Over a million Britons who do not have a bank account are paying an extra £485 a year on average for everyday bills and services, a report has revealed.
Digital current account provider Pockit found around 1.23 million so-called unbanked individuals are missing out on preferential deals and discounts on utility bills, mobile phone contracts, broadband and personal loans.
Analysing prices from leading service providers indicated that energy and broadband providers and mobile phone companies offer discounts to customers if they pay by direct debit - a saving which is not available to those without a bank account.
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In addition, those without accounts have limited options when looking for credit, and often turn to expensive cash-in-hand “doorstep loans”.
With electricity and gas, analysis of energy regulator Ofgem data found those using pre-payment meters paid on average £141.57 more each year than those who paid by direct debit.
As well as forcing customers to pay higher rates, says The Daily Mirror, not having a bank account “could lock others out of the system entirely where providers - such a landlords - refuse to allow you to pay in cash”.
“For many of us, having a bank account is a basic fact of life,” said Pockit chief executive Virraj Jatania. “Yet the unbanked face a banking poverty premium which can put a real strain on their finances.”
While the number of people without a bank account has roughly halved over the past 20 years due to the rollout of no-frills basic accounts and advances in technology, the government said recently “this is still 1.23 million too many”.
In its financial inclusion report the Government said those most likely to be without a bank account include 18-24 year-olds and the unemployed, which might explain the higher levels of unbanked residents in major cities where these demographics are highest.
The BBC says “traditional banks can reject customers applying for accounts if they do not have enough forms of ID, or if their credit rating is poor”, while The Guardian adds other “people who have found it difficult to open a bank account include some migrants [and] those who cannot provide proof of a UK address”.
“There are also some people who for varying reasons do not want a bank account,” adds the paper.
Whether by choice, accident or in the vast majority of cases because they have been blocked from opening an account, the penalty for those already struggling to make ends meet is high.
UK Finance, which represents the UK banking industry, said banks took their financial inclusion responsibilities “extremely seriously”, adding there are over seven million basic bank accounts in the UK to chose from.
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