Excerpt from: Reuters (click for full article)
If you're strapped for cash or have a poor credit rating, the offer would sound tempting: upfront cash in return for your future pension payments.
But it's a debt trap, according to a recent expose by The New York Times, a "pension advance" loan charging sky-high interest rates. A Times analysis of these deals found effective interest rates ranging from 27 percent to as high as 106 percent.
The companies that market these loans like to target unsuspecting military veterans, teachers, firefighters and police officers.
Pension advances are part of a bigger picture of rising debt burdens carried by a growing number of older Americans in the wake of the Great Recession.
Credit cards pose the most serious threat, with interest rates not much lower than the predatory pension loans - average monthly interest rates ranging from 11 percent to 16 percent, according to Bankrate.com.