I was reminded how difficult it is for young people to be able to buy what they NEED without being forced to get into useless debt. Not a single cellphone company was prepared to offer this young lady a cellphone on contract. She had her salary slips, bank statement, ID copy and all the other required documents but still, she could not buy the cellphone she wanted – simply because she has NO debt. She was told to open a clothing store account and then come back at least 3 months later.
I am also aware that some young university students are already drowning in debt because they are given credit cards by banks while they are still studying – in fact, banks sell credit cards in universities. Banks then act surprised why so many people are over indebted and the savings levels are very low. Instead of having a Savings month every July, we should look into the practices that are forcing people to get into debt they do NOT need.
As a former banker myself, I am aware of this sad practice – the question is, why are we allowing this to continue? Is a clothing store account the only means to prove that one can conduct themselves responsibly with credit? As an example, I come across young people who would rather save and invest their money and only get into necessary debt e.g. car loan and home loan when they are ready.
So why are retailers and banks not looking at the savings and investment history as a way to prove financial responsibility? I don’t need to be a psychologist to know that this requirement for people to get into debt to be able to qualify for cellphone contracts, car loans and home loans is a way to get people addicted to buying on credit.The sad truth is that many people end up not qualifying for home loans because they have over extended themselves with expensive short-term debt such as personal loans, credit card debt, hire purchase debt, etc… In a country where over 10,4 million people have an impaired credit record, forcing people to take on debt they do NOT want to qualify for what they want to buy on credit should be criminalised – this is irresponsible and reckless lending.
I will continue to preach to young people to rather save and invest their money than get trapped into debt they don’t need. While this practice continues, my advice to young people is that they must open an account with a store that they have very little interest in e.g. a hardware store, chemist, etc… and go there once in a while and buy globes or some other staff and as soon as they qualify for the cellphone contract or car loan, close the account. I am confident that our young people are not going to get addicted to buying stuff on credit in a hardware shop or a chemist.