Loan Me Your Money or Else!

Dave Ribar recently posted about the prices banks are charging their customers for overdraft protection on their debit cards.  Lemme start off by saying “Guilty!”  Yes, that’s right, even I, Pino, have drifted off the fiscal responsibility fairway and into the rough, perhaps even recently.*  However, I digress.

In Dave’s post he quotes a New York Times report on the subject:

When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully.

So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account…

Reading this it almost sounds as if Peter’s whole involvement and responsibility in what is about to come is that he “turned to his debit card to help him spend his money more carefully.”   In fact, when you continue reading you see that Peter was “stunned” when the bank charged him money for not spending his money more carefully.  [I mean, after all, he DID turn to his debit card!]  See, when it comes to spending money more carefully, you would think that would involve actions that were, well, careful.  Things like:

  1. Reading contracts.
  2. Keeping track of money spent
  3. Keeping track of money not spent

But hey, Peter is a young graduate school student.  Right?  Oops.

Mr. Means, who is 59 and lives in Colorado,

Turns out Peter is 59.  And is still learning how to be careful with his money.  And, it would seem, is still learning about life:

figured employees at his bank, Wells Fargo, would show some mercy…

Now, why would Peter feel that a party to a contract agreed upon by both participants would “show mercy”?  I mean, where would one get this idea that when you agree to do something, you are, well, expected to do that thing?  Ahh, haa, I forgot:

Peter Means returned to graduate school after a career as a civil servant…

It’s because young Peter entered into a life as a government sop.  But surly, certainly, Peter needed the money that he spent on his card knowing all along that his balance was dangerously close to zero.  Right?  No?

He paid $4.14 for a coffee at Starbucks … He got the $6.50 student discount at the movie theater…

Dave follows up on the unfortunate story of poor young Peter with some very good analysis of the business of fees that banks charge to their customers.  The best of which is the acknowledgment that these transactions are, in essence, loans made on the spot , on behalf of the bank, without the explicit knowledge of the bank.  That is, the bank is being depended upon to provide the money on behalf of Peters everywhere without the upfront knowledge of said loan or the ability to DENY that loan.   I mean think of it.  Peter is going to a Starbucks, without money, and purchasing a $4 cup of gourmet coffee.  How many among us would borrow Peter that money?  And how many of us would expect a bank to extend a line of credit to a borrower, with zero money, zero or little income and little if any chance of seeing that loan repaid?

Few.  Maybe none.

So, if Peter really is looking to learn how to spend his money more carefully, perhaps he should appreciate the tender mercies of responsibility.

After all, I am VERY sure that the $238 lesson is far FAR cheaper than the tuition that he is paying for those graduate level classes in whatever it is he is taking.

* My wife and I have an investment account and I use my checking account as a transfer station for my money.  I misjudged once, okay, 6 times, one month and as such, I resonate with the emotions that Peter is struggling with.
** I took that opportunity as a teachable moment and linked my savings account to my debit card–just as Mr. Ribar suggested.

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