Banks taking Borrowers for a ride.

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Larry

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Hi all,
Just been noticing the cost of loans credit card Etc .Why is the cost so high when bank rate is on 0.5% .
Nationwide&Halifax want 7.5%on loans&you have borrow 7500 for that any thing under that is around 12%.Credit cards anything from 14% to 39%
.Why when the bank rate is so low.I'm not looking for a loan just noticed their ads for them on their website's.
 

nelson66

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Because they are busy trying to pay off their losses, and strengthen their balance sheets.
Even banks have fixed costs, so the first 2% is costs and then the rest is profit.

Now that the government owns 90% of RBS and 60% of Lloyds and all of Northern Rock they are unlikely to reign in the profit making ability of banks, as the government are now making big profits from the dividends these banks are paying.

However these high rates which banks are charging are nothing more than high street piracy and its the general public who are paying for bankers mistakes. Its unlikely that this bank profiteering is going to change in the near future. Levels of bank capitalisation still have some way to go before their balance sheets will be considered strong.

There are rumours that the government will sell off their stakes in RBS, Northern Rock and LLoyds via maggie thatcher style IPOs to the general public (remember BT, British Gas, Railtrack etc etc from the 1980's). The idea behind this is that it will give the public the opportunity to profit in the government bail out of the banks. However you can bet that the govt wont do this until theyve made and once they do sell off their banking assets, then they will change the law to make banks less profitable.
Unfortunatley the whole thing is about greed. Who is greedier than who, how much you profit you can get away with making.

Its easy to blame the bankers for being greedy, but the general public are just as much to blame as the bankers. We wouldnt be in half the mess we are now if we hadnt voted for de-mutualisation of our building societies a few years back. I wonder how many carpet baggers are now complaining about the state of the banking industry now.
The likes of Halifax, Northern Rock, Bradford& Bingley, Alliance & Leicester,Abbey, TSB etc would all be around now and doing very well if we hadnt voted for demutualisation and a few easy in our back pockets. They used to pay a % of their profits back into the treasury as corporation tax. This tax money is now paid to the spanish govt as Santander own so many of our banking assets. Just makes the hole were in even deeper.

Its easy to point the finger but human greed is human nature.
 

tazz

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They always have and they r allowed 2 get away with it?loan shark comes 2 mind.[;)]
 

zenith20

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Originally posted by Larry

Hi all,
Just been noticing the cost of loans credit card Etc .Why is the cost so high when bank rate is on 0.5% .
Nationwide&Halifax want 7.5%on loans&you have borrow 7500 for that any thing under that is around 12%.Credit cards anything from 14% to 39%
.Why when the bank rate is so low.I'm not looking for a loan just noticed their ads for them on their website's.

Nationwide isn't a bank. It's a building society so maybe that's why it's so much? To be honest I don't own a credit card so I'm not sure what it means.[:I] Although if that's the repayment interest that's quite a lot.[xx(]
 

Neil ofthe nene

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Basically Nelson's right. The banking industry have to recoup the losses they suffered. Why did they suffer losses? Because we the public demanded they lend to us despite many of us not having the ability to repay in the long term.

So its a two way street, we shouldn't have been greedy, the banks (here and in the USA) should have stuck to lending only where the application met the "Canons of Good Lending".

Right now I am reading adverts at the foot of this page for "Loans With Bad Credit" and "Debt Consolidation Loans". Is it really prudent to lend to someone who has already proved they cannot manage their money? Yet people want, no demand, the right to own the latest 42 inch plasma TV or, heaven forbid, the latest thousands pole.

Whatever happened to saving up?

And finally how can lenders charge such high rates? Because people keep borrowing even at those rates. Simple supply and demand economics. If everyone stopped borrowing rates would come down.
 
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