Yesterday I saved 2500 pounds by making a phone call to a department store that also runs a bank. It’s the place known in the U.K. for its affordable underwear and “covetable cashmere.” I re-read this sentence a number of times after I wrote it thinking it might be the first sentence of a dystopian novel that foresees the next financial crisis.
When we originally moved to the U.K. from the previously semi-disclosed continental European country with a high savings rate, we were also used to the low interest rates that accompany it. We had taken out two private loans with a main commercial bank, which was very untypical given the populations lack of appetite to debt. The bank liked us because we made them money.
When we moved here, it turned out that we needed a car and we purchased a new for us but a few years old used automobile. I didn’t even think about the rates we would get because globally, interest rates are low and the Bank of England’s base rate was no exception. We contacted our main High Street branch and they gave us a loan with an interest rate of 13%, on a car. I was shocked.
Thinking that it had something to do with our limited credit history, I’ve been tracking our credit score with Experian to try to refinance. I called the bank in January and they said I wasn’t eligible for a new loan, but I should try again in a few months. When my Experian credit score clicked into “good” territory this month, I jumped for joy. We could refinance! I called my bank (the one where both of our monthly incomes are deposited into) and asked for refinancing. They offered me the same terms (length of time) for the outstanding amount (we had paid off already 28% of the loan) at the new low interest rate of 16%.
16%. They offered me higher interest rates!? They offered me double-digit higher interest rates and the Bank of England’s base rate is 0.50%?
So I did what every good frugaler does to a captive audience: I complained loudly. Fortunately for me, one of those people (a woman whose identity I will not disclose but who was stuck with me in a car and therefore couldn’t escape as I told my unsavoury interest rate stories) offhandedly mentioned she had gotten a loan for a much better rate at the department store bank. I had been thinking of buying one of their armchairs for awhile, but not refinancing a car loan. I was perplexed.
So because I was screaming mad at the bank who collect all our money every month and had no sense of loyalty! (or as the English would say, I thought the situation was total pants), I called the department store bank. They gave me the same terms for the outstanding amount for less than 6%. The man was apologetic that he couldn’t provide the loan for less (their advertised rate is 2,98%). Bless him!
So all this is to stay, shop around. This is a topsy-turvy world of finance here. I’ve been now thinking about moving our actual banking over to said department store because they also offer mortgages, savings accounts, and current accounts. I stop myself only because it makes we wonder: where will I then buy the chair?