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How do you feel about 'the end of free banking'?

By Helen Gradwell

3 October2021

Girl with piggy bank There has been a lot of debate about 'free banking' recently. Some have argued that charging a transparent fee for all bank accounts will make banking fairer by putting an end to hidden charges. Others disagree.

Research by uSwitch.com has found that the British public have differing views about 'the end of free banking'. It seems 75% are against the idea of paying fees for current accounts, because:

  • They're concerned about the potential cost (38%)
  • They couldn't afford to pay for a bank account (16%)
  • They wouldn't consider paying a small fee (81%)
  • They don't see why they should have to pay because they never go overdrawn (48%)
  • They think that people who don't go overdrawn will end up paying for people who do (55%)
  • 32% would reconsider even having a current account if they were forced to pay for it.

Personal finance expert at uSwitch, Michael Ossei, explained that: "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."

Others can see potential benefits in paying one transparent fee per month, however. They think that up-front fees could:

  • Make accounts easier to understand (34%)
  • Help customers avoid unexpected charges (34%)
  • Encourage more trust in banks (14%)
  • Make current account deals more competitive (33%)

43% believe that 'banking will still be free' in a year's time.

However, Mr. Ossei added: "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."

A spokesperson for All about Money commented: "If you feel you're being charged over the odds each month, an account with transparent up-front fees might work out better for you. The thinkmoney Personal Account charges 14.50 per month, but doesn't charge for missed or rejected payments.

"It also features a built-in budgeting service, designed to get the bills paid on time - along with SMS services, Direct Debits, online account management and a range of other useful features that can help customers make the most of their money."

Image contrastwerkstatt - Fotolia

Tags: free banking, bank accounts, uSwitch

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