Basic banks accounts on the increase

Growing numbers of people are taking advantage of a government and banking initiative to extend the benefits of basic bank accounts to everybody.

According to the British Bankers Association (BBA), every quarter over 150,000 people are taking advantage of a 2003 government initiative called universal banking, aimed at helping everybody benefit from banking services.

The government secured the agreement from 12 banks and building societies to provide banking services free of charge, making it possible for the government to pay benefits into claimants’ bank accounts.

At their most basic, the accounts allow users to take money out at ATMs, accept payments and crucially, make direct debit payments.

As increasing numbers of companies charge for cash payments, a policy that hits the poorest the hardest, the possibility of setting up this basic account is a money saver.

The BBA said that in the fourth quarter of 2006 a net of 153,518 basic bank accounts accessible at the post office were set up.

That brings the total of basic post office accessible bank accounts set up since the launch of the scheme in April 2003 to 2.26 million.

Angela Knight, the BBA’s incoming chief executive, said: "Progress on the shared goal with HM Treasury is steady and sustained."