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COMMENT
The four horsemen of the apocalypse (as described in the Book of Revelation, the last book of the New Testament) are usually said to be Famine, Pestilence, War and Death. However, in this supposedly enlightened age, I feel that people should ignore fantastic prophecies about the end of the world, and devote more time to making life more pleasant for themselves and others! And, given that money worries often dominate many people's lives, putting your finances in order can bring a great deal of peace of mind. For example, here are four products that will lead you down the road to ruin, given half a chance. If you want to steer clear of the road to financial Hell, give these four horrors a miss! Store cards (or the Devil's debt) A few years ago, I decided to buy a completely new outfit to wear to a family wedding. So, I visited my local branch of Austin Reed and spent roughly £500 in a single visit. At the same time, I applied for an Austin Reed store card, simply because it offered a first-use discount of 10%. Hence, this new piece of plastic saved me £50 on day one, which was nice. When my first bill arrived, I paid it off in full, in order to avoid paying any interest. Then, for the next few years, my Austin Reed card gathered dust, although I received regular offers and invitations to use it. Eventually, I got around to closing my account and the encouragements to spend stopped. This is probably the best way to use a store card. If you don't pay off your bill in full every time, most store cards will hit you with annual interest rates of between 26% and 31% APR. Given that the Bank of England's base rate is a mere 4.75% a year, these rates are scandalous. You can learn more in The Great Store-Card Swindle! Transfer your expensive store-card debts to a 0% credit card. High-street personal loans Most people are forced to borrow at some point in our lives, often to pay for large one-off purchases, such as a car, dream holiday, home improvements or wedding. However, about three-quarters of us don't shop around for the cheapest deal - we simply stroll down to our local bank branch and hope for the best. By going to your bank for a loan, you're absolutely guaranteed to pay over the odds. Banks know only too well that millions of customers choose products using blind loyalty, so they charge as much as they think we'll put up with when we need to borrow. For example, an unsecured loan of £5,000 over three years, without over-priced payment protection insurance, would cost a total of £5,458 with Best Buy lender Alliance & Leicester (5.9% APR). The same loan from your local branch of Barclays would cost £6,161 (14.9% APR). In other words, your interest bill would be £458 with A&L, but £1,161 with Barclays – over £700 more. Yikes! So, before you take out another loan, read these ten tips on paying less for your loan. We have several Best Buys in our Personal Loan centre. Secured loans Turn to the back of most newspapers and magazines and you'll find page after page filled with adverts for loans. Almost all of these are "secured", which means that they are only available to homeowners. What's more, you could lose your home if you don't keep up repayments on these debts. The only sensible reason that I can think of for taking out a secured loan is to pay for major home improvements. Even then, I'd think twice because, during the course of my work back in the early Nineties, I saw a lot of people lose their homes to second lenders, even though they were paying their main mortgage. In recent years, millions of people have taken out secured loans for far less important reasons, such as to buy cars, holidays or other purchases, or to roll up existing debts. This "mortgage equity withdrawal" hit £55 billion in 2003, and probably exceeded fifty billion pounds last year, or around 7% of our take-home income. Crikey! Although that "affordable, easy, single monthly repayment" may be a joy at first, it will usually turn into a long-term burden. My advice would be to give secured loans the elbow every time! Impaired-credit mortgages (or financial Death) If you're on a low income, or you've had problems with credit in the past, you may find it hard to borrow from conventional high-street lenders. In these circumstances, many people end up replying to ads of this kind: "Got arrears, defaults or CCJs? Need to remortgage? No problem – we can help!". The most truthful part of this ad is missing; it should read, "No problem – we can help finish you off!". Many of the firms involved in "bad credit" mortgages are simply vultures that feed off their financially distressed victims. This is an industry that is littered with huge upfront and broker fees, sky-high interest rates, huge penalties and grossly unfair contracts. If you sign up with one of these lenders, you can kiss goodbye to any hope of future financial freedom. I can barely express my contempt for these firms and their despicable activities, preying on the vulnerable and financially naive. With any luck, the tougher regulatory regime that the Financial Services Authority has introduced will put the majority of these firms out of business! More: Find better borrowing deals in our Credit Card and Personal Loan centres.