“I don’t understand why my bank won’t help me”.
“I’ve dealt with the same bank for 30 years, why are they refusing me?”.
“If only the bank would lower my payment, I could get by”.
These are just some of the comments I hear, as our clients voice their frustration when their relationship with their bank has seemingly come to a grinding halt.
We seem to have this notion that we entered into a “till death do us part” commitment when we opened that new credit account with the bank. The reality is, we entered into a somewhat superficial relationship. I say superficial, because the relationship is based on everything staying as it is, or improving, but is not necessarily going to survive as you weather a storm together.
The vows, if you were to share them, would go something like this:
YOU: I promise to have all of my accounts with you, to come to you first with my financial needs, to respect your lending practices, to always make my payments on time, to continue banking with you as you increase my fees and to pledge whatever I have of value to you as a token of my commitment.
BANK: We promise to lend you money, at a premium, providing you meet our standard, to give you the best (rate) we have to offer when everything is going well, to increase your interest rate if we hit a rough patch and pull your line of credit if, in our view, we become incompatible.
There is no “in sickness or in health” vow.
I’m not knocking the banks. They provide a specific service to a specific target market. And they do it well. That’s why they are reporting increased profits on a regular basis. What I am saying, is you need to accept that this is a relationship that will serve you well if you don’t hit any major roadblocks along the way. Once you do, and your credit score is affected, you are no longer the banks ideal client. And your relationship with the Loans Officer won’t help, because their head office makes the rules and like ’em or not, the Managers/Tellers have to abide by them.
So kind of like that new relationship, when the honeymoon stage wears off and you realize you really never were suited for one another, you start looking elsewhere for a better fit.
Enter credit unions, finance companies, payday loans, etc., and the risk of making an impulsive decision that could lead to years of misery. The upside is, you may discover a far better match that could bring you years of happiness. Unfortunately, the odds are against you. Many of these institutions are second on the list for a reason.
So what do you do when your relationship with the bank ends? The following are some guidelines to help you pick up the pieces and start looking for that new relationship:
1. Credit Unions often offer a more personalized service, kind of like the banks used to in the good ol’ days. The loans officers have more discretion because decisions are made locally. It’s worth sitting down and having a chat with your local branch.
2. Another bank may welcome you with open arms but keep in mind that they still have the hierarchy of the Big Bank structure and likely have little wiggle room. If you are drowning in debt and looking for a life saver, they likley won’t have one available.
3. Mortgage Brokers are hidden gems in my view. It costs you nothing to talk to them, they have access to various lenders, and if you get the right one he or she will go to great lengths to help save you if you are, well, savable.
4. Make sure you are aware of all the options available to you. Talk to a Financial Counsellor/Trustee in Bankruptcy. Despite the name, a good, caring Trustee firm will do everything they can to help you avoid bankruptcy and ensure you have explored all options available to you.
5. Pray (I put that one in there for my Mum – it’s her strategy for all that ails you and the ones you love) My twist on it is “have a good positive attitude“. I know that’s tough when you are feeling all is lost, but if you open yourself up to the fact that there may be a better solution out there for you, you might be surprised by what comes your way.