Fine Prints Of 6 Common Financial Products
There’s a reason why consumers can be quite cautious when buying financial products. Most of it has to do with the jargon surrounding these products, as well as pages and pages of fine prints that most of us simply can’t be bothered to read. Yet, we know that neglecting the fine prints and not reading into the details can ultimately cost us much, especially when a crisis struck, resulting in an unnecessary loss of huge amounts of money.
Here’s a handy guide to some of the fine prints consumers should look out for in these 5 popular financial products:
Savings Deposit
Many may feel that nothing can go very wrong with your deposits in a bank, but with the array of deposit products coming up, you may want to be aware of the different types of terms and conditions that are tied to them. For instance, if you are looking to cash in on a promotion which rewards you with a cashback for opening a savings account, be sure to look out for the minimum balance required and whether any withdrawal will penalise you.
While local banks are considered very safe in terms of their credit ratings, you should also note that under the deposit insurance scheme, your savings deposit in a member bank is insured only up till $50,000. So it may be a wiser decision to diversify the risk if u have more than that amount of savings into another bank.
Personal Loan
Gone are the days where getting a personal loan from a bank requires a long lead time. These days, if you have a good credit score, you can almost get your loan approval within the day! However, personal loans can be a pretty expensive way of getting credit, and often comes with a few criteria. You should examine these terms and conditions carefully so as to not incur any extra fees of charges. Some common terms of personal loans from banks include:
- minimum loan tenure of at least 12 months
- minimum loan amount
- prepayment penalties
- cancellation fees
- loan origination fees
Credit Cards
Singaporeans love their credit cards; in fact, the average Singaporeans probably has at least 2 of them in their wallets. Lured by the idea of earning rewards, discounts. air miles and cash rebates, most people see little downside in getting more cards, even if they do not use them. While the rewards can be attractive, they are usually laced with lots of conditions that make it pretty difficult to fulfill.
Take for instance, the cash rebates card which remains one of Singaporeans’ favourites. Most of these cards come with a minimum monthly spend and qualifying categories of spending. Unless you are willing to use your mental space to keep track of these, it’s better to look for one that gives you less cash rebates but little of such stringent terms and conditions.
Insurance
Insurance remains a crucial part of life; in fact, insurance exists as a product to mitigate the multiple types of risks we face in our lives. From travel, health to auto insurance, most of us would have taken up some type of insurance policy in our lives. The thing about insurance is that it’s often shrouded in a lot of jargon and because the policies are so thick, most of us don’t bother to check each and every line in detail. One of the most important points about insurance is the exclusion policies that some may neglect. Before you take up any type of insurance, be sure to check out the exclusions and any extra fees and charges that you can incur before any claims. For instance, most people miss out the deductibles and co-insurance when taking up a health insurance, and may find it an unpleasant surprise when an unfortunate incident occurs.
Mortgage Loan
Mortgage loans are one of the most expensive loans you may take in your life, and it is thus rather important to look carefully at the terms and conditions surrounding it. Take for instance, when choosing a loan, you should think about the longer term consequences of signing up for a loan instead of just looking at the promotional rates.
Also, beware of accepting “freebies” from banks, such as waiver of fire insurance or legal fees as you may need to pay these pay if you fail to reach the terms agreed. Look out for prepayment penalties as well as refinancing options as well so that you can balance the pros and cons of each loan.
Investments
When it comes to investments, the first question that comes to mind tends to be the potential returns of the investments. That’s where marketers manipulate the statistics in their marketing collateral in order to present the best investment returns of their products. Other than this, management fees, trading fees and other types of transaction charges can potentially eat into your returns as well.
It’s always a good habit to review your financial products every year so as to keep at the top of how each of them is doing and whether they are still relevant in serving your needs. Doing this also helps you to keep an eye out for costs that may be creeping up and a good time for you to make a comparison with similar or alternative products that can better cater to your needs and circumstances.
