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Letter to the editor

10 Tips: Tread carefully with those pitchmen on TV

The people in TV commercials can seem so understanding, so warm, so genuinely concerned about you. Need a little extra cash? Need help repairing your credit? No problem! Well, there is a problem. The services being offered in some of these ads are not in your best interest. To protect yourself, consider these tips:

By Laura T. Coffey, Times Correspondent
Published November 25, 2007

The people in TV commercials can seem so understanding, so warm, so genuinely concerned about you. Need a little extra cash? Need help repairing your credit? No problem! Well, there is a problem. The services being offered in some of these ads are not in your best interest. To protect yourself, consider these tips:

1 Payday loans often hurt rather than help. These loans let you borrow a few hundred dollars against your next paycheck. The catch: Lenders will charge you anywhere from $15 to $50 for every $100 you borrow, and you may face annualized interest rates in the 400 percent range.

2 Be wary of home-equity loans touted on TV. These ads imply that it's generally no longer possible to get such loans through regular lending institutions. That's not true. And borrowing against your home can be risky if you're strapped for cash.

3 Don't fall for "rescue" offers from law firms. Have you seen the ads where lawyers offer to help you file for bankruptcy or sue over a personal injury you've suffered? If you call the 800-number advertised, you're likely to reach a national firm that handles cases all over the country. Personal service is likely to be limited - not good when you're dealing with such serious issues.

4 Don't relinquish key income streams too easily. Ads promise "cash now" to people who agree to sell or borrow against their annuities or legal settlements. Those offers may be tempting, but you'll pay dearly.

5 Vocational schools can be great - or not so great. Public colleges and community colleges often offer similar programs at a lower cost. Compare private school's courses, rates of completion and job-placement percentages with those of public schools.

6 Avoid credit-repair clinics. Their ads promise: "We can erase your bad credit, 100 percent guaranteed!" But such clinics, which are different from credit-counseling agencies, often charge hundreds or even thousands of dollars to do what you can do for free.

7 Tackle credit-card debt on your own. Transfer your card balances to a card with a lower interest rate, and concentrate on paying it off while those low rates last.

8 Get reputable help if you really need it. If you need a credit-counseling agency, get connected to one that has made a commitment to professional and ethical standards through the National Foundation for Credit Counseling (www.nfcc.org, 1-800-388-2227 and the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org, 1-866-703-8787).

9 Know what credit counseling should include. A good counselor will sit down with you and discuss your financial situation in detail, devise a tailor-made action plan and provide you with ongoing support. A substandard counselor simply will ask you to fill out an application.

10. Find a reputable financial planner. Find a fee-only financial planner through the National Association of Personal Financial Advisors (www.napfa.org) or the Financial Planning Association (www.fpanet.org). Fee-only planners do not make commissions by selling you certain financial products.

Laura T. Coffey (laura@tentips.org)

Sources: Financial Planning Association (www.fpanet.org); Consumer Reports (www.consumerreports.org); Federal Trade Commission (www.ftc.gov)

[Last modified November 23, 2007, 19:14:51]