The biggest news this week is all about the traps and pitfalls awaiting consumers when it comes to student loans, identity theft and payday loans.
Student debt expert Mitchell Weiss has received a lot of requests from readers who are struggling to work with student loan collection companies in finding a way to pay down their balances.
In this article, Weiss explains that the collection companies hired by student loan originators are more apt to put borrowers into loan “fixes” that actually can hurt the borrower in the long run. He warns consumers to make sure they don’t sign up for a loan modification that allows the loan to become negatively amortized, thus adding to the balance of the loan in the long run, while lowering payments in the short term.
A new TransUnion study shows that many Americans are becoming fearful about how much information they have given to social media sites, but that isn’t necessarily stopping them from sharing that information.
The study, which found that 45.4% of respondents fear social media as a way for identity thieves to compromise their identity, also showed that 35% of respondents have shared their birthdate, address, employer information or phone number. All of these small pieces of information can be patched together to help identity thieves hack your accounts and steal your identity. TransUnion suggests making sure you double-check your privacy settings on social networks and make sure you don’t allow any public computers you’re using to save your passwords or login information.
The Consumer Financial Protection Bureau conducted an in-depth study on payday and deposit-advance loans, finding that consumers who take out these loans have significant trouble repaying them, instead becoming trapped in a debt cycle.
While these findings are in line with other recent studies of the payday loan industry, the government agency’s evaluation puts some weight behind what many financial experts have been saying for years. One of the most shocking stats from the study showed that after interest and fees, the APR on some of these loans was close to 400%.
Image: NS Newsflash, via Flickr