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
Fast cash schemes may look like easy money, but in reality they're usually more expensive than traditional borrowing.   (Shutterstock)
camera-icon View 2 more images

(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?” (Read more personal finance stories.)