As the holiday season quickly approaches, now is the time of year we maybe tempted to take one of those financial teasers as we shop. We all see them and we are all tempted by them. But in order to simplify your personal finances you must say no thank you and avoid falling for the trap. Financial teasers are incentives which are offered to entice us to open a new account. Financial teasers are everywhere from your banks offering higher interest rate for limited time for deposit accounts to department store offering zero interest for several months when you apply for their credit card.
These financial teasers are usually for a limited time to get you to sign up hoping you will remain a customer for a long time. Before you agree to accept their offer ask yourself:
Do I really need this financial product such as an additional savings or checking account?
Will I consolidate my existing account to this one account?
Determine how this financial teaser will benefit you in the long-term not just the short-term. If the offer does not have long term and short term benefits, you should look to see if this offer fits within your financial goals and objectives and what other benefits will it have on your financial life.
Here are some of the most common financial teasers you will see and you should approach with caution:
The Irresistible Rate Offer
Financial institutions often offer special interest rates on saving and checking account and to entice you to open a new account. But how long will you receive the special interest rate and what do you plan to do with the funds when the intro rate has expired. Consider do you really need another account because many times these offers or only for new customers. Does this offer fit within your other financial goals. Will you receive notification that your intro rate has expired or do you have to set up a reminder? Do not just accept a great rate offer unless there are other significant benefits to you as well.
The No Fee Option
Often to get you in the door fees will be waived for a period of time. Before you accept this offer consider how long will your fees be waived. What are the usual fees associated with this product or service? Will I use this product if I had to pay the fee? In addition to these questions, you should consider do you have to call and cancel the service or return the product so fees are not charged to you if you do not want the service or product.
The Free Gift
Financial teasers are gifts for signing up for a credit card or opening a particular type of account. Think about it are you just signing up for the credit card or new account just for gift. What is the gift really worth? There are usually strings attached for example if you sign up for a new credit card just for the gift think about how this credit card could impact your credit score even if you do not use the card. Also determine if you will be charged any fees for openning the account which may equal the cost of the gift you received for free. If you received a gift and plan to closed the account soon after make sure there are no penalties for closing the account or period that the account must remain open. It is sometimes easier to just say no. The simple free gift could turn out to be more hassle than its worth.
Have you ever signed up for a credit card just because of the rewards program. Rewards card can be great to have but consider the quality of the card not just the rewards it offers. How does this reward card compare to your current card? For example, you just signed up for this great reward card but come to find out the interest rate is twice what your other cards offer plus there is an annual fee in addition to the higher interest rate. Make sure the rewards are not the only reason you have signed up for the card.
So next time you are tempted by one of these financial teasers think before you decide to take the offer. The offer may cause you more stress than its worth. So consider all factors before you say yes to the next financial teaser you see especially around the holiday season when teasers are all around. By not accepting these offers you may miss out on a short term benefit but in the long term you will not have an additional account you do not need or gift you did not use.