The start of the end of 'free banking'?
The Guardian recently reported that 'free' basic bank accounts could soon come with charges for ATM withdrawals.
The basic bank account is a 'no-frills' account that lets customers pay in their income and do things like set up Direct Debits to pay bills. There is no overdraft with this kind of account. Other account features vary from one basic bank account to another - for instance, some of these accounts come with a debit card, and others with a cash card.
The Guardian reported that between 2002 and 2008, the Treasury estimates that around half the 2.2 million people without any bank account opened one - in the vast majority of cases, a basic bank account.
Today, as the paper states, 'bankers are suggesting that the recent Vickers report on reforming the way banks operate may signal the end of free banking for all'.
Opening a basic bank account
The advantages of a basic bank account, compared with a 'standard account', include:
1. People with a poor credit rating can still open one, so they're simply available to more people.
2. Basic bank accounts do offer the 'basic' banking services most people need for day-to-day banking - things like Direct Debits & cash withdrawals.
3. There is no overdraft facility, which can be really helpful if you want to avoid overspending - as relying on an overdraft can be an easy way to get into debt without really realising it.
4. A Direct Debit facility can allow you to make savings on your utility bills.
5. You can open more than one basic bank account if you want to - you could use one for savings / bill money and one for spends.
Apply for a basic bank account
When applying for basic bank accounts, start by finding out whether you meet the criteria. Different basic bank accounts will have different minimum ages and other stipulations and some accounts come with extras, whilst acting just like a basic bank account. You will need to show the bank or company any documents that they ask for, to prove you are who you say you are (banks have to check your identity by law to prevent money-laundering).