Britons without a bank account face ‘poverty premium’
1.23 million unbanked individuals pay £485 extra a year for everyday bills and services
Over a million Britons who do not have a bank account are paying an extra £485 a year on average for everyday bills and services, a report has revealed.
Digital current account provider Pockit found around 1.23 million so-called unbanked individuals are missing out on preferential deals and discounts on utility bills, mobile phone contracts, broadband and personal loans.
Analysing prices from leading service providers indicated that energy and broadband providers and mobile phone companies offer discounts to customers if they pay by direct debit - a saving which is not available to those without a bank account.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
In addition, those without accounts have limited options when looking for credit, and often turn to expensive cash-in-hand “doorstep loans”.
With electricity and gas, analysis of energy regulator Ofgem data found those using pre-payment meters paid on average £141.57 more each year than those who paid by direct debit.
As well as forcing customers to pay higher rates, says The Daily Mirror, not having a bank account “could lock others out of the system entirely where providers - such a landlords - refuse to allow you to pay in cash”.
“For many of us, having a bank account is a basic fact of life,” said Pockit chief executive Virraj Jatania. “Yet the unbanked face a banking poverty premium which can put a real strain on their finances.”
While the number of people without a bank account has roughly halved over the past 20 years due to the rollout of no-frills basic accounts and advances in technology, the government said recently “this is still 1.23 million too many”.
In its financial inclusion report the Government said those most likely to be without a bank account include 18-24 year-olds and the unemployed, which might explain the higher levels of unbanked residents in major cities where these demographics are highest.
The BBC says “traditional banks can reject customers applying for accounts if they do not have enough forms of ID, or if their credit rating is poor”, while The Guardian adds other “people who have found it difficult to open a bank account include some migrants [and] those who cannot provide proof of a UK address”.
“There are also some people who for varying reasons do not want a bank account,” adds the paper.
Whether by choice, accident or in the vast majority of cases because they have been blocked from opening an account, the penalty for those already struggling to make ends meet is high.
UK Finance, which represents the UK banking industry, said banks took their financial inclusion responsibilities “extremely seriously”, adding there are over seven million basic bank accounts in the UK to chose from.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
'Good riddance to the televised presidential debate'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Caitlin Clark the No. 1 pick in bullish WNBA Draft
Speed Read As expected, she went to the Indiana Fever
By Peter Weber, The Week US Published
-
Today's political cartoons - April 16, 2024
Cartoons Tuesday's cartoons - sleepyhead, little people, and more
By The Week US Published
-
Should couples have a shared bank account?
The Explainer Weigh the pros and cons to determine whether sharing a bank account is right for you and your partner
By Becca Stanek, The Week US Published
-
How to avoid check fraud this holiday season
The Explainer A record number of suspicious activity reports tied to check fraud this year has put banks on high alert
By Becca Stanek, The Week US Published
-
What to do if your bank closes your account and how to avoid it
The Explainer There are steps you can take to prevent the nightmare scenario of an unexpected closure
By Becca Stanek, The Week US Published
-
Lebanon’s bank heists crisis
feature Desperate customers are staging hold-ups after being denied access to their savings
By Fred Kelly Published
-
When will paper £20 and £50 notes expire?
Business Briefing Old notes will soon be taken out of circulation by the Bank of England
By The Week Staff Published
-
Brits keeping 21 million ‘money secrets’ from friends and family, survey reveals
Speed Read Four in ten people admit staying quiet or telling fibs about debts or savings
By Joe Evans Last updated
-
London renters swap cramped flats for space in suburbia
Speed Read New figures show tenants are leaving Britain's cities and looking to upsize
By The Week Staff Published
-
Should the mortgage holiday scheme have been extended?
Speed Read Banks warn that some homeowners may struggle to repay additional debt
By The Week Staff Last updated