Academic journal article ABA Banking Journal

This Day Deserves More Credit

Academic journal article ABA Banking Journal

This Day Deserves More Credit

Article excerpt

A NEW YORK CLOTHING STORE chain has for years used the same tagline in its advertising: "At Syms, an educated consumer is our best customer." The education in this case is about the markdown system the discounter uses on nationally recognized brand names. ("Smart customers buy brands for less," in other words.)

It's a clever ad line, but it's also a true statement in a broader context. Even though some businesses prosper by playing upon the ignorance of people--predatory lending being an example in financial services--a company that takes the trouble to educate a customer in how to be a smarter consumer will likely have that customer for life, and generate far more income than it would from a quick hit on a "dumb" customer.

Few bankers would disagree with that, we're sure. Yet the fact is there is a great deal of ignorance about financial matters, and all indications are that the ignorance is growing. And while readers of this magazine may never intentionally exploit that ignorance, in reality people exploit their own ignorance every day by their misuse of common consumer financial products-a leading example being the credit card.

Individual banks have addressed this situation in various ways--booklets, financial counseling, or even, here and there, by discouraging certain customers from having a credit card at all. There are likely many more such examples, and yet the problem remains.

Which is why it seems to us that every bank in the country that does retail business should participate in the program developed by ABA's Education Foundation, called "Get Smart About Credit Day," set for Oct. 21 this year. The program, described in the article on page 14, is the flip-side, if you will, to the foundation's better known, "Teach Children to Save Day. …

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