The Good, The Bad, and The Ugly (Part 3)

Over the last 2 editions we have looked at my top Good, and Bad financial strategies I have seen over the last 3 decades.

This week, we finish with what I consider to be The Ugly;

  1. Pay-day Lenders. You’ve seen the ads. Need money fast, just nimble it. There has been a massive increase in the use of pay-day loans over the last 15 years. Lenders prey on peoples need for quick cash in return for massive fees and interest. Before rules changed in 2013, some people were forced to pay the annual equivalent of a staggering 700% in fees and interest charges. Now those fees are capped at 20% establishment fee and 4% PER MONTH interest. There are far better ways if you are cash strapped.
  2. Churning. This practice is employed by financial product salesman disguised as advisors to convince you to switch your current financial arrangements such as super and managed funds, to new arrangements without adequate justification to do so. Switching becomes churning when it benefits the salesman, not you. Don’t confuse marketing with advice.
  3. Interstate Property Spruikers. It’s been a little bit quieter on this front in recent times. However many have been lured to purchase property interstate – again by clever marketing focused on tax benefits. The problem with a few of the schemes was the purchase price was heavily inflated by marketing commissions for the spruikers. Property can be a great investment if you buy right. Do your homework and don’t be pressured into making a decision.
  4. Credit Card charging methodology. We all accept that credit card interest rates make them an expensive way to borrow. What really hurts is the way some credit card issuers charge interest from day one, on your whole balance when you exceed the interest free period even by one day, or pay off all but a small amount. Different companies charge in different ways, it is important you understand the terms of your card.
  5. Accumulating multiple ex-employers super funds. The advent of compulsory super, coupled with changing work patterns has meant that many people end up with multiple employers super funds. Although individually they may be small balances, collectively they add up. The Government has recorded millions of dollars of lost super money. It’s your money, be interested in your super.