Banks are Back in Their Old Shells
Loan applicants are being rejected by the banks at the same rate beautiful women turn away hopeful young men on Saturday night.
The old saying that banks will only lend to people that don’t need it, is as relevant as ever. Loan applicants might as well stop dreaming, because the vault is closed. Governments have gone on a spending spree to deal with the financial crisis, but the banks seem to be having their own ideas. The scare from the financial crisis has seen banks curling up in their old safe shells, making credit less available and leaving clients disappointed.
Is it fair that people no longer have access to credit, considering that it’s their own tax money that are being used to bail banks out of the financial mess they got themselves into? Banks seem to be reacting like a pendulum swinging from one side to the other, but they should make a bigger effort to find the balance in the middle.
Of course you would expect banks to clean up and tighten the lending criteria, but there has to be a middle way. People need money to realise their potential and in the long run cutting loans will have a huge negative effect on society. The banks need to remember their role in society and step up to meet the demand.
People have started to turn to alternative credit providers such as payday loan companies. According to research from the UK comparison aggregator, Money Supermarket, the UK market for short term payday advances increased by 55% from may 2008. The higher demand for the quick cash loans are a good indicator of the economic pressure people are feeling. Luckily the payday loan product has evolved significantly over the last few years and can now be considered a smart and safe alternative to credit cards and other short term credit products.
However banks should really take responsibility and find a better balance. We all realise that the lending practises used over the last few years were completely out of hand but so is the narrow loop hole people have to jump through today.
