The Exchange | Your children are not ATMs - Financial experts lament young professionals falling into debt trap because of parents
As banks jockey for position to put cash and credit in the hands of more Jamaicans, there is a warning from financial experts to university graduates that there is a serious risk of falling into a debt trap, especially if they are being manipulated by their parents.
The Bank of Jamaica has cut its signature key policy rate by 50 basis points from 1.25 per cent to 0.75 per cent, a signal to commercial banks to lend more and provide increased credit, in turn stimulating the economy, rather than depending too heavily on interest earned at the central bank.
Some banks have followed suit and have begun offering credit on terms that are almost irresistible.
“Getting access to money is easy. When you have individuals that need money – we recognise what the median salary is in Jamaica – so you recognise people can’t have money or they don’t have it the way they want to, they will go to a financial institution: microfinance, credit union or bank and because the need is there, they don’t read and they don’t think. So, everything goes out the window,” Gail Dixon, managing director at Paradigm Capital, said as she sought to explain how easy it was for persons to get trapped.
The issue was being discussed at the latest edition of The Exchange, held last week at the University of the West Indies Regional Headquarters.
There was a particular warning to recent graduates and children wanting to please their parents.
“They are persons who, they were the first in their family to graduate from university and they feel obligated, they feel guilty to the rest of the family that didn’t make it. So, they in a sense become the family ATM.
“So, they give, even though it hurts, so all of a sudden to pay their own bills, they go and borrow. In many cases, they are being manipulated. Remember the case of the X-Factor winner and his mom who basically said he owed her a big house?” financial coach Dennise Williams cautioned.