The $440 Pizza
By Will from Holland
Based on an article by the Elevations Credit Union Team from Boulder, Colorado
One night my friend and I pitched in for pizza.
As always, I was out of cash. So when the pizza came I wrote a check for $13. Life went on...
The next week I got mail from my bank. "Just another financial statement," I thought. I stuck the unopened envelope in my desk drawer along with other bank stuff. Nothing unusual.
Soon I began getting a bunch of mail—more bank statements and stuff from a company called "CheckRight." I dropped the bank stuff in my desk drawer, but the other mail looked like junk, so naturally, I trashed it.
Then I got the call from CheckRight, a collections company hired by the pizza store. The $13 check had bounced.
They said I owed $50 for processing fees. But since I hadn't answered the mail they sent me, that $50 went up to $80 on top of the $13 bounced check.
I called my bank. Sure enough, the check had bounced. To make things worse, the bank had automatically deducted another $25 from my account for a Non-Sufficient Funds (NSF) fee. That adds up to a grand total of $118. What an expensive pizza!
But trouble didn't stop there. Turns out all those bank "statements" were actually more NSF notices. I'd bounced four more checks. Each time a $25 fee was deducted from my account. That's another $100 that I threw away.
Four months later, I finally made things right by paying off the bounced checks. I also balanced my checkbook and set up overdraft protection so this wouldn't happen again. Lesson learned: Keep track of your money and read your bank statements to avoid surprises.
Now, you might think my problems ended there.
But, I still had some surprises coming. Since I let the bounced check problem go on so long, those mistakes went on my credit record.
When I rented a new place for the next school year, the landlord checked my credit. He charged me an extra $20 per month rent because I was a greater credit risk.
When I hooked up the phone and electricity, the companies made me put down a large deposit in case I bounced a check.
When I applied for an auto loan, I got a lousy rate. That low advertised rate is only for people with really good credit.
Even my car insurance company checked my credit. Because of my little problem, they're charging me about $100 more every 6 months.
In one year alone, that $13 bounced check has cost me at least an additional $440.
I used to think "credit" meant "credit card."
But I learned the hard way that your credit record includes much more. Your credit history affects many parts of your life and follows you for a long time.
At least now I know it is important to keep track of my financial situation. It's easy to mess up your credit, but really hard to fix. With just a little more effort things like this can easily be avoided.
My last message:
is there anything in your desk drawer that may need a look? Any bank statements, letters, etc.? You now know what can happen...