Quick Cash Sources You Should Avoid

Quick cash-you need it, and there are lots of people who are willing to offer it, but how do you know which deals you should avoid? Making the wrong choice can have long-term financial consequences and possibly threaten your home and your relationships.

Do you need cash now?
Before embarking on your quest for quick cash, stop and take a deep breath. What do you need the money for? If you're thinking of taking a vacation or buying something, fast cash is not the answer. Put your desire out of your mind or save up over time to get what you want to buy.

If you're facing a home foreclosure or a loan or credit-card payment is well past due, then your need is legitimate. You don't want to lose your home or your car, but you may be able to work out a payment plan with your creditors. If you're dealing with a collection agency for old debts, don't forget that you have legal rights, despite the high-pressure tactics that some collection agencies will use. They're hoping to scare you so that you won't go to court, where they may wind up with a smaller settlement.

If you need to get quick cash now, here are some sources you want to avoid:

Home equity loans: You've probably heard about all of the reasons home equity loans are great: They're easy to get, they carry low interest rates and they can be tax deductible. But a home equity loan puts your house at risk, and that's never a good thing. If you don't want the bank to end up owning your home, skip the home equity loan. It may seem like a low-risk deal, but you just can't predict what the future will hold.Payday loans: Stores offering payday loans or cash advances are popping up all over the place, but consumers should stay away. These companies may offer to loan you the money that you need to get to your next payday, but it comes at a steep price, and often the contracts are hard to understand. Need proof that these loans are predatory? The US Government passed legislation to limit the amount of interest that these companies can charge to servicemen.

Loans from friends or family: You need money, and a friend or family member offers to lend it to you. Sounds ideal, doesn't it? Maybe so, but it could also be a recipe for disaster. Money can put a strain on a relationship and can sometimes even ruin a relationship completely. Make it a policy to borrow only from a banking institution, and you'll ensure that your friendships remain strong. Most financial advisors would tell your friends and family not to loan you money or even cosign a loan with you, so don't even ask.

Convenience checks: You receive a set of checks with your credit card statement each month, and they seem like the perfect way to settle a bill or two, but they're no bargain. Convenience checks often come with a higher interest rate than what you pay on your card and generally include a one-time "convenience" fee. This fee could be a set amount, say $50 per check, or it could be a percentage of the overall check amount. Either way, it spells extra costs to you.

Making matters worse, credit card companies typically apply your payments to the balance with the lowest interest rate on your card. This means that your convenience check balance will often be the very last thing that gets paid off. In the meantime, you'll continue to pay the high interest rate that applies to that money month after month and perhaps even year after year. Skip the convenience checks, and avoid becoming a slave to your credit card debt.

Cash advances: Credit card companies also allow customers to use their credit cards at ATM machines to withdraw cash. While cash in hand may seem like the best way to handle any money crunch, this feature comes at a price. Expect a hefty interest rate to come with the convenience, and once again you can count on this balance to remain on your card until all others are paid off.

Tax refund loans: Some tax preparers will offer you an "instant" tax refund, but this is actually a loan that can carry an annualized interest rate of 50% or more, as well as hidden administrative fees. In one case, tax preparers offered debit cards that charged a $20 transaction fee every time the card was used. These loans quickly eat away at your refund, and consumer complaints have been so numerous that the IRS is now asking people to report complaints directly to them.

Quick cash sources you can trust
There are some simple ways to get some extra money that won't cost you in the long run.

Use Craigslist: Craigslist is a free online classified service that lets you sell your stuff without paying fees or commissions. Look around the house and see what you've got. Old furniture, exercise equipment and electronics may have some value. Be sure to set realistic prices and to be honest about the condition of your items.

Tap your entertainment collection: Old CDs, DVDs and video games can be turned into cash at a variety of retailers. If you don't use them, sell them. You could have hundreds of dollars sitting in your entertainment center.

Pick up some temp work: Check around with your local temp agencies to see if they have any openings available, or consider a seasonal job.

Tap your talents: Do you have a talent that others consider valuable? If so, put it to work, and enjoy the extra income that follows. Put out the word that you're willing to prepare meals for busy people or that you're looking for a few landscaping jobs or lawns to mow. Whatever your expertise, you're sure to find people who are willing to pay for your services. Spread the word among friends, and consider adding a listing on craigslist.com or in your local newspaper.