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We recently did a podcast called No-one’s Coming in which we discussed the fact that everyone is responsible for their own retirement planning. It’s not their employer’s job or the government’s job to sort it out. Your finances are in your own hands, and this applies even when it comes to banks. Because the fact is, your bank doesn’t care about you, and that’s okay.
There are so many advertisements that show banks supporting small businesses. They’re full of smiling faces and happy families, and the ads make it sound like the banks have a personal interest in you. We’re here to tell you that it simply isn’t true. It sounds harsh, but essentially, you are just a number to them.
Banks actually have a very simple business model. They take your money as a deposit, then pay you 1% interest (or in some cases, less!). Then they loan it to someone else at a much higher rate. They might give a car loan and receive 8% interest on it, or 3% on a home loan, or 6% on a small business overdraft. Banks purely exist to facilitate this transfer. It's not a person who cares about you – it’s a web of transactions. Money comes in and money goes out at a markup, a bit like wholesale to retail.
Think about how Woolworths works in the most simplistic way. They buy the cow from the farmer, then break it into small pieces and sell it to you. You're paying for the convenience, and you don’t expect to pay a wholesale price. You also understand they are there to make a profit, and do not have a personal interest in you. Banks are exactly the same.
We're not saying that banks are trying to rip you off, but they're also not here to take care of you. They are a business.
Click here to listen to the related podcast!
Published by Dallas Davison, Michael Hogue and Ali Hogue. March 31, 2022