When people come to my office in Minnesota to talk about their financial situation and figure out their options for dealing with debt, they often tell me that their bank will be good to them because they have been with that bank for many years.
WHY DO PEOPLE WANT TO WORK WITH THEIR BANKS?
People want to work with their banks because they have been with the same bank for many years, and are loyal customers, and expect the same sort of loyalty from their bank.
This way of thinking may have been true decades ago when banks were small and they knew their customers by name, but business doesn’t work this way now, and it’s simply not the case.
Why doesn’t this always successful?
- It may come as a surprise to you, but to your bank or credit union, you are nothing but a potential source of profit
- They will lend to you if and only if they think you will pay them back with interest so that they can make money
- Your bank is perfectly friendly and nice as long as you keep making payments to them, but things change if the payments stop
WHY IS BANK LOYALTY A MYTH?
If you want to test what your bank thinks of you, then just stop making the payments for one month.
If the bank really valued your relationship, then they would:
- Call to see how you are
- Ask if there is anything they can do for you
- Tell you that they are very happy that you have been a customer for so long
Have you ever had a call like this from a bank? Has anyone you know?
NO, of course not!! They will call you and demand that you pay them right away, and then they will send your account to a collection agency.
Still not convinced?
Want another way to test whether your bank will stick with you in good times, and in bad times?
Try asking for a loan when you have bad credit.
You will NOT hear them say:
- “I am not supposed to give you this loan because of your credit, but since you have been with us for so long, I will do it anyhow.”
What about types of loan or help?
Have you already tried to:
- Refinance your house to make it more affordable?
- Get a debt consolidation loan with a low interest rate to save money every month?
Did the bank let you?
Or did they tell you that:
- Your house was underwater?
- Your debt/income ratio was too bad?
If the banks truly valued your relationship, these things wouldn’t matter to them, and they would work with you.
Remember, the bank only wants their money, and they will do anything permitted by law to get it.
Do they call and offer to lower your interest rate because you are experiencing financial difficulties?
No they actually raise the interest rate because you are in default, which makes it even harder to catch up, and might even push you into Chapter 7 bankruptcy or Chapter 13 bankruptcy.
TO THE BANK YOU ARE JUST BUSINESS
To the bank, you are only a way to make money.
- If you can’t pay, or it looks like you might not be able to pay, then they will try to get rid of you
Nothing personal, it’s just business.
If you are in debt, and having trouble making the payments, you should look at things the same way.
- If it is in your best interests to file a bankruptcy , then do it
Don’t fret over what your bank will think if you stop making the payments after all of these years. No one at the bank is thinking about your relationship, why should you?
If you’re struggling financially and are optimistic the banks will help you, then perhaps it’s come as a surprise to learn that they probably won’t.
Why not Contact Us at 612.824.4357 now and tell us how we can help you?