The bank of Mum and Dad has suddenly become very popular as more people seek a way to get a low interest loan. Since banks are shutting down availability of low interest loans, few have many choices other than to go to their parents for help. This may cause problems down the road for families that are already stretched financially. However, until more low interest loans are offered, this issue could continue for some time.
Alison Green of Axa said: “The bank of mum and dad has so far been quiet on the issue of how it will deal with the effects of the credit crunch. But now it has come out and shown that teenagers have been hit hard.”
Sean Gardner of MoneyExpert stated, “While high street banks can hike interest rates and fees to deter customers’ requests for cash, parents can do very little to avoid the daily handouts and requests for larger loans from their children. Parents are being pulled in all directions - rising fuel and food prices, expensive remortgage costs, and the overall cost of borrowing are taking their toll. So it makes sense that eventually the downturn would affect children.”
Related reading: Low Interest Loan
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