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Top 10 Financial Rip Offs

May 23rd, 2007 at 08:32 pm

Entering the contest and venting at the same time...here's my list:

1) Payday lenders.

2) Time shares.

3) Leasing cars, furniture, etc.

4) Multi-level marketing programs.

5) Lotteries.

6) Rent-to-own (furniture, appliances, etc)

7) Credit cards in general, especially those with double digit interest rates.

8) Adjustable rate mortgages (in many cases).

9) Gambling.

10) Co signing for a loan for someone who doesn't have the financial ability to get the loan on their own.

Did I forget anything?

10 Responses to “Top 10 Financial Rip Offs”

  1. mariejensen2007 Says:

    I'm going to vote for you!!!! I love #10. It doesn't seem so bad at the time but when you read it out loud it sure sounds bad doesn't it? I also liked #2 I once went to a 'timeshare talk' it was the worst 2 hours of my life.

  2. carol Says:

    If there is anything you forgot I can't think what it would be. I rate your list A+.

  3. disneysteve Says:

    Nice list, but I definitely disagree with #7. Credit cards are excellent financial tools that allow you to get an interest-free loan every month for thousands, or even tens of thousands of dollars. Plus, using them can earn you hundreds or thousands of dollars in free rewards each year.

    Yes, if you don't pay your bill each month, they will hit you with often substantial interest charges, but that's the user's fault, not the credit card's fault.

    When we are enjoying 10 free days of hotel stays in New Hampshire this summer courtesy of our Marriott Visa card, I certainly won't think it is a rip-off.

    I have a bit of an issue with #9 also. Yes, when you enter a casino, you need to do so with the knowledge that the house has the advantage, but I consider gambling to be entertaining. I enjoy sitting down and playing blackjack for a couple of hours. Sometimes I win a few hundred. Sometimes I lose a few hundred. There are other forms of entertainment that are equally expensive and don't ever offer the chance of walking away with more, or even as much, as I started with. I suspect you wouldn't call those things rip-offs. Does it really matter if I spend $200 to visit the casino or spend $200 to see a Broadway show? Either way, I get a couple of hours of entertainment for my money. That's not a rip-off in my book.

  4. MsSuperSaver Says:

    I agree with your comment about credit cards as far as responsible use goes, however for the "average" user credit card companies are a financial hazard and dont even get me started on the universal default clause...

    Gambling I consider a rip off because there is not a single game where the odds are not stacked against a player--and this is legal!

  5. disneysteve Says:

    I agree with you about universal default. I don't think they should be allowed to change the terms after they loan you the money. Change the terms going forward, but keep them the same on money that is already owed.

    As for gambling, I guess I don't consider something a rip-off if you know all the terms upfront and agree to them before you play. If you sit down for the purpose of making money, you just don't get it. If, however, you sit down for the entertainment value, I see nothing wrong with that at all. Just a difference of opinion, I suppose.

  6. Debt_is_dumb Says:

    DisneySteve,
    As you enjoy your "free" stay at the hotel you are overlooking the fact that ALL studies have shown that we
    spend more when using plastic than we do with cash.
    Depending on which survey you use, that would be 10-30% more. Even if the results are only half way correct, you are spending 5-15% more to get rewards ranging from 0.8-1.4%. My calculator says that is not a deal. Why do you think they offer those rewards? I bought in to that myth to the tune of 3-4 grand a month for many years. I got wise and have more cash to show for it. I will pay for my airline tickets with cash that I saved by not spending more than I should/would when using plastic.
    If you play at their game, you eventually will loose. By offering rewards they hide the fact that you are loosing. I do not know any millionaires who say that those credit card points put me over the top. If you want to be skinny, to what skinny people do, if you want to be wealthy, do what wealthy people do. They don't play games with credit card companies.

  7. notbrokeanymore Says:

    Disney Steve,
    As you enjoy your "free"hotel stay you are overlooking that ALL studies have shown that when we use plastic we overspend from 10-30%. The rewards range from 0.8-1.4%.
    My calculator says that is a bad deal for the consumer.
    I bought into the myth to the tune of 3-4 grand per month for years. I found that I have more cash now and pay cash for airline tickets with the money that I saved. I do not know of any millionaires who said that the CC rewards put them over the top. They do not play that game. Why do you think they offer rewards? It gives us a false feeling that we are getting something when in reality we are loosing much more. If you want to be skinny do what skinny people do. If you want to be wealthy, do what wealthy people do. Read "The millionaire Next Door" for the habits of the wealthy. It will shock you.

  8. Fern Says:

    Hear hear.

    I would add:

    * additional warranty coverage on major home appliances or electronics

    * most variable annuities

    * much of the cost of title insurance

    * 6% realtor commissions

    * Terminix and similar pest control companies (I can do just as well by doing it myself and save the hundreds they charge)

  9. Jerry Russo Says:

    I think # 11 should be : Don't loan money to anyone.

  10. disneysteve Says:

    "ALL studies have shown that we
    spend more when using plastic than we do with cash"

    There are certainly people for whom this is true. Probably the same people who carry a balance every month because they are spending beyond their means, paying late fees, over limit fees and hundreds in interest charges.

    But it isn't true for everyone. What I buy has absolutely nothing to do with how I intend to pay for it. In fact, many of my monthly credit card charges are other bills that I pay with the CC. For example, I pay my alarm company monitoring, my auto insurance, my cell phone, my home phone, my internet access, my cable bill, gas for my car, groceries and more with my CC. I would be paying those exact same bills in the exact same amounts if I paid by cash or check and I'd get nothing in return. Using the CC, I get the rewards in return and keep the money in my account earning interest for up to an extra month or more.

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