Finances FYI Presented by JPMorgan Chase
Making wise financial decisions is not always easy, especially when you’re just starting out and forging your path.
Factors such as inexperience, impulsivity, FOMO, YOLO, a lack of knowledge, and failing to consider the future can lead to financial regrets for people of all ages. And you’re not alone if you have some.
Here are some financial choices people regret. Hopefully, you can steer clear and choose a better alternative.
Co-signing on a Loan
Co-signing on a loan for a friend or family member is understandable, especially if it’s for a valid reason.
However, putting your own credit at risk for your BFF to finance a dream European vacation and then having to cover the payments because they are short on funds is not a good idea.
Co-signing can have dire consequences if the primary borrower doesn’t make timely payments.
As a co-signer, you assume legal responsibility for the debt. It shows up on your credit report, and your own credit score can be impacted by the primary borrower’s payment history (good or bad).
Additionally, the debt can increase your debt-to-income ratio and potentially damage your relationship with the borrower if they miss payments.
Better Alternatives
Declining to co-sign altogether might be the best option to avoid financial risk and future trouble.
If you still want to help a loved one, consider lending them money from your own savings, taking out a loan in just your name (only if you can afford it), or providing collateral for the loan instead of co-signing.
Opening Too Many Store Credit Cards
Many retail stores offer their own credit cards to customers, enticing them with irresistible perks such as future in-store cash, card purchase discounts and coupons, exclusive sales, rewards points, and more.
Tossing stuff in your cart in the name of saving money is fun — and even okay, right? If card members buy two packs of socks, they get one free. So, get swiping! Wait — please don’t.
Opening too many store credit card accounts, racking up debt just to save 20% with a coupon, or making needless purchases to use store cash can negatively impact your credit score and your wallet.
Maxing out cards to get special store savings or earn “insider rewards” is something you’ll regret when high interest rates eat into the payments you make, and your fantastic savings disappear.
Better Alternatives
In many cases, a rewards VISA or Mastercard offers higher credit limits, a lower interest rate, and a guaranteed cash back percentage everywhere you shop.
The next time the cashier asks if you want to apply for their store card, just say no!
Getting Car Financing at the Dealership
For many car buyers, filling out the finance application at the car dealership is a palm-sweating, heart-racing experience. Then there’s the waiting for a credit decision with your fate hanging in the balance. Cue the music playing in the final round of Jeopardy.
Will you win or lose? And if they say “yes,” what is that shiny new car really going to cost you, factoring in interest and an aftermarket extended warranty?
The thing is, financing a car at the dealership can be stressful and is not always the best choice. Some dealerships shop your loan to multiple partners, with varying interest rates, potentially triggering multiple credit inquiries for a single application — all of which can impact your credit score.
Better Alternatives
Getting preapproved at your own bank or credit union and knowing what you qualify for in advance can relieve stress, ease worry, and even put you in a better position to negotiate.
It also eliminates surprises about your credit profile and the pressure the finance department may put on you to accept higher interest rates that will increase your monthly payment and get you into a car you really can’t afford, which you will likely regret.
Also, waiting to save for a down payment or reduce debt to improve your credit score and lower your car payments might be good options if you don’t need a car right away.
Putting Off Saving for Retirement
Whether you enjoy living in the moment (YOLO!), have a fear of missing out (FOMO), or can’t resist the urge to splurge on VIP concert seats or that spontaneous trip to a dude ranch in Montana, spending what you have now without saving for retirement can be a huge financial mistake.
In fact, it’s the most common financial regret U.S. adults reported in a 2024 Bankrate survey — 22% of respondents said they wish they’d started saving for retirement earlier. Older generations (ages 44-59 and ages 60-78) cited this regret, while younger generations regretted not saving enough for emergency expenses.
Credit card debt, student loan debt, rent, utilities, and entertainment and lifestyle expenses may prevent people of all ages from saving for the future.
The adage that time flies faster than you think is true.
Better Alternative
Save as early as you can, as much as you can, and as often as you can. That’s the sage advice. And if you’re unsure how to do that, consult a professional advisor to get your retirement savings portfolio growing ASAP.
You make financial mistakes every day. Learning from them and making better choices will bode well for your financial future.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
