Look Out!
High cost financial services
Pawn shops charge very high interest for loans based on
the value of tangible assets (such as jewelry or other valuable
items).
Rent-to-own programs offer an opportunity to obtain home
entertainment systems or appliances for a small weekly fee. However,
the amount paid for the item usually far exceeds the cost if the
item were bought on credit.
Check-cashing outlets charge high fees (sometimes 2 or 3
percent) just to have a paycheck or government check cashed.
Rapid-refund tax services provide "instant refunds"
when you pay to have your federal tax return prepared. However,
this "instant refund" is a loan with interest rates as
high as 120 percent.
Check-deferral services allow consumers to get a cash advance
on their next paycheck. However, these short-term loans are very
expensive. A $200, two-week advance may cost over $30 (with annual
costs exceeding $900).
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