Is that really a good deal or too good to be true? What should I know about hidden costs?

We have seen them advertised:  the home renovation memberships with manufacturers prices too low to advertise,  prices so low that we can’t advertise them, 1 or 2 year no interest payments, etc., but in this world of so called “best buys” what are the things you may want to know…

No payment, no interest deals – may have administrative fees that may end up costing more than if you would of took out a loan and paid interest on it.

Home renovation memberships – advertise how much you save on your home renovations, but unless you are renovating extensively year after year, the initial membership fee of $3000.00 plus yearly maintenance fees after that could end up costing you more in the long run.  The downfall of these types of memberships is that very few items are actually on display and you are mostly looking at manufacturers catalog pictures instead. Personally, I don’t like to shop by photos only.

Higher Interest savings accounts – may require a minimum balance or may only offer that higher interest rate for a limited time period like 3 months and then pay out a much lower interest rate after that point compared to other banks, etc.  Most of these higher interest rate accounts are non-redeemable for a certain time period. In some circumstances you may be able to redeem them, but with high penalty rates for early withdrawal.  

Some insurance companies advertise higher interest rates and no fees, but require you to have an account at a bank anyway to use them. Since most banks charge fees on accounts, this save your money, no fees, advertising is kind of deceptive. 

Fitness memberships – various type of memberships require you to pay dues for a set time period whether you use the fitness center or not.  If you are busy with work, starting a New Years fitness resolution, etc. you may want to consider different options or paying a drop in rate before locking into a membership of any type.  I know a mother who is locked in paying for her teen aged daughters fitness membership for one year but, the daughter has only gone to the center twice in 6 months.  Needless to say, the mother is not too happy with that situation, but don’t teenagers change their minds about a lot of things in general?

Low mortgage rates – some mortgage brokers may advertise lower interest rates than banks.  These are usually only for a limited time period like 3 months, 6 months, etc and then the interest rate jumps up to a much higher rate.  The interest rate after the introductory rate is over is usually much higher than a lot of banks.  They don’t call these “teaser” rates for nothing.

Remember…before you lock yourself into any of these so called deals, you may want to carefully read the fine print for hidden administrative fees, terms, conditions, etc. That deal may just be too good to be true after all!

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1 Comment (+add yours?)

  1. coconews
    Sep 12, 2008 @ 13:28:47

    Sorry, I have not been able to post more regularly lately. Very busy professionally and personally, will post as time permits.

    If you have gotten yourself in a deal that turned out to be too good to be true, please tell us your story.

    Thank you
    Coco

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