Keeping Credit and Cash Seperate

When I worked in banking, we had many great customers. Part of our strategy was to grow our customer relationship to cover all of the customer’s banking needs. These primarily included checking and savings accounts, credit cards, and loans.

When a customer paid their loans and credit cards on time and managed their finances responsibly, the customer generally needed little attention and things went smoothly. However, a customer that did not pay their loans and credit cards on time took more effort and things did not always go so smoothly.

People who are bad at paying their credit card on time make the bank more money than people who pay off in full every month. The interest and fees add up quickly. These customers are generally profitable even if things end in a write off. Even though a customer is profitable, the bank will be relentless to collect the money. They do deserve the collection. I am on the side of banks on that part. If you can’t afford something do not buy it.

Even though I am on the side of the bank, I will give you a tip. Do not have your direct deposit going into a bank account at a bank that you owe money to. If you are not paying your credit card and you get a direct deposit, the bank has the right to garnish your paycheck to pay off the outstanding debt.

If you stop paying your loan and you get a regular deposit into that bank, the bank can take the deposit and apply it to your loan without asking first. There are terms in your loan agreement that allow the bank to do that.

How can you deal with this? First, pay your bills! This has never come up with the vast majority of people who pay their bills on time. Second, keep your bank accounts and your debt separate. It might make things easier for you in the future.