Banks Are Mental
07 June 2011
So I needed to do a little spot of light banking today. I rose early and got there for the 9.30am opening time. I was shown to a nice lady called Denise, a Barclays personal banker who kindly explained that she had an appointment and that she couldn’t speak to me for long.
My banking plans were quite simple. I wanted to move some money I had saved from my savings account into an ISA . I really wanted an account where I couldn’t touch the money for a year because money tends to burn a hole in my pocket and so I explained this to Denise. She told me that “actually” I had to transfer funds into an ISA online as she was not allowed to access my savings account, where my money was. Also, I had instant access to my ISA fund and there was nothing I could do about it. In fact, she told me, Barclays offer no accounts where you can put money away without being able to touch it. I still don’t quite believe this to be true but there you go.
I had taken a day off work to go to the bank to sort out my savings and was told to do it myself on the internet.
But that was not all. Although Barclays could not help me with my savings as I was to take responsibility for such boring things on my own, Denise was all but slathering at the mouth at the prospect of lending me money. With tremendous gusto she slammed her hand into the side of the pivot-stand of her monitor to treat me to a screen-load of all the delicious instant loans Barclays could give me. Particularly pleasant to my ears was the offer of £21,000 that, because I was such a good customer, I was entitled to at the lowest interest rate band. I explained to Denise that I didn’t really want to borrow £21,000 just now. “Well how’s about a mortgage? Have you got a mortgage?” A mortgage?! I don’t want to divulge my yearly wage but if you multiply it by the traditional 3.5 then it would hardly buy me a modest toilet cubicle. How can she possibly be offering me a mortgage? I wondered. But she was. She scrolled down the screen with her mouse and line after line of available credit flashed up on the display.
“I just want to put my money into savings!” I wanted to yell. I didn’t understand why I couldn’t just do this thing that is the foundation stone of banking. Or at least it used to be. Denise knew I was trying to save money and yet she was trying to ram all this credit down my throat. She kept talking, telling me the things Barclays could lend me until I finally had to stop her and say that really I’ve decided to just put the money in my good ol’ Post Office account. That’s the sort of account I really like – one where you have to fill in a form and send it off by post to get to your money. I like to imagine a George Bailey type character in the Post Office Banking Department taking care of the nickels and dimes of us savers.
“So can I just withdraw my money?” I asked.
Of course not! Good lord no. Denise explained that for me to get my money I would have to return home, go on the internet, transfer the money in my savings into my current account, return to the bank with two forms of ID, preferably my passport, and withdraw it at counter. I want my savings to be difficult to access, but not in that way!
So I’ve come home to sort out my savings online. What a hassle. But I’ve also been having a think about the interest rates that, as we all know, are very low at the moment due to the Banking Crises. So here is what I don’t understand. The Barclays ISA , their best savings account, offers me 2.2% interest. Inflation is around 4 or 5% I believe. So my real money is going down and there’s no choice in this. It’s not a savers market.
But then the Bank of England’s interest rate is around 0.5%. So let’s get this straight: Bank of England interest rate: 0.5%. ISA interest rate: 2.2%. If you save the banks don’t give you much reward. I can accept this. Interest rates do need to be low at the moment. So why is it then that Barclays are charging 17.5% interest on the Barclaycard credit card? If I decided to take out the loan of £21,000 that Denise so kindly offered me then I would end up paying back £39,000 because the interest rate is a whopping 13.9%! She didn’t tell me this at the time. Aren’t interest rates supposed to be low? Similarly on current account overdrafts rates are set at 18-19% and you actually have to pay a monthly fee for this bargain. The interest rates for savers have plummeted and yet interest rates on loans have stayed the same, increased even. How is this?
What I’m trying to say is that the banks don’t seem to have learned anything from the meltdown. They weren’t interested in me when I was a saver but when Denise started talking about borrowing she was all over me. This is the kernel of the problem.
They tried to offer me a loan of £21,000. If I paid it off over the longest period, 5 years, then it would cost me £329 a month. But this would be a large chunk of my monthly earnings that I could never, ever repay. It’s demented. The Bank of England have low interest rates to help money circulate again but instead of living up to their responsibilities the banks have used this to cut interest payments to savers whilst continuing to nail borrowers. In short, they have used the interest rates to line their pockets even more than before.
I have heard City bankers blaming the public for the Credit Crunch because “stupid” people were borrowing money they couldn’t repay. This is only slightly true though. The real truth is that bank workers are trained to prey on people, encouraged by commissions to lend lend lend. Loans are sold to people so aggressively that you need a lot of will power to say no. We’re told we can easily afford loans with modest monthly repayments and the loan companies do all they can to obscure the fact that anything over £150 is a hell of a lot of money to most people. The public may have taken the loans, yes, but the banks and loan companies were more than complicit. They have vast call centres filled with people calling you up to sell you expensive money. They created the debt for a quick injection of profit, knowingly exploiting people’s naivety in order to make themselves a fast fortune, before selling the debt on and getting the hell out. It was not the public’s fault – it was the banks.
Barclays made £6bn profit last year. Bob Diamond, the CEO, has struck a cool £27,000,000 pay deal which included £6.5m in 2010 as bonuses, according to The Guardian. Why is enough never enough for these people?
Bankers get paid as much as they do purely because they are holding the keys to the world’s money. Their job is not difficult. Yes, some of the brightest people go into banking but it’s because of the pay, not the challenge. I can’t help but think of how much banking is affecting our advancements as a species purely because so many great minds are being wasted in the pursuit of wealth so great that it becomes meaningless. If some of these genuinely brilliant people would re-focus their attention on important things like science and inventions then we could be way further down the line. Banking should be simple. Lend money with interest rates double those of savings accounts. That’s all you have to do – there’s no need for the complexities. Bankers will tell you there is but there isn’t – capitalism didn’t build modern world, human ingenuity did. If you make banking simple, remove it as an industry and turn it into local branches doing simple and honest business, then you can release the great wealth of human intelligence on Wall Street and Canary Wharf into the real world. There is surely a way of changing the culture of greed into something better.
NB There are other banks that are not Barclays
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