Big Box Stores Offer Quick And Easy Financial Services, But Experts Urge Caution
NEW YORK (CBSNewYork) -- Toilet paper, bottled water, and enough laundry detergent for a year; it seems like you can find anything at your favorite big box store. And now you can also find mortgages, insurance, and small business loans during a warehouse shopping trip.
"The difference that we've seen financially in our mortgage has been about $200 a month," Lilly Neubauer told CBS 2's Dana Tyler.
Neubauer refinanced her mortgage at Costco, for a much lower rate than at the bank.
There was a time when shopping for groceries, clothing, medicine, and taking care of banking meant four different stops. Now everything, including a slew of financial services, is available under one roof. Stores like Costco, Walmart, Sam's Club, and Home Depot are all getting in on the action.
"Consumers are drawn to the simplicity of a transaction that in previous products there was much more of a barrier to entry," explained Tom Feltner of the Consumer Federation of America.
Sam's Club offers small business loans to customers who do not qualify for traditional bank loans.
"We've had over 1,000 members qualify. The average loan size is around $11,000, so that's putting over $11 million into the hands of small businesses that otherwise would not have had," said Sam's Club Spokesperson Catherine Corley.
Home Depot offers personal project loans of up to $40,000.
"We have a lot of people that come in and want to do kitchen remodels, need a new roof, need a new bathroom. The project loan allows them the opportunity to finance that project," said Brandon Haynes.
Experts urge caution when shopping at a big box store.
"It's important for consumers to look at their own household balance sheet to determine whether or not these products are going to make sense for them," Feltner said.
Consumer advocates told CBS 2 that it is best to avoid rushing to sign up for any kind of financial service.
"They're targeting customers who are looking to complete transactions very quickly and at the point of sale, and I think in many ways that puts the onus on the consumer to make sure that they're getting the best deal," Feltner explained.
Before committing to anything, experts recommend shopping around and understanding terms, conditions, premiums, interest rates, closing costs, and general fees associated with the transaction.
Have you taken care of your finances at a big box store? How was the experience? Let us know in our comments section below...
