Whether you’re trying to save money or spend, banks actually keep a lot of secrets from you – and these secrets work to their benefit. Fortunately for you, we’ve listed a few important things that you should watch out for when doing business with a bank:
You May Not Get the Advertised Rate
Lenders are not required to offer their advertised rates to all successful applicants – they only have to offer that rate to select applicants with excellent credit history and repayment records. The rest of the applicants get a more expensive deal. To get a better rate, work on improving your credit score and make sure to pay your bills on time, without delaying or missing any payments.
Not Having a Credit History Is Not a Good Thing
When working out whether they should lend you money or approve you for a credit card, banks check your credit history. This means not having a credit score because you’ve never used credit, like a loan or a credit card, in the past is not necessarily a good thing. In fact, having no history at all may be worse than having a slightly less than perfect credit score.
Sometimes Paying Off Your Debt Early Can Cost You More
With mortgages and loans, you would think that repaying your debt ahead of schedule would be a pretty good thing to do. After all, isn’t the lender getting their money back before the due date? But, the fact remains that most lenders will charge you a prepayment penalty if you repay your loan early. Now, this could be a nominal fee or a significant amount, based on the terms of your loan. They do this because they were counting on your loan to make money – when you pay the borrowed amount early, the bank is losing out on a lot of interest it could have received.
Closing a Credit Card Could Hurt Your Credit Score
Have an old credit card account that you want to close? Keep in mind that closing it could affect your credit score negatively. This is because when you close an old credit account, the average age of your credit accounts comes down.