Beware of Recession Predators

Recession fears have rippled through the global economy, and the U.K. is no exception. Though it’s logical to assume that these economic times are difficult on all consumers and businesses, this is not always the case. In fact, there are certain products and companies that thrive off of the recession struggles of consumers. These recession vultures target consumers who are hurting the worst and then take advantage of their financial flight for their own monetary gain. Unfortunately, many of the consumers that these jackals target are also paycheck advance customers. To help you avoid these financial parasites, we’ve compiled a list of parties and products to watch out for during times of economic hardship.

• Credit card cheques. The Bank of England has recently cut interest rates, but many lenders have nevertheless raised the interest rates on their cards. Credit card companies are also increasing the number of credit card cheques they send out to cardholders. Credit card cheques are prodigiously high-interest-rate cash loans that bury cardholders in transaction fees in exchange for the convenience of quick cash. Avoid these loans at all costs.
• Store credit cards. Department store credit cards are one of the most expensive forms of debt and are generally unnecessary. The best thing they have to offer is the one-time initial discount on your purchase when you sign up. After that, you have nothing to look forward to but high interest rates and unreasonable terms. Many store credit card APRs are now averaging around 30%, which is 10 times the base rate of the Bank of England.
• Paycheck advances. When it comes to paycheck advances, you run a high risk of borrowing from a lender who is a recession vulture. The fees on paycheck advances usually translate into astronomical APRs. For instance, if you paid a fee of 50 pounds over the course of a month to borrow 200 pounds, you would be paying an APR of over 2,000%. Clearly, this type of loan is extremely lucrative and thus an enticing undertaking for recession profiteers.
• Logbook loans. These are similar to paycheck advances in that they are terribly expensive and largely unregulated by Parliament. Logbook loans are loans that are secured against your automobile, the title to which you temporarily transfer to your lender when you borrow money. If you do not repay the loan as agreed, your car could be auctioned off. Even worse, if your vehicle doesn’t raise enough money to repay the loan, you might still be pursued for repayment of the remaining debt.