Report says free bank accounts may disappear within a decade
After banks introduced a monthly charge for bank account maintenance of up to £10 per month, a latest report has warned that banks will stop offering free bank accounts in a decade.
Steve Davies, who authored the report said, “The problem is that while customers perceive their bank account to be ‘free’, it is of course not free … they have paid for it through overdraft charges, penalty fees and uncompetitive or zero rates of interest on credit balances.”
As of now, four out of five people use current accounts without paying any monthly fees, in spite of the banks making available packaged accounts that cost up to £25 per month including insurance policies. He also said that unless the free accounts are phased out, the banks would not be able to recover the costs that arise due to mis-selling of products to customers who don’t need them.
He also said that the free accounts will disappear, most likely within a decade and the banks will have to pick up a fee-based approach instantly, which will be sustainable. The researchers at PwC examined the attitude of customers, regulators and intricacies of the current account market. Nearly half of the respondents among customers said that they would switch banks if they are charged a fee. As a result of it, researchers said that it was unlikely that banks would ditch free accounts entirely.