10 Consumer Economy Problems That Urgently Need Fixing – Part 1
While we are living in an era that is continuously benefiting from more and more sophisticated financial advancements and transactions, still many people keep falling further behind when it comes to understanding how to use financial products. As a result of this lack of understanding, there is a huge amount of friction between consumers and financial product providers when negotiating and when implementing them.
For consumers, financial products fall short of their promises, while for financial institutions consumer suspicion and distrust impair them to taking full advantage of great financial products, such as personal loans. Things get even worse when the government steps in, since it seems to completely lack an understanding of what consumers actually need.
That said, let’s take a look at the first five of the ten consumer money issues that need urgent correction:
1. Consider your 401(k)s:
While most retirement and investment companies try to constantly remind us that their accounts will be successful if consumers just set aside enough fund to retire, these messages tend to be more on the commercial side. The reason for this is that more than one study on the matter has determined that these investment companies earn by just “managing” retirement accounts regardless of the results they obtain. So, it becomes clear that whether it is for saving for retirement or for acquiring a simple personal loan, investment and other kinds of financial companies need to commit with their customers’ interests better.
Annuities are perhaps one of the most misunderstood concepts among the very people they’re supposed to help. Perhaps one of the ways in which annuities have failed most miserably is in that they fail to target regular people with average sums of money. The so funny-its-sad part about this is that these very customers that are not benefited by annuities crave for a financial instrument like this that can provide them with secure and predictable returns. In fact, they wish they could be part of an annuity even more than they wish to acquire a personal loan.
3. Consumer communications and complex contracts:
This is fairly easy to explain and even easier to relate to. Just ask yourself this question: Have you ever actually read and truly understood even one of the endless documents that come attached to any financial commitment? Most likely you always end up just accepting whatever the their clauses say without giving it a second thought. What is even more annoying is that despite confusing and abusing consumers, financial companies keep congratulating themselves for getting more and more people to sign up for personal loans and such. But the real reason customers sign up for them is that they need them and not because the contracts are clear at all.
4. Controlling your credit cards:
Credit card conditions have definitely improved in the past years, with pro-consumer laws making it actually harder for credit card companies to abuse consumers with unclear and unwarranted fees. However, that doesn’t mean that customers don’t feel like prey for card issuers anymore, with many of them actually preferring to acquire personal loans. In fact, nowadays more than ever the regular customer gets enormous amounts ads from banks urging them to take out more new credit cards. This causes that even if the customer knows fully well how harmful credit card rates and conditions can be, they still can be tempted by need to take one or several new credit cards, making their future financial situation all the worse. What is even more discouraging is that is is far harder to get a personal loan than to get a credit card, despite the former being far more beneficial for the customer.
5. Check your health insurance:
There is really not much to add here. There has been a new health-reform law that is almost universally hard to understand. This of course, does not bode well for a system that was already convoluted. The scary part: If in a few years we actually get state insurance exchanges, mandatory coverage and other insurance measures that are planned for 2014, then things will get so complicated that acquiring a personal loan will seem like child’s play.
Stay tuned for out next article, where we will take a look at the other five things related to consumer money that need to be fixed.