Big Banks

Why The Financial Sector Doesn’t Want You to Go Off The Grid

Going off the grid takes more than just the literal form of installing equipment such as solar panels, generators etc. to be able to generate your own supply of electricity or anything else along those lines. Going off the grid in the financial industry particularly refers to being self-sustaining in relation to all your money matters, not really needing the big banks or other goliath financial institutions. Form an insider’s point of view, I have some insight I’d really like to share as to why the financial sector operates the way it does, effectively not wanting you to “go off the grid.”

This is a “no conspiracy theory zone” – I’m merely sharing what I know about what I’ve seen on the “inside” of this financial sector I’m working in. Okay, so here goes…

The Mega Financial World Feeds off Dependency

Look, I definitely know where my bread is buttered – working in the financial industry and all – but the truth is the truth and it’s that big financial institutions feed off of the dependency of those people they call clients. Why do you think loans for people with bad credit are hard to come by in the world of big the financial institutions like big banks, but are more readily and realistically available from lenders who specialise in services such as guarantor loans?

It’s because the big banks prefer to loan out money to clients who will be maintaining something closer to a lifetime of repayments. If you eventually manage to pay off your current debt, they’ll try to get you to take on some more debt so that you keep making repayments – you and may other clients.

On the other hand, lenders who offer credit to people with bad credit, like guarantor loans make good returns on the money they loan out even if they work with small client numbers. Such loans tend to be more realistic in their repayment terms and the amount of money which can be burrowed falls more in line with realistic financial goals – financial goals such as getting oneself out of a sticky financial situation and perhaps working towards being debt-free. So it’s a matter of the big financial institutions not wanting to lend you the amount of money on the terms which will have you eventually become independent of them. It’s all about volume for them, with high volumes in transactions allowing them to keep making money through charges such as transaction fees and other service fees.

Selling Debt

In what is perhaps a last-ditch attempt at salvaging their investments, the large financial institutions sell their debt to debt collectors at a lower price than what they’d expect to get from the delinquent clients, cutting their losses in this way yet still getting something back from their investment. But this isn’t where they get the most value out of essentially keeping a large volume of clients chained to a credit iron-ball however. Big banks can package and sell the debt on their balance sheets as derivatives, or produce that debt on their balance sheets as assets which allow them to further loan out money for which they charge interest.

Katie Sanderson

Katie Sanderson

Katie Sanderson is a keen financial ninja who has made it her goal to help and advise people on all aspects of saving and generally helping with their day to day budgetary needs.When not thinking about saving she can be found at home with her family or out with friends.
Katie Sanderson
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