PEOPLE who can’t get a bank account are hit with a “poverty premium” of more than £250 per year in extra fees and charges.
Around 1.2million vulnerable and older Brits don’t use a bank – but they have to pay more for services and are missing out on discounts, research found.
Customers who can’t pay by direct debit are charged an average of £199 per year more on their energy bills, £26 more on mobile phone bills and £38 extra on their broadband bills.
It means they are paying an average £263 extra in total.
The research, carried out by digital account provider Pockit, also found people without a bank account were more likely to take out high-interest doorstep loans with loan sharks.
Someone borrowing £300 on a credit card would have to pay around £38.85 interest over a year, but the interest on borrowing the cash using a doorstep loan is around £261.60 – or nearly £223 more.
Not having a bank account – known as being “unbanked” – can happen when people have a low credit rating, no fixed address in the UK or simply don’t trust banks.
Pockit is a prepaid Mastercard which acts like a current account because customers can pay in wages and benefits, and are given a sort code and account number so they can use it for direct debits.
It is free to pay in money by bank transfer or to pay using the card in store or online.
But it costs 99p per month and charges an extra 99p on top every time customers pay in or withdraw cash or transfer money out of the account.
Pockit founder Virraj Jatania said: “For many of us, having a bank account is a basic fact of life. Yet the unbanked face a Banking Poverty Premium which can put a real strain on their finances.
“From paying more for their energy bills to not being able to shop online, people without a bank account face additional costs and challenges on everyday items we take for granted.
“A bank account is a simple yet important step to helping people escape the Banking Poverty Premium and to make the financial system work for them.”
Source: Read Full Article