I was 17.5 when I graduated from high school and I had plans to head to college in New Hampshire. Over the summer I had a work-study job there and it felt great to be working. I could pay my tuition and I had some money in my pocket.
I wanted to save my money to pay for things like clothes and transportation to get back to New York to see my family. So I went to the bank to open an account. With a bank account, I thought I'd have a safe place to save my money and wouldn't be as tempted to spend it.
I didn't know anything about what it meant to have a bank account, or that it would be so complicated and tricky. The representative at the bank didn't really break it down for me. She just told me to be careful about going into overdraft.
I didn't know what she was talking about; I just thought that having a bank account meant I could have a debit card. To me, a debit card represented freedom and independence. It would show I could be responsible without relying on someone else.
I completed the application to get a bank account, which included both a checking and a savings account. I ordered a checkbook and paid extra for cute Mickey Mouse checks. They also gave me a green debit card. I was ecstatic that it was green because not only was green one of my favorite colors but also it represents money.
I Was Ignorant
The problem was, I wasn't paying attention to the fact that it was a debit card, not a credit card. I didn't understand that a debit card meant every time I swiped it to pay for something, the money came right out of my checking account. I didn't understand that if there wasn't enough money in my account to cover my purchases, the account would go into overdraft, meaning I'd owe money to the bank and would have to pay penalty fees.
I didn't pay any attention when the bank teller told me that if I had a negative balance (spent more money than was in my account), I'd have to pay it off. If I didn't, the bank would report me to a collection agency. I only thought about using the card to get points and rewards (every time I bought something, I'd get points toward free prizes).
After I received the debit card, I let my mother know about it. She wanted me to be independent, but she warned me to be careful.
"Chimore, you need to be practical with your money. Because if you don't you will have problems for years," my mom explained to me.
"Yeah, I know already," I replied, trying not to hear a lecture from her.
"For example, you shouldn't have bought that Mickey Mouse checkbook, you should've got plain checks for free."
"Mom, it's my money and I can do what I want with it. If I get a negative balance or waste my money on nonsense, let it affect me," I sassed at her.
I didn't want my mother to say anything else on the matter, so I changed the subject. I wanted to be independent and I wanted her to know that I wasn't a little girl anymore; I could handle my business on my own. The truth was I didn't actually know how to handle my business, but I didn't realize that until it was too late.
Since I hadn't looked at the monthly statement the bank sent me, I didn't notice that almost every time I used my debit card, they added a fee. Every time I used an ATM at a store, I'd get a $1-$3 fee. When I withdrew money from a bank other than my own, they'd charge another fee—sometimes as much as $5.
After two months, my mother's prophecy was true. I wasn't being practical and I ended up having a negative balance of $98.00. I couldn't believe it. I was pissed off, wondering how it had happened.
I finally looked over my monthly bank statement. Between all the fees, my Mickey Mouse checkbook, and the money I spent on my Metrocard, my account had gone into overdraft. It hadn't taken long at all. I didn't keep on top of my balance like I was supposed to, so those fees kept crawling in on my account like a snake ready to catch its prey.
I hated the thought that my mother would look at me like I was a child. I knew I had to fix this problem, so I called one of the representatives from the bank. She gave me another shock: My account had been closed because I hadn't paid off the negative balance. I didn't get any warning call. If they sent me a letter, I never got it. To make matters worse, the bank had already reported me to a collection agency.
Things weren't going well for me. I had to leave college in New Hampshire and go back to New York. I lived once again at my foster mother's house. And since I didn't have a job, trying to pay off the bill was difficult. I tried job hunting but I couldn't find anything.
Paying It Off, Little by Little
The collection agency offered me a payment plan to pay off my debt little by little. But since I wasn't working, this didn't help much. My only income was my foster care allowance and stipend—$100 a month. That was for clothes, hygienic items such as soap and deodorant, and other miscellaneous things.
But I really wanted to pay off my debt, so I started tutoring and babysitting. I was able to start paying the collection agency $10 a month, but even that was difficult. I needed to start saving money for transportation to get back and forth to school.
I told my foster mother that she should increase my allowance because the money she was giving me every month wasn't enough. I thought that was fair since I always do my chores. She agreed, and this helped motivate me to make money my responsibility.
Little by little, I paid off the debt, and I have learned my lesson about bank accounts and debit cards. Yes, it's your own money and you can do what you want with it. But I also have learned that being independent means being able to manage your money carefully and not buy a lot of things that you don't need. It also means educating yourself about the way banks work and knowing what you're getting into before you open an account.
I still keep my green debit card in a special box to remind me about being responsible with my money and not spending it on foolish things.
Shopping for a Bank: Things to Look for
When I opened my first bank account, I didn't ask a lot of questions, and that helped me end up in a big financial mess. You need to know what kind of bank is best for you and understand the pros and cons of opening an account at that bank.
Five Things to Ask Before Opening an Account
Just because you go in to talk to a bank representative about opening an account doesn't mean you have to open one at that particular bank. Here are some questions you should ask: