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Consumer Alert:


Consumer Alert: Dangers of a Low Interest Rate Market



Consumer Alert: Dangers of a Low Interest Rate Market
TALLAHASSEE, Fla. (February 27, 2012) – Whether you are trying to protect your savings and want to keep up with inflation, or if you are eager to take advantage of low interest rates for loans, the Florida Office of Financial Regulation (OFR) urges all consumers to be wary in a low interest rate market.
The Federal Reserve announced recently that interest rates are expected to remain low until at least late 2014. Consumers: while this may seem like an opportune time to rush to the bank for new loans, such actions could also lead to over-extending one’s personal finances. Investors: while you may want to find ways to boost return and keep up with inflation rates (that generally currently surpass interest on savings), be cautious about committing to products and investment vehicles that promise higher yields but pose greater risks and could also jeopardize your portfolio or life savings. Floridians should also be wary of outright fraudulent investments.
“Today’s low rates tempt investors to reach for yield, and to take risks they can’t afford. Bad guys know this,” said OFR Commissioner Tom Grady. “If it sounds too good to be true, chances are – it is. Remember, it’s your money and you are the best guardian of your financial future.”
Although all consumers should take precautions, some of those most at-risk include: seniors, individuals who depend on fixed-income investments, and people who are nearing retirement and may be tempted to turn away from their slower growing but safe investments to alternative, riskier investments.
Risk and reward mirror one another. All investments carry a degree of risk. Higher yields mean greater risk; lower yields generally mean lower risk. Consumers and investors should follow these tips before purchasing any financial product:
• Keep a paper trail. Write down your financial needs and goals. Determine which products are suitable for your personal situation. Request written information that fully explains the product. The documentation should contain enough clear and accurate information to allow you or your investment adviser to evaluate and verify the particulars of the investment.
• Be wary of products that sound too good to be true. Does this product guarantee returns? Does the promoter promise “no risk,” “100 percent guaranteed or get your money back,” Or interest rates higher than others? If so, run – don’t walk – the other way.
• Research whether the financial products and people you are dealing with are licensed or registered. Verify credentials; do not fall for “alphabet soup.” Click here to find out whether the person is licensed and registered with the OFR. If they are not, they may be operating illegally.
• Seek a second or third party opinion. Talk to friends and family you trust who have had financial success. Inquire with multiple professionals and find one who listens and understands your needs.
• File a complaint if you have fallen victim to fraud or if you suspect questionable practices. Consumers can call the OFR at (850) Its-Your Money (850-487-9687) or file a complaint online.
For more information, contact the OFR Press Office:
Brittany Perez    
(850) 410-9709
Amy Alexander   
(850) 410-9789
Katie Norris
(850) 410-9826