Dec 04, 2013 Sean Albert
One of the more sobering lessons the Great Recession provided consumers is that it's essential to understand the details and fine print associated with loans, credit accounts and other financial services. Overly confusing statements and terms were a significant contributor to the economic decline in recent years. Many consumers simply signed up for services or products, despite having little knowledge of how these offerings functioned.
Although many borrowers have realized this, some financial outlets still have not taken the necessary steps to simplify their consumer agreement terms. In an article published in the Journal Sentinel, Brandpoint asserted that traditional credit cards are one financial source that is rife with confusing language and policies. The source cited data from BillGuard that found Americans unnecessarily spent $14 billion because of confused about credit card fees in 2012.
Even some government agencies have started to take note of this dangerous practice, which can land consumers in financial trouble. Consumerist reported that the Consumer Financial Protection Bureau is investigating the rules associated with credit card rewards programs because many come with confusing terminology that is difficult to understand.
Some of these credit providers offer rewards initiatives that mislead consumers about how much they actually need to spend to obtain a free flight, retail rebate or other perk.
Short terms loans easy to comprehend
However, some non-traditional and unrightfully maligned financial providers have taken the proper steps to make their loan terms as clear as possible. Brandpoint noted that for years, short term lending outlets in the United States have offered incredibly simple, easy-to-understand products that help clients gain insight into what they will owe in the future. This way, consumers are able to budget and plan their financial output more effectively, helping them avoid having little access to funds down the road.
In fact, one short term loan company the source mentioned has implemented a simplified disclosure form that was recently enhanced to make it clear what fees and payments an individual is responsible for.
"Transparency is one reason consumers choose short-term loans," said Patrick O'Shaughnessy, CEO of Advance America. "Many comparable products come with hidden fees and confusing disclosures or no credit disclosures at all."
In most instances, short term loans feature fixed rates that have payment periods lasting just a few months. As a result, it's easier for borrowers to complete payments on time.