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6 Dec 2019

Go Direct Personal Finance News  2009

The beginning of the end of free banking

Speculation is rife that in tomorrow’s Budget, the Chancellor, Alistair Darling will announce that all UK citizens must be offered a basic bank account from UK banks if they want one.

Currently, basic bank accounts are available to the majority of customers, with only a few being declined in exceptional circumstances, including having a previous bankruptcy judgement against them.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented:

“Basic bank accounts were originally set up with the aim of giving banking facilities to all, but banks still had the final say.

“Basic bank accounts appeal to customers who are worried about overspending, as they do not allow you to go overdrawn.

“You can only spend the balance of your account; however, you still need to keep an eye on your funds to cover any standing orders or direct debits. If there is not enough money in your account to pay these, they will be rejected and you will be charged.

“Without banking facilities and the ability to pay by direct debit, many customers find themselves having to pay a higher price for the same amenities, such as their utility bills.

“By making it a legal right to have banking facilities, the less well off customers will get a fairer deal.

“Banks will inevitably face higher costs if this legislation is passed, with the cost recovered through standard banking customers.

“The change could be another nail in the coffin for free banking, with banks looking to regain the additional cost potentially through the introduction of monthly fees.

“Virgin Money has already stated that when it launches a current account, it will look to charge a monthly fee, albeit with the overdraft charges included within it.  This may open the flood gates for other providers to follow suit.

“Already, the number of fee paying accounts has more than doubled in the last five years and this is only going to increase further.

“While the heart of this initiative is in the right place, in practical terms it may cause more expense for the majority of customers further down the line.”

Appendix

Provider

Account

Rate at £1

Standing Orders

Direct Debits

Account Operation

Alliance & Leicester

Basic Cash Account

-

No

Yes

Post Office, WAP, Postal, Branch, Internet,

Barclays Bank

Cash Card

-

Yes

Yes

Post Office, Branch,

Clydesdale Bank

Readycash

-

Yes

Yes

Post Office, Branch, Internet, Telephone,

Coventry BS

BranchSaveMoneyManager

0.1

Yes

Yes

Branch,

Coventry BS

CallSaveMoneyManager

0.15

Yes

Yes

Internet, Telephone,

HSBC

Basic Bank Account

-

Yes

Yes

Post Office, Postal, Branch, Internet, Telephone,

Halifax

Easycash

-

Yes

Yes

Post Office, Postal, Branch, Internet, Telephone,

Lloyds TSB

Cash Account

-

Yes

Yes

Post Office, Postal, Branch, Internet, Telephone,

Nationwide BS

Cash Card

-

Yes

Yes

Post Office, WAP, Postal, Branch, Internet, Telephone,

NatWest

Step

0.1

Yes

Yes

Post Office, Postal, Branch, Internet, Telephone,

Norwich & Peterborough BS

Basic Banking

-

Yes

Yes

Postal, Branch, Internet, Telephone,

Royal Bank of Scotland

Key

0.1

Yes

Yes

Post Office, Postal, Branch, Internet, Telephone,

Royal Bank of Scotland

Cash Account

0.1

No

No

Post Office, Postal, Branch, Internet, Telephone,

Santander

Basic Account

-

Yes

Yes

Post Office, Branch, Internet, Telephone,

The Co-operative Bank

Cashminder

-

Yes

Yes

Post Office, Postal, Branch, Internet, Telephone,

Yorkshire Bank

Readycash

-

Yes

Yes

Post Office, Branch, Internet, Telephone,

Source: Moneyfacts.co.uk 23.3.10

 

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

 

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