In the past year, the six major canadian banks and Desjardins group have pocketed $ 89 billion $ in net interest income on loans and credit cards.
With such a margin of profit, a little effort additional banking seems justified !
I therefore ask the canadian banks and caisses Desjardins to demonstrate greater collaboration in the financing of the war effort deployed by the federal government and the provinces against the dramatic financial consequences of the COVID-19 on individuals and businesses.
The world bank currently provides to its customers affected by a loss of income, a deferral of payments on mortgage loans, lines of credit, personal loans and credit cards. And the client éclopé, whose request for deferral is accepted (analysis case-by-case basis), will be entitled to a temporary reduction of interest rate on his credit card.
It is a nice effort, but clearly insufficient.
According to a recent survey from the firm of DART & maru/Blue, about 1.3 million Canadians think of having to declare bankruptcy within three months if their financial situation does not improve significantly.
We will agree on one thing : when there is bankruptcy, an individual or a business, everyone loses, including the bank or the fund.
Question to the leaders of the banking institutions. Which of the two options will prove to be the most profitable for themselves : ONE, allow a client to survive financially in him charging a low interest rate, or BOTH, smother it with very high interest rates which will lead it into bankruptcy ?
Of course, it is the option of survival at a low rate of interest which proves to be the best.
Why, in this period of low key interest rate of the Bank of Canada, 0.25 %, banks continue to charge high interest rates on personal loans (up to 15 %), overdraft account (up to 20 %), and credit cards (up to 21 %) ?
Such rate-gouging can only bring the customers the most fragile at the edge of the financial abyss, especially in this difficult period of economic paralysis.
For the next six months, until the end of October, it would be necessary that the banking institutions put a cap on a maximum of 5 % the interest rate that they apply on all loans and lines of credit granted both to private individuals and companies.
This measure should also include the overdraft account where you will be charged up to 20 % interest.
In addition, it is important that banks and credit unions extend to all the holders of credit cards the interest rate caps on cards to a maximum of 10 %.
The banking institutions will see their profits plummet over the next few quarters.
But they should feel happy to see Justin Trudeau, François Legault and the other prime ministers put forward a range of financial measures aimed at supporting individuals and companies that are the victims of the coronavirus.
Without the aid of government, they would be left with a mountain of losses on loans.
Their turn to make an extra effort !