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Everything You Would Need To Know About Starter Accounts
Despite incredibly easy access to personal finance services, there are still three million adults inside the UK today who are completely outside the banking system and don't have access to a bank account.
Many of these people are unable to get a standard account since they have a poor credit score, because of past monetary difficulties, or basically a lack of positive financial history. While high street banks are keen to deal with people with good credit ratings, they may be cautious about making credit facilities such as overdrafts available to folks with sub-prime ratings.
A new type of bank account was required when the industry's government prompted a goal of increasing financial inclusion. That was when the Basic Bank Accounts were born.
Basic bank accounts, also known as starter accounts or introductory accounts, are a very easy type of account which provides little in the means of credit or ways for account holders to get into debt. There is generally no overdraft facility, no check book, and no debit card. The accounts simply provide a way for cash to be paid over the counter, by electronic transfer, and withdrawn by money machine.
This lack of capabilities means that there is little risk or cost involved for the banks, and so their approval rates are a lot higher. In fact, about the only people who will have their applications rejected are undischarged bankrupts, or those having a history of fraud or very severe poor debt.
Firstly, most accounts will let you set up direct debits to pay your bills, and this will save you money as many companies will give you a discount if you pay in this way. So how can obtaining a basic bank account benefit you? Ask a financial services provider or fsp by exploring, "financial service provider".
Furthermore, the government is moving towards paying all benefits and pensions direct into bank accounts rather than in the old way over the Post Office counter. Basic bank accounts will let you receive money in this way.
Lastly, this kind of account could be a 'stepping stone' into other monetary services, helping you to build up a better credit rating and in the future to take advantage of other services available like overdrafts and debit or credit cards.
Since they were introduced, basic accounts have been really successful, and there have now been around 5 million accounts opened. Both government along with the banking industry say they are committed to increasing this figure even more over the next few years until each and every adult has some form of bank account. We can expect to hear a lot more about basic accounts in the not too distant future.
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