You would be forgiven for believing that most people have a bank account to manage their financial affairs, but the reality is much different. There are lots of people that are Unbanked or Underbanked here in the UK with those in this position, accounting for over a million people. The question is why and how do people find themselves in this position? Read on to find out some of the top reasons why people are Unbanked or Underbanked in the UK.
What Do Unbanked and Underbanked Mean?
Before we share the reasons, you may want to understand what Unbanked and Underbanked mean as they are not widely used expressions.
Unbanked is when no person within a household has a bank account of any form and cannot access financial services through a bank because of this.
Underbanked is when someone in a household has a bank account, but choose to use alternative financial services rather than using their bank to help. These services include payday loans and cheque cashing shops.
There are many reasons that a person may be Unbanked or Underbanked, take a look through the main ones below.
1: A Poor Credit History
If you have had poor credit, CCJs or even become bankrupt, then it may be impossible to find a bank that is willing to take you on. However, many banks are willing to open basic accounts to help people when it comes to rebuilding their reputation. You just need to be aware that you will be unable to access the full range of products that are on offer and will need to go into a branch to open your account. There are many other banking alternatives available today which allow you to have access to financial services to be able to safely and securely manage your money if you are unable to open a bank account with a traditional high street bank.
2: Lack Of Trust In Mainstream Banking Facilities
Many people who are Unbanked or Underbanked cite that they do not have any trust in the banking system and prefer to use alternative methods to manage their money. This means that while they cannot access the products that a bank offers, they are in full control of their finances at all times.
3: They Are Unable to Access Banking Due to Language Needs
Many people who come to the UK to work are unable to access mainstream banks due to language barriers. British banks often do not have translation facilities, and so people who are unable to communicate fully in English are left unable to open a bank account. This means that the only other option is to be Unbanked and use alternative sources for finance.
4: They Want to Avoid Banking Costs and Charges
Many people become frustrated with banks that charge fees and find themselves in a spiral of debt when charges begin to mount, and they are unable to get their accounts back into the clear. Rather than using banks, they choose to remain unbanked to avoid this situation, becoming a reality for them.
UK Unbanked and Underbanked Summary
It is clear that there are many reasons that a person may be Unbanked or Underbanked, and while this is a choice in some cases, it is also a source of stress in others. If you are in either of these categories and want to open an account, then it may be a good idea to try a more modern bank that can cater to your needs.
At Suits Me® we understand there are still many people in the UK that are either unbanked or underbanked and in many cases, are unable to gain access to a bank account in order to be paid safely or access benefits.
Suits Me® provide personal e-money accounts without the need for a credit check or a proof of address as we are aware that these are generally the main barriers to accessing a bank account.
Open a Suits Me® Account
Opening a Suits Me® account is quick and easy, once the online application form is complete, an account is open within 3 minutes with instant access to account details, online account and mobile app to be able to start managing money and finances.