Household banking mission accomplished, says government
18 Oct 2009 Tell a Friend
A goal set out by the government and the Financial Inclusion Taskforce to reduce the number of adults without access to a bank account has now been achieved, according to a new report. The main aim of the venture is to ensure that all adults can manage their money 'effectively, securely and confidently'.
The target has been to halve the number of households that do not use in-branch or online banking at all, and the latest report shows that the number has fallen from 2 million households in 2003-4 to just 900,000 in 2007-8.
Sarah McCarthy-Fry, Exchequer Secretary to the Treasury said "We welcome the announcement that this very important goal has now been achieved. The shared goal is a great example of government, industry and third sector partners working together to ensure that everyone can access the financial services they need to get by day-to-day."
So how easy is it to go about your daily life without a bank account of any kind? If you are employed or self-employed you are required to have a bank account so that funds can be paid in electronically. The only exception is if you are paid cash in hand. If you are not working, having a bank account can still provide a much greater level of security for your money, and if you are not looking for an overdraft, most bank accounts are actually free to set up and cost nothing to use.
It would also be rather difficult to apply for credit without a bank account, bearing in mind that a loan provider will base their decision about whether to lend money to you on your credit report. This credit report is a record of all the money you have borrowed, and all of the financial products (such as credit cards and store cards) that you have had. Without so much as an overdraft to your name, it makes that decision about whether you would be a reliable borrower very difficult, and means that your application would be much more likely to be refused.
Tasks such as bill-paying become more difficult and possibly more expensive without access to a current account. Companies that provide utilities, gas, water and electricity, usually require direct debit payments that are taken straight from a bank account. Choosing not to pay in this way can incur a surcharge. Other products such as insurance may also come cheaper if you are able to make a direct debit payment each month, because this limits their administration costs.
Security and a lack of trust in the banks is a major reason why people choose to opt out of banking services. However, if you would prefer not to manage your money through online banking and run the risk of falling victim to identity fraud, you can manage your account through your local branch. If your reservations about opening a bank account come from being concerned about getting into debt or incurring bank charges, you can open a basic bank account (also known as an introductory bank account). This would enable you to open the account with a minimum of £1, and you would not be able to lose track of your money or go overdrawn because you cannot spend or withdraw money that you don't have. Although with a basic bank account you would not be able to pay in shops and restaurants with your card, you can withdraw money from ATM machines or through the Post Office up to a daily limit, and this is usually free.
Basic Bank accounts are also an ideal option if you have been bankrupt or have a poor credit rating. Although you are unable to own a credit card for a set period of time once you have been declared bankrupt, you can open a basic account because there are no credit facilities. There are also credit-building bank accounts which provide the first step to helping you build your credit rating back up again. The only requirements are usually proof of identity and proof of a fixed address.