I just met the newest slave on the block.
Backpack strapped to his strong
flesh-covered spine, a tall young black man stands before the counter
of his local branch of Fifth Third Bank. In contrast to the quiet
youngster, the bank teller, perhaps not wanting to be accused of her
not doing her job, pours forth financial advice targeted at the ears
of the seemingly young and naive.
It was a joy to eavesdrop on this
one-way afternoon chat. It sounds so familiar. Few years back, I was
standing exactly where that boy now stands, and I was given a similar
lecture. I have the financial scars to prove it.
Obviously, the student has run into a
problem with the bank, and the teller is doing her best to help.
Yes, right!
Fifth Third Bank has slapped the boy
with $33 of overdraft fee for overdrawing his checking account. How
can he avoid that in the future is the solution is very much
interested in finding? That's where his lovely teller comes in with
ready answers, the sort of solution the overdraft fee was designed to
point the young man to anyway. Actually, the student has a few
options, but the teller, as well as I, can predict with nearly 100%
precision which option the boy will pick. Let's not spoil the fun,
though.
Here are the offers he can pick from.
(1) Open a savings account linked up to
his checking account. Whenever his checking account goes negative,
the bank will charge him only $9 instead of $33 for the privilege of
moving funds from his savings to his checking to cover the amount of
the overdraft.
(2) Open a different kind of savings
account or one that keeps a larger balance, and the bank will move
money from the boy's savings to his checking before the overdraft
item comes through. This will cost him no fees. (He should have
selected this option, but...)
(3) "Our best option," says the
teller to the student, "is the Student Master Card, which has a
$500 spending limit."
The teller says the student is likely
to get approved for this card, because of the low $500 credit limit.
She advises him to leave at least a $100 room on the card, so that
when there is another overdraft incident, there will be enough
spending room left on the card to cover the overdraft amount.
By mentioning that $100 breathing room,
the teller has just insinuated that instead of the boy simply keeping
the credit card and using it exclusively for the purpose of overdraft
protection, she expects him to use that Master Card to buy whatever
he wants, within the limit, of course.
"Do you think you'll be interested
in applying for the card?" asks the teller.
The student's eyes lights up. He has
found his money genie that will save him from overdraft fees as well
as allow him to spend some easy money. He grabs the Master Card
application along with a brochure and exits the bank. From the bounce
in his legs and feet, and grin across his chin, I can tell this
students thinks he has just won The Luckiest Dude contest of his
town.
Does he know there are some important
facts the teller leaves out of her persuasive chatter?
Just like a youth bought off the slave
auction block by a smiling slave master, that boy has no clue that
what is now his friendly bank might turn out to be his worst enemy of
his financial chance.
That is how banks, Master Card, Visa, American Express, Discover, and other credit card companies enslave young people to a lifelong habit of borrowing, which almost guarantees they'll live from pay check to pay check.
The boy does not know that the bank
will still charge him an overdraft fee that will be charged to his
wonderful student credit card, in addition to the amount of the
overdraft. He is yet to find out that if he develops the habit of
paying the minimum on his credit card, which is typically a measly 2%
of the balance, the bank will probably start raising his credit limit
above the original $500, thus tempting him to spend more and more on
credit, hoping he'll only continue to lucrative habit of making only
the minimum payment from month to month.
The kid does not realize that the
bank's objective is not what's in the boy's interest, but how the
bank can train this youngster to use credit on a regular basis until
he's hooked and becomes like the rest of us debt slaves on the
plantation run by our credit masters. He's entering boot camp to
become a lifelong credit user, a borrower by career.
Most important of all, this young
student has no idea that he's about to sign up as a source of income
for Fifth Third Bank for years to come. If he proves to be a
dependable source of income for that bank, then other banks and
lenders will soon get his information so that they too can offer him
loan solutions from Visa, American Express, Discover, and the rest of
the credit sharks that make up the lending universe.
He's probably thanking his school
teacher who lectured him and his classmates about how they should
"use credit responsibly", regardless of the fact that none
of the students will ever apply that advice to real life. This is the
credit card the school told him about, and he's not about to prove
that he will be that lone exception to the bunch of students before
him who have used their credit cards irresponsibly.
A word to us parents: We need to start
teaching our children about how important it is to live debt free, particularly freedom from credit card debt. We need to warn our
children about the dangers of swimming with what Dave Ramsey calls
the credit sharks. If we fail, then we need to understand that our
beloved sons and daughters are headed for a financial future that
involves enriching banks and other lending institutions all the days
of their income lives, while robbing themselves of a financial stable place later in life. The credit sharks are determined to hook children before they get out of high school, and to shackle them the moment they step foot on college campus.
This boy is blind to the fact that
though he's no longer a social slave like his black ancestors who
were made slaves against their will, he is choosing to become a
financial slave to his lender. It will probably be tens of thousands
of dollars from him to the banks before he finally wakes up, if he
ever will, that indebtedness has become the new slavery, while banks
along with other lending houses have become the new slave auction
blocks.
Welcome to the plantation, young new
slave. You're in good company. Some of us will die owing our many
slave masters. It's wonderful to have you in the number. As long as
you remember that you are in charge, and that borrowing is all about
buying power, this bondage really won't hurt that much.
