LONDON–How much extra does it cost someone annually if they are unbanked in the U.K.? According to new research, it costs the unbanked as much as £485 ($629) extra each year.
The 1.2 million so-called unbanked individuals are said to pay a “banking poverty premium,” because they are missing out on preferential deals and discounts on utility bills, mobile phone contracts, broadband and personal loans, reported the Guardian.
The numbers on costs to the unbanked were compiled by Pockit, a digital current account provider with almost 500,000 U.K. customers.
Pockit said it analyzed official data and pricing information to calculate the “banking poverty premium” figure, reviewing electricity and gas, mobile data, broadband and the interest on a 52-week loan of £300. The company said the average annual cost for all these totalled £1,118 for people with a bank account, while the equivalent figure for unbanked individuals was £1,603.
“The extra £485 reflects the fact that, for example, energy, broadband and mobile phone providers often offer discounts and better deals to customers if they pay by direct debit – savings that are not available to those without a bank account,” the Guardian reported. “The unbanked also often have limited options when looking for credit.”
Last month, the U.K.’s government issued a financial inclusion report that found those more likely to be without a bank account included 18- to 24-year-olds and the unemployed, which it said might help to explain the higher-than-average levels of the unbanked in London and big cities.
The document, issued by the Treasury and the Department for Work and Pensions, stated that the government was “committed to helping all consumers across the U.K. access suitable banking products and supports a variety of options across the financial services market.”
The government data did include some good news. Approximately 15 years ago, there were an estimated 2.5-million people in the U.K. who were unbanks, but the rollout of no-frills basic accounts combined with advances in technology meant that by 2017, the estimated number had fallen to 1.23 million.