Back to banking basics?

Much of the analysis during the fallout of the financial crisis has focused on how the events since the autumn of 2007 have affected multi-national organisations and governments around the world. However, normal families have also been hurt by the downturn, with many hard working individuals finding themselves unemployed for the first time often through no fault of their own.Many workers who had thought they would be employed until retirement have found themselves in this unfortunate position. In times when the UK’s lenders are reluctant to lend large sums to anybody perceived as a risk, many without significant savings will have found themselves in the unenviable position of struggling to make ends meet. Unfortunately, many individuals and families will have fallen into serious arrears on their homes, fallen well behind with their loans and failed to repay the interest on their credit cards. This inevitably leads to county court judgements, meaning access to credit becomes severely limited, especially in times when providers are loath to rubber stamp lending to consumers who could be considered in the least part risky.People in such a position will find a dearth of financial products available to them. While they may not be everybody’s first choice, applying for a no frills bank account could be the first of many steps to financial recovery. There are no bells and no whistles with such accounts, but they do offer the opportunity to slowly rebuild what is likely to be a heavily eroded credit history, as the great majority of basic bank accounts offer facilities for direct debits or standing orders – often both. This means that the payment of household bills, mobile phone payments and the like can be overseen and controlled from one place. Most also offer online banking, too.True, the rates of interest are minimal, often non-existent and about half of the basic bank accounts currently available do not allow customers to use chip and pin in the shops, so withdrawing funds from a hole in the wall is the only option. Overdrafts are also out of the question.Basic bank accounts will not be to everybody’s taste; indeed, most people will not need one. However, they do provide a much needed service to those who have fallen on hard times and should be viewed as a way of cautiously managing finances when other options are not available.