Report Bank Charges successes and failures

Nasqueron

Keya9 wrote: »

Why are Banks & Building societies allowed to charge existing customer higher interest rates on existing borrowing and not helping those customers who have outstanding credit card debts paying the minimum amounts by helping them pay them off?

Instead they write warning about the minimum payments when they themselves could offer to consolidate these debts in a structured way by offering a repayment plan with lower interest rates. The same is with the loans that they offer. These establishments are not treating their customers fairly and should be made to pay customers the difference back. This surely is against your human rights.
:mad:

Banks are required to look at hardship cases if you make them aware of your situation and ask them for help, this might take the form of freezing charges or refunds of a few months worth of charges to help you get out of the cycle. Do note hardship cases will look at your spending patterns to confirm you are in hardship and not just living beyond your means (e.g. expensive pay TV / mobile contracts, eating out, shopping for clothes at premium brands).

Consolidation loans sound great in theory but so many people take the loan and either pay off the cards then run up the debt again (meaning twice as much debt) or just take the loan and waste it.

Approach your own bank for a hardship case, a consolidation loan where they pay off your debts and cancel your cards to stop you running up debt might help.

Oh and credit/loans are not a human right, they're a luxury

dunstonh

Why are Banks & Building societies allowed to charge existing customer higher interest rates on existing borrowing and not helping those customers who have outstanding credit card debts paying the minimum amounts by helping them pay them off?

The opening of a new debt product creates a new sale of product. A new retail liability. If they do not think you can afford the new product then they wont offer it.

Consolidation does occur often but many people abuse it. They have a cycle of borrowing. Spend on store cards and credit cards. Max out and then consolidate on to a loan. Instead of cancelling the cards, they start the cycle again by borrowing on the cards. Then they look to consolidate again, often using the mortgage. But instead of cancelling the cards, the go on a cycle of spending again and maybe repeat several times using as much equity in the house as possible.

Consolidation only works if you have self control. if they bank doesnt think you have that control then why should they consider taking on the risk?

Instead they write warning about the minimum payments when they themselves could offer to consolidate these debts in a structured way by offering a repayment plan with lower interest rates. The same is with the loans that they offer. These establishments are not treating their customers fairly and should be made to pay customers the difference back. This surely is against your human rights.

Inability to obtain credit due to lack of financial control is not a breach of human rights.

Keya9

@ Dunstonh - Thank you for your comments.

As an independent financial advisor, you should be aware that companies can take the liberty of making you sign a disclaimer that you will consolidate and close your credit card accounts when consolidating. The matter is not about financial hardship but more so to do with unfair lending policy. Knowing that a customer is paying the minimum off the credit cards and still adding interest at such high rates is unfair. A change in circumstances i.e. drop in income can also force one into such a situation at which point the lenders no longer offer further borrowing and rightly so, however they should consider the option of helping and not leaving customers in debt that they then struggle with.

Human Rights - relates to being treated fairly at such time.

Keya9

@ Nasqueron - Thank you for your reply. The Human Rights, relates to helping someone out when in a unfair position.

Your points are valid, but sometimes it is not to do with the fact that it is just hardship, it is a case of the banks have a product/solution to help the customer but are not exercising their right to help. A change in the customers situation would highlight this i.e. change in income, child birth etc. Credit should be reviewed as a requirement from lenders. Both the lender and credit agencies can help in dealing with these matters.

It is a known fact that debt can lead to suicide etc. and as a result these sort of solutions should be made available. The stigma associated with IVA's and Bankruptcy are also factors that contribute to the above in certain societies.

Keya9

@ Moneyineptitude - Consolidation is not borrowing more money! it is refinancing the existing borrowing on a lower rate of interest thereby reducing ones monthly outgoings. This is a solution that banks are able to offer but due to the fact that they will lose money in the form of interest are failing to do so. Instead they offer 0% offers on new credit cards etc with the view to putting them in the same situation at a later date.

