4. Dangerous Products

How to recognize risky financial products, avoid harmful traps, and make safer, smarter decisions.

Not all financial products are designed to help consumers.
Some are complex, overly expensive, or built in ways that transfer risk toward the consumer and away from the company selling them.

Understanding dangerous financial products helps students know what to avoid — and why many people experience financial stress even when they earn enough money.

The goal is not fear.
The goal is awareness.

What Makes a Financial Product “Dangerous”?

A product becomes dangerous when it:

• is hard to understand

• has high or hidden fees

• encourages impulse decisions

• locks people into long commitments

• uses persuasive marketing

• transfers risk to the consumer

• causes long-term financial harm

• sounds too good to be true

Dangerous products often look attractive at first — but become costly later.

The Most Common Dangerous Products

This curriculum focuses on awareness, not judgment.
These products often appear in everyday life, so understanding them helps students make informed choices.

1. Payday Loans

Short-term loans with extremely high fees and interest rates.

Problems:

• very high APRs

• quick repayment timelines

• can trap people in repeat borrowing

• often targeted at financially stressed individuals

Payday loans solve short-term problems at long-term cost.

2. High-Interest Credit Cards

Credit cards are useful tools — when used responsibly.
But some have very high interest rates or penalty structures.

Problems:

• interest charges grow quickly

• missed payments lead to fees

• balances can snowball

• people may spend more than intended

Credit cards are helpful only when balances are paid on time.

3. Rent-to-Own Programs

Programs that allow people to “rent” furniture, electronics, or appliances and eventually own them.

Problems:

• extremely high effective costs

• long payment periods

• products end up costing far more than retail

• defaults result in losing the item

They trade short-term convenience for long-term expense.

4. Extended Warranties (Most, Not All)

Warranties added to electronics, appliances, or vehicles.

Problems:

• often unnecessary

• expensive relative to the item

• coverage exclusions

• low likelihood of use

Some warranties are valuable — but many are sold aggressively without real need.

5. Complex or High-Fee Investment Products

These include:

• high-fee mutual funds

• variable annuities

• complicated insurance-investment hybrids

• structured products

• speculative crypto tokens

• trading “systems” or “signals”

Problems:

• difficult to understand

• expensive

• often underperform simple index funds

• sometimes marketed aggressively to beginners

If someone cannot clearly explain how an investment works, it is wise to avoid it.

6. Buy Now, Pay Later (BNPL)

Apps that allow people to split purchases into multiple payments.

Problems:

• encourages overspending

• multiple BNPL plans become hard to track

• late fees accumulate

• purchases feel cheaper than they are

BNPL is convenient — but can reduce financial control if used frequently.

7. High-Pressure Sales Products

Any financial product that involves urgency, pressure, or emotional appeals can be risky.

Examples:

• timeshares

• door-to-door sales

• “limited time” offers

• investment pitches relying on fear or hype

High pressure often signals that the product is not strong enough to sell itself.

8. Title Loans

Loans that use a vehicle as collateral.

Problems:

• very high interest

• risk of losing the vehicle

• aggressive repayment terms

Loss of transportation can create serious financial hardship.

9. For-Profit Schools With Low Value

Some educational programs charge high tuition but offer:

• low graduation rates

• poor job outcomes

• misleading claims

• high student debt without corresponding earnings

Education is powerful — but only when the program provides real value.

Warning Signs of a Dangerous Product

Teach students to look for these red flags:

• “guaranteed” returns

• unclear fees

• emotional pressure

• extremely high interest

• urgency (“You must act today”)

• long contracts

• complicated terms

• difficulty finding negative reviews

• salespeople avoiding direct answers

• something that feels “off” or too good to be true

If a product sounds exciting but confusing, the safest choice is to pause.

Why People Get Pulled Into Dangerous Products

People fall into traps because of:

• urgent financial needs

• persuasive marketing

• lack of information

• emotional decision-making

• wanting a quick solution

• social pressure

• overconfidence or optimism

Good financial literacy reduces vulnerability.

Safer Alternatives to Dangerous Products

Instead of payday loans →

emergency fund, credit union loan, payment plan with provider.

Instead of high-fee investment products →

low-cost index funds.

Instead of rent-to-own →

saving ahead, buying used, cost-sharing within a household.

Instead of BNPL overuse →

planned budgeting and delayed purchases.

Instead of high-interest credit cards →

paying balances in full or using debit.

Instead of high-pressure sales →

comparing multiple options and cooling-off periods.

How Students Should Think About Dangerous Products

They should ask:

• “Is this product helping me or helping the company?”

• “What is the total cost over time?”

• “Am I being pressured?”

• “Do I understand how this works?”

• “Is there a simpler, cheaper alternative?”

These questions build lifelong financial protection.

The Core Message

Dangerous financial products often solve short-term problems at long-term cost.
Awareness, patience, and understanding help people avoid traps and build a strong financial life.