uSwitch current accounts news July 2006

Research carried out for the National Consumer Council has revealed that basic bank accounts are failing to help people. Those with such accounts are more likely to get into financial problems than those without them.

The survey of 1,520 people said that basic accounts were failing to help customers, particualry the poorest to manage their finances from week to week. It also suggested that customers were more likely to be in arrears paying their household bills than people without a basic account.

The reason seems to be that the accounts do not always help people with small weekly incomes deal with unpredictable gaps in both their wages, benefits or spending.

"There is a mismatch between the needs of the poorest to keep close track of their income and spending and to avoid debt, and existing bank account design which doesn't help them achieve this," said Claire Whyley, the NCC's deputy head of policy.

The NCC says that basic bank accounts need to be more flexible - for instance by offering weekly direct debit facilities and small free overdrafts.

Clydesdale Bank has announced details of the closure of 18 branches in Scotland by the end of 2005. The closures are part of a plan to reduce the number of branches by 60 in the next year.

The bank stated the closures were a result of internet and telephone banking, which has reduced the number of customers using a local branch services.

The Scottish branches will close along with 40 branches of the Yorkshire Bank in England following an announcement in May by parent company National Australia Bank (NAB).

Recent research undertaken by Clydesdale indicated that on a monthly average 72% of customers didn't use their branch at all.

The bank has contacted customers affected by the closures detailing their decision and alternative arrangements for their accounts.

Consumer watchdog Which? surveyed 1,000 people and found that almost 40% will spend between one and three hours shopping and choosing a pair of jeans. But fewer than one in three would spend that time looking at their current account.

Although 51% of Britons have never changed current account they could be missing out on earning an extra 4% interest on their balance. They could also be paying more than 12% too much interest on their overdraft.

And being overdrawn is no reason not to switch, as new current account providers will simply move the overdraft into your new account.

Fortunately it only takes a few minutes to see if your current account is the best fit for you, with uSwitch.com’s current accounts comparison service.

Put your account to the test

Research was conducted online with a nationwide sample of 1,000 adults aged 18+. The survey was carried out by Explorandum between the 11th and 13th of July 2005.