Charge-free basic bank accounts for the non-poor

Chomeur

All the commentary about the new basic bank accounts seems to suggest they are for the poor. But aren't they useful for everyone? If you have to give your bank account/debit card details to someone you don't entirely trust then having an account that will refuse payments that will take you overdrawn and not charge you for it will be really useful. You might want to do this (a) where someone is paying money to you online, (b) for a free trial period on a subscription which you know you will cancel, or (c) because someone wants to take payment over the phone and you have no evidence of the amount agreed, so will just credit the account with the amount agreed and if there is a dispute they have to pursue you rather than the other way round.

I had someone set up an unauthorised direct debit on my Halifax electron account this year, and although it didn't cost me anything, it was a hassle to sort out. With one of these new accounts presumably they wouldn't be able to do this.

Agreed?

Edit, forgot to say that you'd of course have to keep it with a zero balance all the time unless there was a payment you wanted to make from it.

chris_m

Chomeur wrote: »

All the commentary about the new basic bank accounts seems to suggest they are for the poor.

But they are not - they are for people who, for whatever reason, cannot meet the requirements for a "normal" current account. They could have a decent income but a dire (or, even, non-existent) credit rating/history.

Archi_Bald

If you wreck your credit records sufficiently - and you are absolutely free to do so - you can get one of those new fee-free accounts as well, regardless of how much you earn. This is because you wouldn't be accepted for any of the accounts that pay interest or offer other benefits such as overdrafts and cashback. Nor would you get accepted for a loan or a mortgage, you could get turned down for a rental property, mobile phone, credit cards or insurances, and you might even have difficulties getting certain jobs as employers increasingly check the credit files of applicants.

If you think you are unable to manage your account without going into overdraft, there are accounts that offer overdraft 'control', such as this one from Natwest. These have been around for a long time.

If you aren't sure whether you are dealing with trustworthy companies on the internet, why are you dealing with them in the first place? Although, if you pay with your credit card, you have good protection. And there are things such as the DD guarantee.

Aside from that, it is, and always has been, rather easy for anyone to get fee-free accounts if you look after your accounts and pay your bills on time. I have not paid a penny in current account fees for some 40-odd years, and it isn't because I am swimming in money but because I have always been living within my means. Even better, a number of banks will actually pay you for keeping your money in their current accounts, and to pay your bills through them. I can't see why you'd want to trade this for an account that comes with restrictions as outlined above.

Bottom line: no, I do not agree with you at all.

A_Flock_Of_Sheep

All accounts should be like these. For everyone. No overdrafts or fees. People shouldn't be relying on overdrafts for things they cannot afford to buy - regardless of whether payday is due at some point or not.

absolutereturn

Archi_Bald wrote: »

If you wreck your credit records sufficiently - and you are absolutely free to do so - you can get one of those new fee-free accounts as well, regardless of how much you earn. This is because you wouldn't be accepted for any of the accounts that pay interest or offer other benefits such as overdrafts and cashback.

That's exactly the way it should be, there is no reason not to have a current account because of a poor CREDIT record, you are not asking for credit, just a place to get your money paid in so you can manage your finances.

Archi_Bald wrote: »

Nor would you get accepted for a loan or a mortgage, you could get turned down for a rental property, mobile phone, credit cards or insurances, and you might even have difficulties getting certain jobs as employers increasingly check the credit files of applicants.

Not every employer can check credit files, under the principles of reciprocity, only those companies that share data with the credit reference agency can check your credit files. Financial institutions obviously can and it is in this sector where we see employers checking the credit of those applicants they have already chosen for a job, not of every applicant.

Anybody (not just employers) can check the CCJ records which is they reason they are more damaging than defaults.

Archi_Bald wrote: »

If you aren't sure whether you are dealing with trustworthy companies on the internet, why are you dealing with them in the first place? Although, if you pay with your credit card, you have good protection. And there are things such as the DD guarantee.

There are also pre-paid cards which you can load up with just the right amount of money for a transaction and you don't need good credit for these.

Archi_Bald wrote: »

Aside from that, it is, and always has been, rather easy for anyone to get fee-free accounts if you look after your accounts and pay your bills on time.

Yes, we all know this so no need to highlight it in bold, however, if, for whatever reason, you haven't been able to do so, you still need a bank account, in this day and age you just can't live without one.

A_Flock_Of_Sheep wrote: »

All accounts should be like these. For everyone. No overdrafts or fees. People shouldn't be relying on overdrafts for things they cannot afford to buy - regardless of whether payday is due at some point or not.

There's no reason why people who, as the OP above, have been able to pay their bills on time, shouldn't have overdrafts. Most O/Ds are modest when compared with, say, credit card limits. They may carry interest and charges but are still cheaper than a payday loan.

There should be BOTH basic accounts without credit facilities (overdrafts) AND accounts with overdrafts. Not everyone's circumstances are the same. What's wrong with starting with a basic account and upgrading to one with an O/D in the future? The reason banks would rather promote accounts with O/D facilities is because that's where they make their money.