The Great Banking Rip Off

How Banks Made Unethical Profits on Loans and PPI

The more finance is regulated the smarter banks become at ripping off their customers. Avoid the clever methods used by banks to maximise profits.

Numerous people live under the misconception that banks are ethical, well intentioned institutions that seek to serve the customer. Sadly, this isn't remotely accurate. Banks use underhand tactics to help customers part with cash and meet unrealistic city targets.

Turning Overdrafts into Bank Loans

Ever wondered why banks are so keen to offer overdraft facilities? It is because they are a trap. By offering overdrafts at 17% and waiting for them to be used up, it makes it easy to sell loans at 8.4%. A great chance to save money by transferring the overdraft into a loan. It all sounds feasible, but it is simply to keep the customer locked in.

Reach or exceed an overdraft limit and a call from an Account Manager will shortly follow for a financial review. Unsuspecting customers agree, but the trap has been sprung to sell a new loan and PPI.

A few months later the customer has both a loan and an overdraft. Want to re-finance the loan and remove the overdraft (again), Mr Customer? It is a sure-fire pathway to serious debt problems for the customer and unprecedented profits for the banks.

The Sale of Loans and the Creation of Serious Debt Problems

Banks will use pushy sales techniques to lend money, send customers on a path to serious debt and then turn their back on them. Worse still, they pursue customers relentlessly via debt collection agencies for money that debtors can't afford to pay.

Mis-Selling Payment Protection Insurance (PPI)

Serious debt problems are causing the customer to become gravely concerned what will happen in the event of unemployment or ill health. No problem, take out Payment Protection Insurance (PPI) and be covered for 12 to 24 months.

The problem is that PPI has been mis-sold to thousands of people. It was even sold to people that were too old to claim it if something really did happen - all in the T&Cs, of course. In some instances customers were told that they couldn't get a loan if PPI wasn't chosen. The list goes on and on.

The sale of loan insurance is vastly more lucrative than selling the loan itself. Those that were sold PPI could have purchased it online for a fraction of the price and often with better coverage. If sold Payment Protection Insurance, check to see if compensation can be claimed.

This is just one area where banks have acted unethically. The bubble has now burst for the financial institutions and it is rather ironic that the tax payer has had to pick up the bill for the banks becoming insolvent. If only they had shown the same compassion that the tax payer has been forced to show them.

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