Bank Customers Pay For Record Profit Margins

Posted by sparta

April 12, 2008

We all know the cost of borrowing has risen dramatically in recent years, but this doesn’t stop us from using it as a means to get by. There isn’t a great deal of choice really, as salaries never increase to meet inflation rates. On top of this, it is becoming increasingly difficult for young people to get on the property ladder and, even with the advice of a mortgage broker, for the rest of us to stay on it.

High street banks are seriously taking advantage of this need, fleecing more and more money from their customers with underhanded tactics, despite record breaking profit margins of over 39 pounds billion expected to be announced soon.

One of the worst rip offs currently being touted by banks is the need for payment protection insurance on loans. This can add an extra 21,000 pounds to a 25 year loan. All very well if you opt for this and know what you’re paying for and likely to get but many loans are given with no explanation as to how this charge is included and without a get out option.

In the worst cases, mortgage advice has included an insistence on payment protection insurance. This has been sold to housewives and part time employees despite the loan provider knowing full well that it is a condition of the insurance that you need to be in full time employment in the event of a claim. A top high street banks subsidiary has recently been fined 1 poundsm for doing just this.

Always talk to your mortgage broker to discover what you are truly paying for, whether or not you need it and exactly how much it is going to cost.

Mortgage brokers should always start with how much that advice is going to cost. Charges to arrange a mortgage have more than doubled in the last two years, netting lenders an extra 1.1 pounds billion a year.

Credit card charges are also mis-leading. The general public are led to believe they are getting a good deal with free transfers but this is more than made up for with the horrendous interest charges made on new purchases. If you don’t purchase things with it often enough, you can get charged up to 35 pounds per year, although a 12 pounds limit has been placed on late payment charges. A total of 125 changes have been made to credit card usage over a three month period last year, bringing the lender an extra 30 pounds million a year.

Mortgage brokers advice should encompass all things financial and customers can benefit by taking the advice so as to make their money work for them. Timing dates of mortgage payments should not be overlooked.

Despite governing bodies stating that banks should only charge the admin costs of 4 pounds for going over overdraft limits, they continue to abuse this problem. With charges up to 39 pounds a time, banks make 3.5 pounds million a year out of us this way.

Savings accounts are confusing for customers who are lured by headlines of attractive interest rates only to penalise them on trivial matters. Another money making scheme for the banks that costs savers a staggering 860 pounds million a year in lost interest.

Banking is, and always has been, a business. But it’s now a multi-billion pound business and it’s at our expense. Using the right mortgage adviser is absolutely essential to keep abreast of new charges and loop holes. Always make sure you know what you are paying for and what you can expect for your money.

Mortgage expert Catherine Harvey looks at how a mortgage advisor can help with excessive bank charges. To find out more please visit http://www.pennypeople.co.uk/

Mortgage