Banks and building societies are generally good friends to have and in certain circumstances they can be a lifesaver. However through years of use it often becomes glaringly obvious to most that they are in fact fair-weather friends at best, and this is never truer than at the present time when many people are struggling with their finances. So why do we call them fair-weather friends and what can we do about it?

What is a Fair-weather Friend?

A fair-weather friend is a person, or in this case a financial institution, who is only too willing to help during the good times but who then does a disappearing act when things get rough. Think about it for a minute…when you have plenty of money in your bank account and you don’t go overdrawn and the bills always get paid then your bank is often very willing to give you loans, credit cards and other helpful financial products. The fact that you don’t actually need this help at the time is irrelevant – you have good finances and enough money to live on so you bank wants to give you more.

However, should you hit on poorer times (as many people are now) and you need a little bit of help to get through, then it’s probable your bank will give you the cold shoulder and call you a credit risk. Hence the fair-weather friend label…when things are good for you they want to be your friend and give you more money which will in the long run earn them profit, but if things get tough they run a mile and turn down any applications you make for their help.

Why do they do this?

Sadly, your bank isn’t really your friend. It’s a company just like any other company and the aim of any company is to make profit. So, if you have plenty of money coming in and stable finances then your bank will see an opportunity to make some profit. If they give you a credit card they know there’s a good chance you’ll spend on it because you can afford to and when you pay them interest on the balance they make their profit. The same principle applies to personal loans and in a lot of cases business banking.

If you’re struggling however and constantly end the month with no money or overdrawn then they are a lot less likely to offer credit because there’s a higher risk of non-payment…and this would mean no profit for them. The fact that their loyal customers are struggling to make ends meet is neither here nor there to a bank. They choose their friends according to how much profit they can make from them.

What can you do about it?

Frankly not a lot but it’s a good start just knowing that this is what they do. Make the most of what your bank is offering you and try to keep your bank accounts in good order so that should you need your fair-weather friend they may be more inclined to give you a helping hand.