Is there really a need for basic accounts anymore

davethorp

When basic accounts were first launched, they were cut down versions of the full accounts generally offering a reduced debit card (solo/electron) or a cash card, standing orders and direct debits but no cheque book or overdraft facilities. There was a significant difference between the basic account and the full account back then.

Nowadays though, the gap between the accounts seems to be closing with most uk banks now offering either a maestro card or more likely visa debit on their basic accounts (only banks to offer basic debit or cash cards off top of my head are HSBC, the santander group and nationwide). Cheque books are more or less obsolete with nowhere on the high street accepting them any more and without a guarantee card they are no more lethal than a direct debit and overdrafts on a full account are subject to status anyway.

So should the banks be doing away with the basic accounts and simply offering full accounts to all but tailoring facilities such as cheque books, overdrafts and credit cards based on credit score or internal trust score? Personally given that most banks are offering full debit cards on all accounts now, I'd say yes and the basic bank account is no longer necessary

fawinds

I agree. Banks should open full current accounts and then assess the customer for individual facilities. A standard current account with no overdraft and cheque book is the same as a basic account, in my view.

book12

fawinds wrote: »

I agree. Banks should open full current accounts and then assess the customer for individual facilities. A standard current account with no overdraft and cheque book is the same as a basic account, in my view.

I totally agree with both of you.

It's a good idea to write to the FSA or some other financial body, and see what they think about it, or even individual banks.

never-in-doubt

davethorp wrote: »

When basic accounts were first launched, they were cut down versions of the full accounts generally offering a reduced debit card (solo/electron) or a cash card, standing orders and direct debits but no cheque book or overdraft facilities. There was a significant difference between the basic account and the full account back then.

Nowadays though, the gap between the accounts seems to be closing with most uk banks now offering either a maestro card or more likely visa debit on their basic accounts (only banks to offer basic debit or cash cards off top of my head are HSBC, the santander group and nationwide). Cheque books are more or less obsolete with nowhere on the high street accepting them any more and without a guarantee card they are no more lethal than a direct debit and overdrafts on a full account are subject to status anyway.

So should the banks be doing away with the basic accounts and simply offering full accounts to all but tailoring facilities such as cheque books, overdrafts and credit cards based on credit score or internal trust score? Personally given that most banks are offering full debit cards on all accounts now, I'd say yes and the basic bank account is no longer necessary

Remember though mate there is a major difference in the operating of the cards....

You get Full Auth cards for 'basic style' accounts and a Full Debit card for 'full style' bank accounts so there is a big difference and the debit cards are still totally different.

never-in-doubt

fawinds wrote: »

I agree. Banks should open full current accounts and then assess the customer for individual facilities. A standard current account with no overdraft and cheque book is the same as a basic account, in my view.

They are not the same mate

Full Auth Card (- Old style solo/electron)
This will request authorisation before allowing the sale to proceed (to check for funds). This means that if you were on a plane wanting duty free, on a train buying a ticket or at tesco petrol pumps, you'd be declined the sale because the terminals are offline and cannot provide authorisation.

Full bank cards (-3 in 1 cards)
These cards do not seek authorisation and will work on 'trust' or if you like, a floor limit (as it used to be). Therefore the card will always be authorised even if offline (by authorised I mean if using an offline terminal it may allow you to go overdrawn) meaning you can use it on planes, trains and tesco pay @ pumps.....

That is a big difference and also the way the accounts are run is different (most basic accounts offer 3 strikes and you're gone!)......

Remember a basic account is only there because the government wanted to ensure everyone could use 'basic banking facilities' because they had the brainwave to pay benefits directly and forgot most people never had a bank for one reason or another and some couldn't open one. The PO started the trend with the banks following suit shortly afterwards.......

A lot of basic accounts are used purely for peoples benefits.

davethorp

never-in-doubt wrote: »

Remember though mate there is a major difference in the operating of the cards....

You get Full Auth cards for 'basic style' accounts and a Full Debit card for 'full style' bank accounts so there is a big difference and the debit cards are still totally different.

There is no reason though banks couldn't offer the two card styles on their full account (and some banks do) again subject to the banks assessment of the customer. Even with the two different card types, the majority of debit card transactions are done online anyway and a transaction comes straight off available balance

Were the banks to do this they would likely make more money too as many basic account customers operate their accounts in ways that would make them eligable for other products but several banks seem to ignore their basic customers for any further products

never-in-doubt

davethorp wrote: »

There is no reason though banks couldn't offer the two card styles on their full account (and some banks do) again subject to the banks assessment of the customer. Even with the two different card types, the majority of debit card transactions are done online anyway and a transaction comes straight off available balance

Were the banks to do this they would likely make more money too as many basic account customers operate their accounts in ways that would make them eligable for other products but several banks seem to ignore their basic customers for any further products

I agree, don't get me wrong mate but each account is operated differently. I used to have a 2-in-1 card with HSBC (only for a month mind you) and then I wanted the CGC put on and it was done.

But I do know of some banks issuing a restricted card on a full account, like abbey for instance, issue electron to some people but give them an overdraft and cheque book (weird eh?) which suggests they are only half worthy of banking - this to me is bonkers.

The government had the final say in basic banking (http://www.moneymadeclear.fsa.gov.uk/pdfs/bank_accounts.pdf) and you know their idea's, it'll be dead-and-buried in the next 10 years and like you suggest, I think there will be a bank account that will offer the facilities requested and necessary per risk. Its a matter of time :beer:

davethorp

I bank with Natwest and as we know they are due to start switching over to visa debit on monday (still a full auth card but better than solo). I only have the step account though. I really don't see why they dont do away with the step account, give me a full account, still give me the full auth card if they dont trust me enough after 3 years and not bother giving me an overdraft or cheque book. Its no different, removes the stigma of basic bank account and makes the bank more likely to consider me for things such as overdrafts, credit cards etc etc rather than overlooking me simply because I am not to be trusted with an account that is hardly any different to my own anymore

spindo

never-in-doubt wrote: »

They are not the same mate

Full Auth Card (- Old style solo/electron)
This will request authorisation before allowing the sale to proceed (to check for funds). This means that if you were on a plane wanting duty free, on a train buying a ticket or at tesco petrol pumps, you'd be declined the sale because the terminals are offline and cannot provide authorisation.

Full bank cards (-3 in 1 cards)
These cards do not seek authorisation and will work on 'trust' or if you like, a floor limit (as it used to be). Therefore the card will always be authorised even if offline (by authorised I mean if using an offline terminal it may allow you to go overdrawn) meaning you can use it on planes, trains and tesco pay @ pumps

Isnt the Barclays Connect Debit Card issued on their basic account neither of the above, not quite 100% a full bank card but supposedly way better than a Solo/Electron? I'm only going by what i've read on this forum over the last months/year.

book12

never-in-doubt wrote: »

Remember though mate there is a major difference in the operating of the cards....

You get Full Auth cards for 'basic style' accounts and a Full Debit card for 'full style' bank accounts so there is a big difference and the debit cards are still totally different.

Natwest could offer full authorisation cards (Solo) or full debit cards (Maestro) to 'full style' bank accounts.

book12

spindo wrote: »

Isnt the Barclays Connect Debit Card issued on their basic account neither of the above, not quite 100% a full bank card but supposedly way better than a Solo/Electron? I'm only going by what i've read on this forum over the last months/year.

It's called Connect (Electronic). For some reason, the staff say it's a VISA Electron.