While some media have pushed annuities as bad investments, we know that they do serve a purpose. However, there are many other financial decisions that have far worse repercussions. We will look at two money problems that have caused serious damage for many households over the years: credit card cash advances and advance tax refunds.

Credit card cash advances

This money problem was a nightmare for me personally. I remember the first time that I found out that credit cardholders could pull cash off of their credit cards. At that time, there were still quite a few retailers that did not accept credit cards, so I thought I had hit the jackpot.

I went into a bank to pull the money off of the card. The teller was really nice. She helped me quickly, and I was on my way to do more shopping. I didn’t get the bad news until about two or three weeks later when the bill arrived.

Bad news #1 was that there was a fee to access the cash on the credit card. At the time, the fee was 2% of the amount accessed from the card, or $20, whichever was greater.

I’m sure the teller disclosed that to me during the transaction, but I was probably in a daze and failed to actually interpret what she was saying. So, my $200 cash advance cost me $20 right away. Rather than a 2% fee, that actually worked out to 10% for me. That was not a good start.

Bad news #2 was that the interest rate on a cash advance was higher. For me, it was 22.9%. My regular purchase interest rate was about half of that. So, I was basically double charged. If I consider the access fee of 10%, I was charged about three times the normal interest rate.

Needless to say, I only did that once. Unfortunately, many of us don’t read the fine print in our credit card usage agreements. We also do not analyze our credit card statements to even know if and when something like that is happening.

We need to take special precautions when it comes to the fees we agree to pay. More often than not, the things we choose to spend the money on are not worth the extra cost.

Advance tax refunds

This is another concept meant to take advantage of those in dire straits. I think that we can honestly address this topic by asking ourselves one question: Why should we pay extra to get something that already belongs to us and is already on its way?

We get so caught up in the need for instant gratification. However, we shouldn’t be so eager. Proverbs 28:20 said, “A faithful man will be richly blessed, but one eager to get rich will not go unpunished.” (NIV)

Let’s make a better effort to properly plan for our spending, as well as our tax preparation, so that we do not find ourselves wasting our money on rush services. There are so many better uses for our financial resources.