Gambling may be the first thing to pop up in your mind when you hear about risking money. Your thinking is justified, since many people around the world, lose thousands and others even millions by betting on sports every year. Some have even become addicted to gambling. Here are a few other ways that you may be gambling with your cash and you haven’t realized it yet.
1. Credit Card Cash Advances
Credit card advances make you lose money especially if you borrow a huge sum and make late payments. It’s not always a wise decision to take an advance. This is because the interest on your cash advance is normally higher than using the same amount to purchase goods. In addition, there is also a transaction fee that you are charged on your credit card advance. At times, the transaction fee can be as much as 5 percent of the credit card cash advance. So if you take a $2000 cash advance, you pay a transfer fee of $100 added to your interest payment. In essence, you are gambling with the idea that you’ll pay back your credit on time.
2. Delaying Repairs
It’s understandable to postpone repairs because you cannot afford them at the time you are required to fix them. However, you may be risking your money depending on the repair. Putting off repairs for too long can strain your financial power later. Consider, your house has a crack on the wall and since it’s a small crack you put it off. After a while, without repair, the crack will extend and damage the entire wall. As a result, it will force you to use more cash to repair the damage than you would have if you repaired earlier.
3. Deferred Interest Payment Plans
Deferred-interest payment plans can be a cash gamble. It’s not a problem when you buy a product using a store credit card, and you pay off the item within the required period. Nonetheless, failing to make payment within that time will make you lose money. Moreover, you will suffer financial damage. Deferred interest plans are only favorable when you are sure of paying them off in time. If you are not sure, then do not gamble with your money.
4. Bank Overdrafts
A bank overdraft is an amount that your bank allows you to withdraw beyond your limit. Compared to deferred interest payments such as store credit card, overdrafts are riskier. First, the lender may call in the overdraft at any time. You also risk losing your business assets since overdrafts are secured against business assets. Moreover, you incur administration fees if you exceed your limit.
Buying a warranty is making a bet and in essence making a bet is simply gambling. When you buy a warranty, you are gambling that your product will get damaged at some point. Essentially, you are reasoning that by spending your cash now, you’ll avoid spending more money later. But if you think your product will break then why bother buying it in the first place?
Gambling with your cash can have adverse effects on your financial status. Be careful when you use deferred payments and other financial tools when spending.