Master Your Card

As someone who has been in the industry, I have to say there are times when we do fail. However, having said that, there are times when customers just don’t want to hear what we’re telling them. It’s part of human nature, really. No one likes to hear bad news and so very often we hear only the things that we want to hear.

But now, with the economy the way it is and the fact that American’s have racked up $951.7 billion in credit card debt, the banking industry is getting blamed for a lot of what is going on. Our education programs are insincere. Our efforts are only to help those with money. Our only concern is making more money for the stockholders. You get the idea.

Admittedly, some of the larger banks tend to be very numbers-oriented. Remember, a large bank has stockholders that they have to answer to, so if the bank is underperforming that becomes a serious problem. However, for all of their faults, banks do try to initiate programs. Every bank that I’ve worked for has tried to go into the local high schools and set-up a Banking 101 course. When that didn’t work, we offered to go during homeroom classes and teach the students. We were told that it was the parent’s responsibility to educate their children in these matters. That’s all fine and dandy but there are plenty of adults out there who could use these courses. We’ve also tried holding luncheons and after-hours events, offering prizes and free food to get people to come. Not many showed up.

So, my point to all of this is that while banks are under fire for not taking the opportunity to educate people about their accounts, we all must understand that at some point consumers have to take responsibility for their own education. Consumers should be concerned with their financial situation and willing to learn how they can help themselves. Banks and credit unions are a great resource to this end. Bankers are knowledgeable about finding ways to help consumers meet their financial goals. Taking 15-30 minutes out of your day to go over your financial picture may take years of stress out of your life.

Now, I’ve said it before but it’s worth repeating, there really should be Banking 101 classes offered in high school. If I knew then what I know now, I probably wouldn’t have made such a mess of my credit at 18 as I did. It took a lot of time and persistence to fix my credit because neither my parents nor my high school offered any education on how to do banking. I had no clue. And I can tell you, I wasn’t alone then and I wouldn’t be alone today.

For the parents

What kinds of things can I be teaching my kids?

Well, let’s start with the basics.

1.) Explain what a checking account is. Most banks will allow minors to open checking accounts as long as there is a responsible adult on the account (some may only allow a savings, so call ahead that way you know). Take your child down to the bank and let them open an account for themselves. This will instill in your children at a young age how to manage their money. Plus, it makes them feel good to have an account of their own, which I’ve found to be a great boost of confidence for kids.

2.) Teach them to balance a checkbook. Now, if they’re under 18 the bank isn’t going to allow them to have checks; however, you may be able to get an ATM card or even a debit card. This is actually a much better method of teaching them then checks because there is no carbon copy to fall back on. If they use the debit card, they must write it down or keep the receipt until they have a chance to write it down. Teaching them how to use a register and record their purchases and withdrawals will keep them out of trouble in the future.

3.) Explain overdraft fees and how they work. The reality is that if you spend more money than you have, you’re going to be charged a fee. Sometimes mistakes happen, but having an understanding of how the process works is the first step in preventing misuse of an account later down the line.

4.) Explain credit cards. This is the one I wish I would have known about when I was 18. Most young adults getting their first credit card don’t really understand all of the legal speak in the terms and conditions, and if their parents don’t take the time to explain it, then they’ll never know until there is a problem. Most students getting their first credit card fall victim to the double-cycle billing and it really gets them in trouble. Furthermore, if they don’t have an understanding of how to manage debt, they’re spending could spiral out of control.

5.) Teach them about credit scores and reports and what kind of impact this has later in life. I had a young woman come into the credit union the other day. She was about 19 or so and was looking to get her first credit card. I asked her some questions to see what she knew and she had no idea what a credit score was or what it meant. She’d just been told that a credit card would help her increase her score. So we sat down and I explained it to her, but I’m thinking at 19 she should have understood at least a little something about credit scores. If they don’t know, how are they supposed to make informed decisions when it comes to accepting debt?

These are the most common lessons a young adult needs to know before they venture out on their own. Learning these early on can help prevent missteps in the future. Don’t expect banks and credit unions to be solely responsible for everyone’s education. As I’ve demonstrated, many financial institutions continue to try educating students and parents alike; however, we are often met with flat out resistance.

So, in my opinion, bank and credit union education programs are not the part failing. The problem is getting people sufficiently interested enough to take action. To that end, everyone is just as responsible as the banks and credit unions are.

What are your thoughts? Are banks failing their customers when it comes to education?