81% would not pay to bank
Despite being promoted as the way to end banks charging hidden fees and to create a fairer banking system, new research from uSwitch.com shows that ending free banking would not be received well by the consumer.
Over eight out of ten consumers are unwilling to pay a small fee to own an account, with 16% admitting that they would not be able to afford to pay for a bank account at all.
Michael Ossei, personal finance expert at uSwitch.com, says: “The end of free banking would be a double-edged sword – what we gain in simplicity and transparency we lose in financial exclusion. There is a real danger that many consumers will be priced out of the current account market.
“The impact of millions of households shunning bank accounts will be immeasurable – and the impact on household budgets will be immense. The fact is that those without bank accounts tend to end up paying more for household bills, goods and services – they are often excluded from the best deals and have to resort to more expensive payment options instead.”
Almost a third of consumers would be forced to think twice about even having a current account if they had to pay for it.
The end to free banking is also set to anger millions of consumers who stay in credit and avoid going overdrawn at the prospect of having to pay for their current account in the future.
Almost half don’t see why they should have to pay the fees, while over 55% of all consumers are convinced that those who don’t go overdrawn will simply end up footing the bill for those who do.
Ossei continued: “While Lloyds has stepped out as the first UK high street bank to pledge its commitment to free in-credit banking, the others are yet to do so. But the fact is that banking is only really free for those who never go overdrawn.
“Everybody else is paying in some way or another through myriad charges or less competitive rates. I would urge those consumers in particular to take action today – work out how much your account is costing you and then shop around to see if you can get a better deal elsewhere.”
And while advocates for the end of free banking argue that the initiative would lead to greater transparency, fairer charges and more trust in the banking industry, consumers remain unconvinced – only 14% say that the clarity of a fee-based system would make them trust their bank more.
Over half believe it will be just another money-making exercise for the banks, while 95% say that the introduction of charges would do nothing to make the sector more professional.