Nasqueron

Keya9 wrote: »

@ Moneyineptitude - Consolidation is not borrowing more money! it is refinancing the existing borrowing on a lower rate of interest thereby reducing ones monthly outgoings. This is a solution that banks are able to offer but due to the fact that they will lose money in the form of interest are failing to do so. Instead they offer 0% offers on new credit cards etc with the view to putting them in the same situation at a later date.

Consolidation loans IN THEORY do that but there is a mass of anecdotal evidence that people take the loan and waste it or just run up the cards again meaning they do borrow more money. One of the biggest issues I feel was the likes of Ocean finance doing TV adverts suggesting people could save all this money on repayments and then go on holiday etc! A consolidation loan for someone who is determined to fix their finance is a good idea but that must be accompanied by changing spending habits, cutting up the credit cards, cancelling accounts etc and so many people do not do it. You only need to look at the debt parts of this forum to see people who did a consolidation and then just ran up the debts again giving twice as much debt.

A financial hardship case to the bank will result in some help such as stopping charges or freezing interest allowing you to get back into a position of stability but this has to come with an attitude change of the person and a willingness to cut back.

A bank now HAS to be a responsible lender. If you have say a salary of 25k and 12.5k of unsecured debt on cards/OD then giving you a 12.5k loan gives you (in theory) 25k debt as there is no guarantee you won't spend the loan elsewhere - signing a disclaimer means very little!

Once again the Human Rights Act does not cover lending you money or extending credit.

dunstonh

s an independent financial advisor, you should be aware that companies can take the liberty of making you sign a disclaimer that you will consolidate and close your credit card accounts when consolidating.

I also know that the FOS take very little notice of disclaimers like that. And consumers will sign anything put in front of them but will still do what they want to do.

The matter is not about financial hardship but more so to do with unfair lending policy. Knowing that a customer is paying the minimum off the credit cards and still adding interest at such high rates is unfair. A change in circumstances i.e. drop in income can also force one into such a situation at which point the lenders no longer offer further borrowing and rightly so, however they should consider the option of helping and not leaving customers in debt that they then struggle with.

The problem is that you cannot complain about unfair lending on a credit card. However, if the bank takes it and puts it on a loan, then that is a new credit facility. In the event of a complaint, the outcome may be that granting a new credit facility was not sensible lending. Also, you have to consider how credit failures affect the individual recommending the facility. Bank staff and their managers are measured on debts going wrong. So, you may have a credit card debt that could be cheaper on a loan. However, the bank clerk is not responsible for your credit card debt if it does wrong. However, they would be if the loan they granted went wrong. So, why should they take on that risk if they do not believe this risk is viable?

Human Rights - relates to being treated fairly at such time.

And has nothing to do with this.

If you have money problems then there are means to sort them out. The hardest step is usually the first one but the citizens advice bureau is a good place to start. Maybe it will require a debt management scheme. Maybe it will kill your credit rating for a number of years. However, there are means and ways.

dunstonh

Gillevs wrote: »

Many Thanks to Martin, I applied to Co Op Bank on 2nd February, was unsure how long I had paid for my bank account, but today I had a letter to say I was successful, they are paying me £1,416.53, including £635.66 interest, and they have taken £127.13 tax off, which I can reclaim as I am not a tax payer. This dates back to March 2002. I cancelled the privilege account September 2010. I did not keep statements. So worth doing as I was truly told I needed to pay for my account in order to get/retain my overdraft!!:

Good news for you. However, this thread is not about packaged bank charges.

Keya9

@Moneyineptitude - This is a Forum and I am clearly not having a Rant and neither I am asking for your help in regards to Financial Hardship. I am expressing an opinion, for which I am within my human rights to do. Thank you for comments to date.

Keya9

@ Dunstonh - I really appreciate your constructive replies. The point I am trying to make is that in reality Banks also have a responsibility to ensure that credit card debt is repayable and are just accountable for this as they would be for the loan.

You must admit that it is clearly bad business for them to shift the debt and lose interest.

I have worked in Banks (Management) and currently work as an advisor.

P.s. I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.