If you have a bad credit rating this could be for you

If you have a bad credit rating this could be for you

Those who have been barred from mainstream banking services due to poor credit ratings will be given basic bank accounts as of next year.

These accounts will not charge for missed payments, have no overdraft facilities and have no interest attached to them. This news came after the Government struck a deal with a number of major banks to help those who are currently struggling after a period of financial trouble.

The charge free accounts aim to aid customers who have a bad credit history or previous banking issues.

The reasons for this is to reduce the amount of payday lending industries who have loaned money to customers who find it offcut to manage their money and have no access to a bank account.

At the moment banks charge between £6 and £35 for failed payments, which is capped at £30 a day or £150 a quarter.

Other banks have uncapped charges, which send customers into non-existent overdrafts, and can see them racking up hundreds of pounds in charges.

Some people consequently find it hard to apply for a debit card and access cash machines, electronic payments or online shopping.

In 2012, the government revealed that one million British adults don’t actually have access to a bank account.

However this will change as of next year- the new basic bank account will be offered to customers with the same terms and conditions as other current accounts.

This will ensure that they will be able to access ATMs and be able to use over the counter services at their chosen bank and that the Post Office.

The banks who are on board include; Barclays, the Co-operative Bank, HSBC, Lloyds Banking Group, Nationwide, RBS Group (NatWest and Ulster Bank) and Santander.

Each bank has said it will offer this bank account by the end of 2015.

The new accounts may not come with an overdraft facility, however it will enable people to manage their money with ‘certainty and clarity’, according to Treasury economic secretary Andrea Leadsom.

She said: ‘It will end people being effectively locked out of their basic bank accounts due to high fees and charges when their payments failed.

‘Ending this unfair situation is a real step forward for the banking industry’s most vulnerable customers and improving access to banking is a key part of our long-term economic plan.’

The accounts will allow customers to have wages, benefits, State pension or tax credits paid directly into their account, pay in cheques for free and pay bills by direct debit or online.

It currently costs the banking industry about £300 million to provide basic bank accounts to an estimated nine million people.

Anthony Browne, chief executive of the BBA trade body, said the proportion of the population with no account at all is less than a third of that in the United States and Europe.

He added: ‘Now we will be helping even more people access banking services than ever before and these basic accounts will make it easier for more people to manage their money.’

The launch comes amid a crackdown on the payday lending industry, which has picked up business in recent years as more people struggle to maintain access to a basic bank account. 

 



by for www.femalefirst.co.uk
find me on and follow me on