Should banks do More to stop you getting into Debt?

musclesza

Do you think your bank could have done more to guide you away from falling into debt and the charges? If so what do you think should have been done?

It seems banks are quick to claim money off you but very few help you if you look like you will go into debt or as you go into debt!!!

What do you reckon should be done in an ideal world?

LilacPixie

To be honest no. I personally do not get charges but ultimatly I am an adult, I made a decision to take out a loan/mortgage/car finance/credit cards because I wanted to not because I was forced too.

Ultimatly a bank is a biusiness, they are not financial baby sitters.
Ideal world would be kids being taught more about credit and financial matters at school so then they start Uni and have thousands availible in interest free overdrafts and credit cards they use it wisely.

IWantToBeFree_2

I do think that banks should lend more responsibly, but at the end of the day, they don't force anyone to take credit. That is a choice of the consumer...

I do think that there is a big blame culture when it comes to debt and people are quick to point the finger at everyone but themselves. This is echo'd by all these companies etc that try and write peoples debt off due to tiny loopholes... Its about time that people stood up and were accountable for their debts!

musclesza

So what you guys are saying is its not up to the banks but up to the schools and the parents to teach us how to manage our money and debts?

LilacPixie

pretty much.

You don't expect asda or tesco to teach you how to cook; you don't expect BP or Shell to teach you how to drive, so why expect a bank to teach you how to budget correctly???

musclesza

I completely agree with you, however it seems a lot of us have got ourselves into a mess pehaps by no fault of our own - so once we are here do you think the bank could have helped and how?

Paulgonnabedebtfree

musclesza wrote: »

Do you think your bank could have done more to guide you away from falling into debt and the charges? If so what do you think should have been done?

It seems banks are quick to claim money off you but very few help you if you look like you will go into debt or as you go into debt!!!

What do you reckon should be done in an ideal world?

I think Renault should teach me how to drive .

Seriously though. I don't believe it should be the banks responsibilty to guide me away from being a debtor. BUT (and this is a BIG but), I also think they should not market their products in the unseemly way that they do. One of the poorer examples seems to be MBNA's extreme tactics of "bait and switch" with interest rates. I've known drug dealers that behaved more honestly than that.
So I say that it's not down to them to get me out of a mess but they certainly shouldn't do these glitzy marketing campaigns that only focus on the positive side of debt (and there is a positive side to it if managed efficiently IMO). Of course it's hard to legislate about such things once you get into the finer details of what to allow as advertising is often about glossing over negative aspects.
One thing I would like to see is that credit card companies should only send their special offer cheques to those on an opt in list. At the moment, you have to opt out. A small start but a baby step in the right direction.

misspoppy

LilacPixie wrote: »

pretty much.

You don't expect asda or tesco to teach you how to cook; you don't expect BP or Shell to teach you how to drive, so why expect a bank to teach you how to budget correctly???

The government have left it to the supermarkets to teach us how to cook you only have to go into one of them and you can find receipe cards and free magazines with meal suggestions and not all of those are in our best interest.

I think when people go to a bank and say they are in trouble the bank has a responsibilty to help them get to the route of the problem ie offer budgeting advice and a review rather than an over priced loan.

musclesza

It seems everyone thinks that banks shouldnt try help you avoid debt but is that the case?

kevin_M

ahhh this thread is refreshing...

letme explain. The debt i have is 100% my fault no one elses i spent the money I filled out the Apps. And its me whos gonna pay it all back. So its not the case of being on the outside looking in.

I do think the banks could offer more when a person calls them saying i have a problem paying even if its just saying well we will redo your loan over a longer term to reduce the payments.(never asked them to do this so they might offer)

I think personally why banks take such a hard line is for one you agreed that you could pay that amount and would repay the full amount. And also the wont pays. the people who are trying to get out of paying anything when they can afford to pay.

But anyway i 100% agree its my fault and not the banks fault

LilacPixie

musclesza wrote: »

A lot of us have got ourselves into a mess perhaps by no fault of our own - so once we are here do you think the bank could have helped and how?

See this is a totally different question than you asked in you original post. In the OP you asked;

Do you think your bank could have done more to guide you away from falling into debt and the charges? If so what do you think should have been done?

In answer to your amended question.

Quite simply banks cannot help to the extent that people wish they could and would i.e freezing all interest and charges as soon as someone contacts them to say they are having issues because quite simply people would take advantage and is that did happen banks would need bailed out more and more, taxes would rise for all and the whole country would slip further down the tubes.

Also look at it this way, you approach bank for a 5k loan and bank says yes we can lend but only at 20% APR and you say fine. 6 months later you contact bank and say your having difficulty making payments and the bank freezes interest and helps you sort out an affordable payment plan. Your happy but the bank has effectively lost out because it has lent you 5k and will get no return for it. that is 5k they could of invested elsewhere.

If everyone does this, and lets face it people are greedy and would do it to avoid paying interest even if no bad changes in circumstance, then banks make no money, Apr's offered mean nothing is a bank has to change them to 0% as soon as a customer said they were experiencing some financial difficulty. Bank would effectively stop lending, small businesses would suffer and have to close. Jobs would be lost, more reliance on our benefits system and therefore more pressure on taxpayer to help support it all.

Those in financial difficulty but still working would be being taxed more so have less to pay back commitments and so the cycle starts again.

It may seem a bit extreme but it is a very possible chain of events if people do not become more financially aware. We need to start teaching our children the true value of money, we need to get the message over that credit is not 'free' cash and it will need repaid over a very long time. We also need to push home the message that it is wise to save for large purchases when possible.

Having 2/3 months amount of bills in savings is also wise just to cover a minor blip.

Ultimately we need to help our kids avoid making the mistakes we have made in the last 20 ish years of freely available credit.