FINANCIAL
HOUSEKEEPING |
Learn to spot
predatory loans
In the middle of a search for money that can sometimes feel a bit desperate, many consumers agree to loan terms and conditions that are abusive.
While most people believe they could spot a problem loan, the trouble lies in the fact that many of the elements that make a loan worrisome lie in the fine print or in terms and clauses with which many borrowers are not familiar.
Predatory loans can have some combination of exorbitant prepayment penalties, excessive fees or mandatory arbitration for disputes, and often come with monthly payments that stretch the borrower to the max, or balloon payments that allow a buyer to qualify now but may lead to a default in the future.
For more information on avoiding predatory loans, check out www.responsiblelending.org/consumers, the website for the Center for Responsible Lending.
SHORT COURSE |
Flexible spending accounts
A flexible spending account, or FSA, allows employees to deduct money from their paycheck for the purpose of paying certain expenses with pre-tax dollars. Typically, the money goes to cover medical and child-care costs.
The pre-tax deductions build up in the FSA and are then removed for items such as health insurance co-pays, over-the-counter drug purchases or uninsured treatments. Some companies limit employee contributions, and the contributions are set aside on a “use it or lose it” basis, so that if a worker overestimates medical costs for the year and sets aside more than necessary, the extra funds are lost.
Counteracting that drawback, recent federal rule changes give participants up to two months and 15 days after the end of their benefit year to claim reimbursement. (Under the old rules, workers had 30 days after treatment to make claims on the account.)
