Media13.com is a source of free to republish or reprint articles, writers may submit your articles in our database as long so you agree that your article will be freely republish or reprint by other.

Submit Article

Search our database

Received article from us.

Name

Email Address

Friends

Bollywood News
Link building
Article submission service
Freelance Writers
Laser hair removal

We have been looking for freelance writers. Contact us

Basic bank accounts failing the basic needs of consumers by Richard Green

The lists of bank and savings accounts that are available to most people are bewildering. A quick look at a comparison site like Moneynet or Moneyfacts will reveal thousands of different products. Unfortunately many of these accounts are not accessible for anyone with either a poor or even no credit history.

Research carried out for the National Consumer Council (NCC) reveals “that the poor pay more, or get less, for essential goods and services… having a bank account can be a gateway to other products and services, such as affordable credit and insurance”. To help counteract this problem of financial exclusion, the government has tried to initiate the introduction of basic bank accounts for the least well off. The NCC has however warned that, “the current model of basic bank accounts, introduced by government in 2000 in an attempt to enable all low-income consumers to access banking services, is not delivering.“

The new basic bank accounts were introduced as part of a wider push towards ‘universal banking’ and corresponded with the introduction of direct payment of social security benefits to bank accounts as well as the Post Office Card Account (POCA). The plan was that these accounts would also help their users by letting them set up direct debits to pay their utility bills, and so keep better track of their finances from week to week.

The accounts were originally designed to let people save and withdraw money, but in an effort to prevent extending any existing debts and stopping the accounts from becoming overdrawn, they don`t offer cheque books, overdrafts or other credit facilities. The accounts were intended for those with no credit history who might not meet the banks` criteria for opening a standard current account. The accounts features typically include the ability for payments, for example pensions and benefits, to be credited direct to the account, withdrawals by plastic card through cash machines and the facility to pay bills by direct debit.

The problems experienced seem to be partly because the accounts do not always help those with a small weekly income to deal with the unpredictable gaps which can occur in wages, benefits or spending. Automated monthly direct debit payments for goods and services can prove of little use to many on low weekly based incomes. Those paid on a week by week basis, expressed a preference for weekly cash based, rather than monthly direct debit, budgeting options and felt that bank accounts with direct debit facilities would not provide them any advantages. By using cash instead of a bank account, they found they could juggle payments easier, and avoid punitive additional bank charges if they did not have the funds to hand, to cover an outgoing debit payment.

Another problem experienced was that the holders of these basic accounts are also liable to be those on low incomes, with low (if any) savings and are more likely to be in arrears paying their household bills than those without them. This vulnerable group are less likely than most to be able to deal with unexpected additional expenditure, such as an unforeseen bill for home repairs, but without recourse to any credit facilities, they may be forced into resorting to high interest loans to cover temporary setbacks.

The NCC found that “people on low incomes who use accounts to manage their money are more likely to be in arrears with household bills. They are also more likely to have outstanding credit commitments, partly because they have wider access to credit”, than those without accounts.

The government has set a target of halving the number of households which do not have access to a bank account by 2006. The banks state that they currently face a lack of demand, however more than two million applications, in excess of the government’s expected take-up, for the POCAs have been made. The banks are claiming that reaching the targets will be difficult, as they are being impeded by various barriers to opening basic bank accounts, such as the identification requirements in money laundering rules. Some of those on low incomes may not possess either a full driving license or full passport, and so find difficulties setting up new financial accounts. The banking industry has also been widely criticised for failing to actively promote basic bank accounts and, sometimes, for actually discouraging people from opening them.

The NCC proposed that basic bank accounts need to be more flexible. Suggestions to make the bank accounts meet the needs of consumers included offering weekly, rather than monthly, direct debit facilities where payments are only triggered if the money is available in the account, occasional payment holidays, and small free ‘buffer zone’ overdrafts.

Whether the lack of interest is due to the banks, the government, or the product itself, something needs to be done if there is to be an increase in the take-up rates. Half of those surveyed by the NCC felt they do not really need an account. An even more damning indictment of the current basic bank accounts was that a similar proportion of account holders preferred to withdraw all their income, rather than leave it in the account, and then manage it as cash. An inclusion policy may be a laudable idea, but it is no use if people do not want to be included, and it should not disadvantage those it is meant to help.

Author Info:

Richard lives in Edinburgh, occasionally writing for the personal finance blog Cashzilla and reciting Vogon poetry.

Latest 20 articles

Hire the California Labor Board or California Labor Law Attorneys - You Decide With a downturn in the economy, many employers are cutting back on payroll. Unfortunately, some employers are reducing payroll costs by violating the California overtime laws. When this occurs, employees have essentially two options to recover their California overtime pay: the California labor board, or hiring California labor law attorneys. Although the California Labor Board is a commonly

Hiring a Car At Bangalore - Is More of Necessity Than A Luxury Your sedan is probably the best materialistic thing that you own and while going to a new place, that is what you ought to miss the most but if you are going to Bangalore then you probably have a option of getting a replacement so that you don’t miss it all that most because it will be as comfortable and as obedient as your own car and the Bangalor

How to Choose a Car Rental Company in Bangalore Bangalore is a place that lists one of the best as far as infrastructure is considered in India as it is the IT hub of India and thus the roads to drive is atmost pleasure and thus if Bangalore is the destination that you are planning for next then the best way to move around is by hiring a car. To hire is car is very simple if it is in Bangalore because there are some very good car rental compani

