Dining out on debt, courtesy of our banks.
by Fred on 20/12/06 at 2:32 pm
8 comments
Debt is an unavoidable fact of life. The way we manage it is often key to success in running our businesses. I, personally, have come to hate any form of debt, so a big part of my plan for World Wide Creative is to get out of whatever debt we have accrued over the years. Late last night I was watching Oprah (yep, I’m a big fan!), and she was helping some ordinary families in the States get out of debt – check out the ‘Great American Debt Diet’. The pain that these guys are going through is palpable.
Scary stuff, yet we don’t hesitate to think about phoning the banks to extend our overdrafts. ‘What about running costs!’ I hear you say. Well, I’m not so sure how to answer all the questions, but I do know that I get seriously hacked off when I receive something creepy like this (click on the pic on the left) in the post.
This is a brochure from ABSA asking me to get their credit card. It weirdly plays on all the wrong emotions: ‘Sorry we can’t have your favourite meal on our anniversary…’ Read between the lines and stuff like ‘Get the purchasing power you deserve’ really means: ‘If you don’t know that this is the most expensive debt available, then please fill out the form on the back!’ When South Africa is reeling from credit card and consumer shopping account debt, this is the last thing we should be receiving at Christmas time. My domestic worker didn’t even know that you are charged interest on her ‘Get it on credit’ shopping accounts. Aye caramba…
Message to all small businesses out there next year: Stay away from debt. Asseblief. With love from Ideate.
Fred Roed is the marketing guy in the Ideate crew. He runs a web marketing company called World Wide Creative and loves writing about people out there doing marketing right. View more articles by Fred.
Henre
Dec 20th, 2006
It’s bad enough that we have have catchy phrases and half truth promises from product vendors in general. But society is a sad case when the Financial Institutions start sending random credit cards for every Tom Dick and Harry. What saddens me is that these are the guys that help you make the right financial decisions and then resort to these tactics to catch the next guy.
It’s all about making money I guess, but please then stop the bullsh*t of “Today, Tomorrow, Together”.
I think it’s time consumers start treating banks in the same manner as we do those telemarketers who obtain our cell phone number from Vodacom (yeah, thanks for that too by the way) and invade our time with useless sales pitches. Because frankly, ABSA and co, that is what you’ve become. You’ve lost my trust as a financial institute I can rely on for sound financial advice, because you have to question motives when this sort of thing happens.
Andrew
Dec 20th, 2006
I’m not an economist, but my undestanding from listening to the radio is that Governer Mboweni keeps upping the interest rates because inflation is rising. The desired outcome is that debt becomes too “painful”, we spend less on credit, and interest is kept in check.
However, as Fred rightly says, the poorest don’t understand debt and interest anyway, so they will probably just get more hurt. The only debt I have is against my house, which I am now paying an extra few hundred rand a month on. I feel like one of those innocent bystanders that gets shot during a crime.
Karin
Dec 20th, 2006
“Stay away from debt. Asseblief.”
Dankjewel
I know banks and other financial institutes are making it very easy for most people to get into debt, but…
what about own responsibility? Or is that still down to not enough financial education in schools, universities, parents etc?
I was brought up with the ‘usual’ piggy-bank all my schoolmates had and was made to put half of my pocket money into it to save for all the extra toys (books in my case) I wanted.
And, yes as a small, starting and growing business we have debt also (as little as possilbe and paid back as soon as possible) and it is kept under close guard and scrutinity by our financial cornerstone (me).
Fred
Dec 22nd, 2006
Funny enough, since writing this article, I’[ve become acutely aware of how the banks have started going into overdrive targeting the poor in South Africa. Yesterday I went to Cavendish Square in Cape Town, where half of Cape Town’s shoppers are going to shop, and there was a makeshift table on the pavement on one of the back-roads leading away from the centre. Nedbank had (unbelievably) put up a sign saying something like: ‘Make those dreams come true. Take out an overdraft right now!’
There was a queue of people signing up. Believe me when I say that the people who were waiting for their overdraft did not look like people who could afford to be in debt.
The sad truth is that debt pays the banks well. It is a shortsighted reality. If they really wanted to be profitable over the long term, they should be putting up tables on the street handing out brochures entitled: ‘Get out of debt. Here’s how!’
Getting people in the clear should be a priority.
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