Over 4.1million consumers benefiting from fee-free bank account

Posted by George Coburn in Personal Finance on 14 December 2016 - George is a Credit Analyst at checkmyfile

You’d assume that a bank account was a pretty standard thing for everyone to have, but government research conducted a few years ago found that many people didn’t have access to this seemingly vital service.

Your typical bank account will usually come with an overdraft and there are often fees and charges applied when you go over this or if something like a payment bounces. Charges can then potentially add up substantially and land the individual into debt and money problems. What’s more, if you have a poor credit rating due to past payment behaviour, you may find that you don’t qualify for a normal current account. So what does someone do if a current account isn’t suitable for their circumstances or available to them?

To tackle this problem, the government launched an initiative in 2014 to encourage banks and building societies to offer fee-free bank accounts. These are essentially a current account minus any charges or facilities such as an overdraft, meaning even those with poor credit ratings can be accepted. They also appeal to individuals who may be prone to getting charged on other types of current account.

Since its launch, there are now over 4.1m fee-free bank accounts and this represents just over half of the 8m basic bank accounts currently open in the UK. In fact, according to the research, Nationwide, Clydesdale and Yorkshire now have more fee-free bank account customers than those with standard current accounts.

The most fee-free bank accounts opened in the first half of 2016 were opened with either Nationwide Building Society or Lloyds Banking Group and the group currently have close to half of the whole market share.

Speaking of the success of the initiative, Simon Kirby who is Economic Secretary to the Treasury said, “Ensuring consumers have access to the financial services they need is a vital part of our plan to build an economy that works for everyone.

“That is why I am delighted nearly half a million people have opened fee-free basic bank accounts since January.

“There is still more to be done and I am determined to work with the industry to boost financial inclusion and make sure people have the resources they need to manage their finances.”

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