Over the past couple of years banks have found themselves increasingly under fire, having been found guilty of irresponsible lending, partly fuelling the financial crisis, and seeing their own finances suffer as a result.

Many banks have now had to be bailed out using taxpayers’ money, but although one might think that there would be some gratitude from the banks for this bailout from the public purse rather than being sympathetic to the needs of consumers, banks seems to be using them to try and recoup their own losses.

There are a number of ways in which the taxpayer has ended up paying for the mistakes that the banking industry has made, and in one way or another most of us will find ourselves suffering in some way whilst the banks do all they can to claw back revenue and shore up their own finances. Some of these are outlined below:

Borrowing

Borrowers have really suffered as a result of the blunders that the banking industry has made.

Whilst banks are being encouraged to stop lending irresponsibly, which is partly what got the industry into the mess that it is in, they are also being encouraged to start lending again the eligible consumers and businesses in order to help the economy to recover.

However, recent reports have shown that in order to shore up their own finances banks are strictly limiting the amount of money that they will lend out on things such as mortgage, and once the allocated funds have been used those that apply for finance afterwards are likely to be turned down even if their credit rating is excellent.

In the past someone with good credit would have no problem getting finance, but these days it seems to depend on the time of day that you apply and whether or not the banks has used its daily allocated funds by then.

Loans and mortgages

Over the past five months the base interest rate has been at an all time low of just 0.5 percent, which is just a tenth of the level that it was at just over a year ago. However, despite this rock bottom base rate the interest rates that lenders seem to be charging on loans and mortgage seems to have no link to the base rate.

One industry official summed it up by stating: ‘Reducing interest rates to these low levels was intended to make borrowing cheaper, to help kick start the economy. Evidence shows that this is just not happening.’

However, the British Banker’s Association states: ‘The cost of borrowing reflects more than the Bank of England base rate. Various factors affect the price of lending. Banks’ costs have gone up, and there is less left to lend. More people default in recessions and banks can take longer to get their money back as they help customers by rescheduling repayments. They are paying relatively more for their money as a result of both competition for savings and scarce and expensive wholesale funding.’

Credit cards

Credit card customers have also been affected by banking blunders. Some cardholders have seen their interest rates rocket, others have seen their credit limits slashed, and some have even seen their accounts cancelled. Getting a credit card has become increasingly difficult even for those with pretty good credit. Also, banks have been increasing various fees on credit cards, such as annual fees, cash transaction fees, foreign fees, and a range of other charges as they see fit.

In addition to this banks have acted cunningly by reducing the minimum required repayment for some cardholders. Although this may seem like it is designed to help consumes in the current climate, what it actually means is that you will spend far longer paying off the credit card debt and pay far more in interest to the lender.

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