Car Rental Companies in Bangalore If you are travelling to Bangalore and hiring a car is what worrying you then you can be relaxed because this is one service that you will easily get in Bangalore and that too at very affordable and economic prices. Basically there are really good car rental companies in Bangalore available for renting the cars and you can either book in advance or go there and hire a car for yourself. Also, you h

Tips to Hire a Car in Bangalore One thing that most of us agree is that the fact that the most comfortable way to move around at any place is by your own vehicle but what if you are going to a new place, it is not possible to carry your vehicle along with you and you actually cannot trust too much on the public transportation system and at such situation the best possible option is to hire a car for yourself, at some places it c

Hire a Car: Comfortable Way to explore Bangalore If you are out to a new place than the first thing that comes into your mind is a comfortable accommodation and then the second one on the priority list is a comfortable way to move around in the city and if Bangalore is your preferred location, than you’ll be having options for both of the facilities, but if we specifically speak about the second one that is moving comfortably than the best opti

Car Rental – A convenient mode of transport in Bangalore Bangalore, a place which probably is considered one of the best places in India as far as infrastructure is considered and reasons are many for that, one is because of the IT hub that it is and also because it is one of very good places if you are considering holidays and because of this very good facility provided for the people visiting Bangalore is that you have many options in case if you are

Rent a Car in Bangalore: Take the Right Decision In today’s world, time is money; the more you save it better it is for you. And in that case if you are going to another place where you are not too familiar with the surroundings, then instead of wasting time on travelling by locating and travelling by public transport is to hire a vehicle for yourself. This helps in many ways, one it saves on time and also it moves at your pace so you don’t have

Bangalore Car Rental: Save Your Time When you are at an unknown place or for that matter known place and time is your major factor of concern then, the best way to save on time is by having your own vehicle for conveyance. This gives you freedom to move at your own pace and wish. And for that matter if you are at a place like Bangalore where the roads are so beautiful that it is a sheer pleasure to travel through your own rented vehi

Best Package Tours to Kerala Kerala – God’s own country which means heaven for those who appreciate the real untouched, naïve beauty of nature and if you are one of those than consider Kerala as the option for you next holiday. Kerala gives an option to explore the nature to the fullest because it has all the places where you can explore the nature be it scenic beaches or the hill stations or the ethnic culture, just everythi

Kerala Tour: A Getaway from Regular Stress If you are tired of daily stress and meetings and looking for a getaway so that you snatch some time for yourself with your loved one’s than Kerala holidays is the perfect is the perfect thing for you. Its calmness and closeness to nature would give you that much needed peace of mind that you always wanted. Also along with enjoying the beauty of this scenic place on your holidays to Kerala you can

Kerala Tour Packages: Have A Look If holidays are on your mind, then Kerala is one option that you cannot choose to neglect. Because Kerala is one place that offers you all from calm and serene natural places to exciting sports to exotic beaches and also beautiful hill stations, everything provided at one place which is also known as god’s own country. And obviously such wide range of activities would make it a tough job to cover

Kerala Holidays: Places To Visit Kerala also known as God’s own country, the name itself is synonymous with heavenly experience and to see this heavenly place all you have to do is pack your bags and head straight away to Kerala. Kerala is a place of multiple opportunities of which you can select the ones that interest you the most and design your own package for your Kerala tour. You can come to Kerala for various reasons and th

An Overview to Kerala Tourism Life’s a journey and to keep moving there are occasional breaks that you need to take and if you are looking for one of those breaks than Kerala holidays is one place that is your answer. Be it a family vacation or honeymoon tour or just a getaway with friends, this is one place that provides with ample opportunities for every kind of vacation. In fact there is so much to do and see that you will

Kerala : Popular Travel Destinations Kerala holidays is one thing that you should treat yourself and your family at least once and once you go to Kerala, you’ll have that craving to go back again and again, such is the charm of god’s own country that is Kerala. To give you a glimpse of what all Kerala have to offer to its visitors, let’s start with the most famous tourist hot spot i.e. Munnar, a place which is famous for its tree and

Kerala : Welcome To GOD’S Own Country If serene and calm beauty of nature is what’s on your mind then, Kerala is just the place you are looking for. It is so pristine and pure that it is called God’s own country. Greenery spread everywhere till your eyes can see; picturesque views, fog in the morning etc. are some of the first things you will notice when you step in Kerala. Kerala Tou

A California Labor Law Attorney: Just What You Need in Times of Trouble! In a time where California labor law is constantly changing and employers are playing it “fast and loose” in order to make ends meet, a California labor law attorney may be just what the doctor ordered to explain the complex California overtime laws. With a weakening economy, and jobs being shipped overseas, it is not uncommon to see rampant abuse of the California overtime laws. Employers r

Tax Debt Help Needed - How Can I Stop an IRS Bank Levy? The IRS does give you ample warning that they intend to levy your bank account. You undoubtedly received the notice and demand for payment from the IRS which included the amount you owed in back taxes. You probably did not contact the IRS at that time, and that was very important. The next communication you received was called the “Final Notice” which did express their Intent to Levy and also inc

California Labor Laws: Asserting Your Employee Rights Many employees when experiencing a labor violation are confused as to where to turn and typically take one of four paths. 1. A very common path and usually the most treacherous, is doing nothing at all. When an employee is hesitant to hire California overtime lawyers or California labor law attorneys to handle a situation, it usually gets worse before it gets better. Complacency will typicall

California Overtime Laws: Top 4 Common Employer Mistakes A California labor law attorney has revealed the four most common mistakes that employers make in violation of California overtime laws. Although California labor laws for breaks and lunches are clear, nevertheless employers tend to overlook something as simple as giving their employees a meal or rest break. While this is only one of our top three violations, it is often the most overlooked.