Banks must bail us out
IN 2008 the world economy appeared to be on the brink of meltdown.
The banks’ pursuit of profits fired by a culture of greed and management hubris led to the failure of some and the defenestration of many. But in a plan inspired by Gordon Brown, many were bailed out by us — the taxpayers they had cheerfully fleeced and misled in the previous decade.
Now, 12 years on, as we stand on the brink of yet another devastating recession, it is the banks’ turn to save us. Through no fault of their own, millions of householders find their finances on the brink.
Many have already been living with the consequences of the banks’ failures for years.
They are the people who approached their jobs with dedication, only to face a decade of stagnant wages. The people who had hoped and planned for a comfortable retirement, only for their nest eggs to be decimated by a stock market crash and rockbottom interest rates. Now they face financial hardship again, with thousands expected to lose their jobs or see their wages slashed before this crisis ends.
Those approaching retirement will yet again be forced to work longer, or live on less.
But this time, the once-reckless banks have the power to help.
Many are already making the right noises. They have promised three-month mortgage holidays to those struggling to keep a roof over their heads, and pledged a moratorium on repossessions. They have also said they will waive missed payment fees and help those struggling to repay personal loans.
But they can, and must, go further. An easy gesture would be to scrap — or at least reduce — overdraft charges for the next three months.
As Money Mail explains on pages 40 and 45, overdraft fees are set to soar to as much as 50 pc from April 6, after the City watchdog told banks they must begin charging customers a single interest rate.
But there is nothing to stop banks setting this rate at zero.
With more people likely to slip into the red over the coming months, this extra breathing space could be invaluable. Banks could also slash the cost of credit card borrowing, where the average rate is now around 20 pc.
With the Bank of England base rate at just 0.1pc, banks cannot justify such high borrowing costs.
What banks certainly don’t want you to read about is how some of the cheapest personal loan rates are being quietly withdrawn.
And how many big banks are yet to pass on the latest base rate cut to their mortgage customers — despite hammering savers almost immediately.
Debt charities have already reported worrying rises in people visiting their websites for help and advice. And things are likely to get worse before they get better.
Generosity is what Boris Johnson has demanded.
The Government has pledged to do whatever it takes to make sure our economy survives, spending billions guaranteeing wages and supporting businesses.
And while banks are also under pressure amid falling share prices, they too must help. This is their chance to earn back our trust, to prioritise customers above bonuses and precious profits. If banks act swiftly, they could save businesses, livelihoods and maybe even lives.
If they fail us now, they will never be forgiven.
Smart way to pay
FINAlly, a tip for those worried about touching grimy PIN pads on card machines at supermarkets.
First, banks have increased the contactless limit from £30 to £45.
But if you have a smartphone you can spend unlimited amounts without having to enter your PIN.
Users of iPhones, for example, can register their debit or credit card with Apple Pay and swipe the handset against card machines.
Because it requires a fingerprint or facial recognition to approve payments it’s safer than using a contactless card. And Android phones and Google Pay work in much the same way.