Banks 'selfish with fivers'

High street banks have been criticised by the Bank of England for not allowing credit card holders and current account customers to withdraw £5 notes.

Mervyn King, the Bank of England governor, was speaking at the Mansion house dinner when he told bankers that their refusal to issue fivers from ATMs was a source of frustration to people.

Despite customers’ need for small notes for small transactions, five pound notes only account for £1 billion of the £40 billion of cash in circulation.

He attributed this partially to the fact that the general public obtains 60 per cent of its cash through cashpoints but very few offer the option of taking out £5, opting instead to issue only £10 and £20 notes.

Banks claim the do not generally offer fivers as they are not economical, despite the benefits they offer customers and businesses.

Mr King said: "Such mutual convenience is a public good and may not correspond to the private interest of commercial banks."

With credit cards offering cash withdrawal fees, customers are forced to go further into debt than they might want to by having to take out multiples of £10.

The average cash withdrawal on credit cards is currently 2.5 per cent, though the APR applies as well.

This means that when withdrawing £100 and not making a repayment for one year, an average card customer will pay £23.77, a Co-operative Bank credit card holder will pay £8.10 and a Vanquis customer will pay £48.69.