Estonian banks cheat tens of thousands of borrowers

Marge Tubalkain-Trell

Estonian consumer protection demands banks to stop taking hidden additional interests from housing loan clients, Eesti Ekspress writes.

Most consumers haven’t heard how banks earn extra profits on them.

Most of the housing loans in Estonia are given in euros. That is on the paper only. Actually people will get and return the loan money in euros. Only few borrowers know that banks don’t use central bank’s official rate when converting money, but their own commercial rate. And that allows banks to earn easy profit.
For example Swedbank’s rate differs from official rate by 5.2 cents for every euro. In other words, borrower pays 0.3 pct more than official rate is.

According to Consumer Protection this is unfair trading.

Through machinating with Euro rate banks can show interest rates lower and loan expenses smaller than they really are. Borrowers often fight for even 0.1 or 0.2 pct lower interest. They don’t notice the rate through which bank takes back the win and even more.

The fact that loan calculators don’t show sums in Euros or exchange rate for Euro, adds more illusiveness to the process. But most of housing loan calculations are in Euros.

Even though Mrs Tubalkain-Trell´s English is a little hard to understand (the reason why I keep her notes here to the lowest), I do hope that you can make something out of it too ... !

So, next time watch it guys and dolls ... ! and borrow your money in EEK as your bank offered it to you in the first place .... But you prefered EUR ...  So do not complain now ... ! This is the unfortunate reality ...