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Quick-Fix Cash Schemes Find More Takers

Reverse mortgages, insurance buyouts among risky moves

By Kevin Spak,  Newser Staff

Posted Jun 2, 2008 10:21 AM CDT
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(Newser) – Big banks aren’t the only ones struggling to find the cash to keep going. Americans are feeling the pinch, and grabbing cash anywhere they can find it, the Wall Street Journal reports. Credit-card debts remains high, but more are turning to options that bring a quick infusion of cash but have high costs down the road, like reverse mortgages or life-insurance buyouts.

“You don’t want to do these things unless you absolutely have to,” one expert said. Life-insurance policies typically sell for just 20% of face value, and reverse mortgages come with huge fees. Pulling money from 401(k)s is safer, but robs consumers of compound gains. Still, as one debt attorney said, “Why plan for retirement if you can’t make it today?”

Fast cash schemes may look like easy money, but in reality they're usually more expensive than traditional borrowing.
Fast cash schemes may look like easy money, but in reality they're usually more expensive than traditional borrowing.   (Shutterstock)
Money has been so tight that real spending isn't growing - something not seen since the 90s recession.
Money has been so tight that real spending isn't growing - something not seen since the 90s recession.   (Shutterstock)
Americans are trying to eke out every penny of cash, and sometimes paying a premium to do it.
Americans are trying to eke out every penny of cash, and sometimes paying a premium to do it.   (Shutterstock)
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Money • US

 
personal finance • debt • 401k • consumer debt • life insurance • cash flow • reverse mortgage

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