure and all your personal information is safe with the company. The website should also have the contact information and office address mentioned clearly.

If you suspect a caller to be a fraudster, ask them to allow you some time or call back later. Meanwhile, go through their website, or look for the business online. Online reviews, testimonials, and feedback from past customers will give you an insight into how the company is and whether their services and offers are beneficial for you or not.

Stay sharp

We often tend to brush off the red flags and warning signs and look for the best in others; however, in the matters related to money and finance, one should not turn a blind side. One should be careful and cautious when taking any financial decision.

The easiest way to avoid one from falling into these pitfalls is to be alert, diligent, and vigilant.