Millions of bank customers are set to save hundreds of pounds with the launch of fee-free bank accounts in the new year, following an agreement struck with the Treasury.
The accounts will be available to anyone who does not already have a bank account, is ineligible for a standard current account or can’t use their existing account because of financial problems.
From their launch on 1 January, the accounts will be charge-free, even when direct debits or standing orders fail. Until now banks have charged as much as £35 for each such failed transaction – and they have been “uncapped”, so they could build up to hundreds of pounds in fees over time. The reform will remove the risk that basic account customers will be forced into overdraft by bank charges.
Basic bank account customers will now also be offered services on the same terms as other personal current accounts.
The economics secretary to the Treasury, Harriett Baldwin, said of the measure: “I’m delighted that, for the first time, truly fee-free basic bank accounts will be available to anyone who doesn’t already have an account or isn’t able to use their existing account.
“This is a key step forward in ensuring that our banking industry works for everyone.”
Banks and building societies that have signed up to offer basic bank accounts include Barclays, Santander, TSB, Lloyds, the Royal Bank of Scotland and NatWest.
Sian Williams, head of the Financial Health Exchange portal at the Toynbee Hall charity, said: “We know from our work with the financially excluded that a transactional bank account is essential for getting and sustaining a job and a home, as well as for accessing opportunities to study and take part in wider society.”
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