Despite increasingly easy access to personal finance services, there are still 3 million adults in the UK today who are completely outside the banking method and don't have access to a bank account.
Many of these men and women are unable to get a standard account due to the fact they have a poor credit score, because of past financial difficulties, or simply a lack of positive financial history. While high street banks are keen to deal with people with great credit ratings, they may be cautious about making credit facilities such as overdrafts accessible to men and women with sub-prime ratings.
A new kind of bank account was needed when the industry's government prompted a goal of increasing financial inclusion. That was when the Basic Bank Accounts were born.
Basic bank accounts, also known as starter accounts or introductory accounts, are a really basic type of account which offers little in the way of credit or ways for account holders to get into debt. There is typically no overdraft facility, no check book, and no debit card. The accounts merely present a way for funds to be paid over the counter, by electronic transfer, and withdrawn by cash machine.
This lack of features means that there is little risk or cost involved for the banks, therefore their approval rates are a lot higher. In fact, about the only individuals who will have their applications denied are undischarged bankrupts, or those having a history of fraud or very severe bad debt.
Firstly, most accounts will let you set up direct debits to pay your bills, and this may save you money as many companies will give you a discount when you pay in this way. So how can acquiring a basic bank account benefit you? Ask a financial services provider or fsp by exploring, "financial service provider".
Also, the government is moving towards paying all benefits and pensions direct into bank accounts instead of in the old way over the Post Office counter. Basic bank accounts will let you receive funds in this way.
Lastly, this kind of account may be a 'stepping stone' into other financial services, helping you to build up a better credit rating and in the future to take advantage of other services accessible such as overdrafts and debit or credit cards.
Since they had been introduced, basic accounts have been quite successful, and there have now been around 5 million accounts opened. Both government and the banking industry say they are committed to increasing this figure even more over the next few years until each and every adult has some form of bank account. We can expect to see a lot more about basic accounts in the foreseeable future.
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