Save Your Money (And Your Credit Score) by Avoiding These Credit-Related Products


Paying for and using some credit products can be like buying extra car features. If you’re adding paint sealant or fabric protection to your new ride, then you’re probably getting a bad deal.

Or it could be a scam, like when a dealer knowingly sells you a lemon.

But not all credit products are a scam. In fact, many are perfectly legal. They just happen to be a bad deal for you, the consumer, and sometimes your credit score, too.

In the fine print of these bad deals, there could be a wide range of costs. For some of the services listed below, it might be a few bucks a month. But others can put you thousands of dollars in debt. And then there’s the damage to your credit score that you’ll have to restore.

Before you buy into any of the credit services below, beware of what you’re getting into.

1. Credit score monitoring

Many companies, including credit bureaus, offer credit monitoring services. It’s not so much that these companies offer a service that’s a scam. It’s more that it isn’t necessary to pay for this service.

A typical credit score monitoring service may cost about $20 per month. In addition to monitoring your credit report, the service typically includes access to FICO scores, credit alerts, and other updates.

But there’s little reason to pay for this service. You can often get similar credit reports and updates at no cost.

One option for tracking your credit score: Credit Karma. For the impossible-to-beat price of $0, you can track your credit score from one bureau (TransUnion). This free score isn’t a FICO score, but it’s based on the same information and should be similar.

Credit Karma sends you alerts when your score or report changes. And you’ll be able to generate a credit report card to see which areas of your credit need improvement.

When you need to access your credit report, you can get it totally free from This site doesn’t require a credit card, and you can access your report from each of the three bureaus once per 365-day period.

2. Credit repair

While some services aren’t worth it, others are downright scams. Such is the case with many credit repair services, which the Federal Trade Commission warns against.

The cost of these services varies, though losing money likely won’t be your only worry.

The FTC says that not only do some credit repair tactics not work, but they can also be illegal and land you in trouble. These questionable tactics include giving you a new credit identity, which is really just a way of saying illegally using another Social Security number.

Another tactic involves “jamming” credit bureaus with fake dispute reports. Jamming occurs when a credit repair company sends dispute letters to contest legitimate but negative information on your credit report. Jamming also isn’t legal, and even if consumers do get results, they’re likely only temporary.

As for the legitimate, correct information that’s on your credit report that’s hurting your credit score, it’ll simply have to remain there until the time limit expires—typically seven years.

So, how do you know if a service is a scam? On its list of warning signs, the FTC states that scams typically:

  • Ask for money upfront before any work is done
  • Instruct you to use false information on credit applications
  • Tell you to dispute information on your credit report that you know is accurate

Instead of hiring someone to fix your credit, take steps on your own to figure it out. To get started, check out our post on how student loans affect your credit score, which suggests several steps that you can take to take control of your credit score.

3. Store credit cards

You’ve probably been tempted to sign up for credit cards at store registers. After all, you can save up to 25% off on that day’s purchase. But signing up likely isn’t a good idea.

While there are several reasons why signing up for these cards could be a bad idea, it’s rarely good to sign up for these offers on the spot. For one, if you’re looking for a rewards credit card, then the deal might not be good compared to what you can find elsewhere.

Some of these cards may offer free financing, but that’s dangerous. You often have to either pay off the entire balance or owe interest on the entire balance.

For example, if you finance $2,000 on your store credit card but have an outstanding balance of $200 at the end of the 12-month, no-interest promotional period, you’ll have to pay interest on your balance from the entire period, not just the $200 that’s left. This is a bad deal, especially if you’re already struggling to pay off credit card debt.

4. Anything with ‘advance’ or ‘loan’ in the name

Yes, from time to time, you will need loans such as a standard home mortgage and auto loan. But anything else with “loan” in the name should instantly make you skeptical. Why? Few products are worse and more expensive than some of these services.

One example is payday loans. While you might think that credit card interest rates with 24% APR are high, that’s nothing compared to payday loans, which can exceed 300% APR. It’s so bad that the Consumer Financial Protection Bureau (CFPB) says, “Payday and deposit advance loans can become debt traps for consumers.”

Payday loans can lead to a cycle of debt that’s nearly impossible to escape. The CFPB says that nearly half of payday loan borrowers have more than 10 transactions per year. This leads to payday borrowers being in debt for a median of 55 percent of the year.

In fact, payday loans are banned in Georgia, New York, New Jersey, and Arkansas, and eight other states plus the District of Columbia have effectively outlawed payday loans through rate caps.

Lastly, you might have been offered a cash advance on your credit card. Cash advances involve taking cash from an ATM with your credit card or cashing a convenience check. Unlike credit card balances, which are charged interest only if you don’t pay your balance in full, cash advances usually start charging interest as soon as you take them.

There simply aren’t many suitable substitutes to these expensive products that are marketed to consumers who need money fast. Instead of borrowing money, start an emergency fund. That way, if you do need cash fast, then you don’t have to take out a high-interest loan.

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