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April 01, 2019 | By: Sandra Sherk

Top 7 Ways People Foolishly Give their Money Away

Money Management | Consumer Protection

As a certified Credit Counsellor working for a non-profit credit counselling agency, I’ve become somewhat of a consumer watchdog. I see first-hand the difficulties people face as they deal with unmanageable debt, when they’ve fallen victim to a payday loan cycle, or worse, when they’ve been scammed out of their money. Here are some of the different ways people give their money away unnecessarily. The good news is sometimes it just takes a little re-education to become more aware and stop any money missteps in their tracks.  

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CRA scams

There are many scams to watch out for, but some of the more infuriating involve the Canada Revenue Agency (CRA). The way it typically works is you get a call saying you owe money to the CRA and you need to pay the balance now or you will be arrested. The twist? They want to be repaid in iTunes cards and Bitcoin. Hang up and avoid being fooled into paying them by purchasing these items. 

Lottery scams

Credit Canada’s Education Department runs all kinds of free money management workshops for community groups and organizations, from Surviving Tough Times to Money and Budgeting 101. One participant at a workshop I did on fraud said his wife got a call saying she had won a lottery. To claim the funds all she had to do was provide her banking information. She did. Before she could tell her husband about the “win” her bank account had been cleaned out.

Interest charges

Credit cards can be easy to use and you only have to pay a small minimum payment every single month. However, making that small payment could take ten-plus years to repay the balance and you will have paid a lot of money in interest charges. Some experts say that if you carry a balance on your credit card, you could be paying as much as 50 per cent more for the items you purchased. Expert Tip: Increase your monthly payments and pay off the balance in full as quickly as you can to avoid credit card debt.

High-interest loans

I had a client who said he had found a car that he really, really wanted. Unfortunately, he couldn’t get a bank loan due to his credit rating and a low credit score, so he went to a lender that said they would approve anyone. After signing the loan agreement and making the payments for a few months, he realized he would be paying more in interest than he paid for the car due to the high interest rate. He said the company made him feel like a fool and that it was an expensive lesson to learn.

Credit repair scams

Credit repair scams are all the rage nowadays. An online ad or an ad at the back of the newspaper will say you can improve your credit rating and credit score quick and easy by signing up for credit repair. What ends up happening? You pay thousands of dollars towards a fake loan you never get, with the hopes that it will show up positively on your credit report but the negative ratings for your other accounts are still on your credit report. What's worse? If you stop paying for this fake loan, they will actually further damage your credit score and credit rating. 

Signing unfinished agreements or documents

The salesman says all you have to do is sign at the bottom of the agreement and he will fill in the blanks later. Never sign an agreement, document or contract with blanks. Your signature legally binds you to any contract you sign, whether the sheet was blank or not when you signed it. So don’t sign anything— not even a blank sheet of paper— before you know the full implications of what you are getting yourself into. And make sure you understand everything BEFORE you sign at the bottom. This includes credit card contracts. Don’t sign a credit contract until you have read it and understood it completely. If you don’t understand something, ask questions until you are satisfied.

Mindless spending

At a recent high school presentation, we talked about "money gobblers" and discussed how little purchases can quickly add up. A young man came up to me after and said he just figured out that he had spent $279 since January on lunches and snacks. He was flabbergasted. He said he would start to bring his lunches from home starting the very next day. Use our Budget Calculator to discover other unnecessary spending that could be gobbling up your money and future goals. 

Get free expert help with your debt and money

No one wants to lose or waste their money. By taking control of your finances you can protect yourself and your finances. If you need help with this, one of our certified credit counsellors can assist you. Give us a call at 1.800.267.2272 and we'll book you a free counselling session. It's 100% free, confidential and non-judgmental – Credit Canada is a judgement-free zone! 

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