Improving bank accounts for young people
The Fairbanking Foundation awarded four new FairBanking Marks at a ceremony at the London Guildhall last Thursday, to bank accounts which were judged to contribute to the financial well-being of customers who choose to use them. This signals a real step forward not just for retail banks, whose reputations have taken a battering in recent years, but also for young people, who struggle to engage with the financial services industry, and have limited access to financial education.
Let’s have a look at the accounts deemed worthy of a Fairbanking Mark.
Lloyds TSB – Current Account with Control
Awarded a 3 Star Fairbanking Mark. A current account with overdraft which keeps customers informed about their balance with a range of alerts, including weekly balance, account limit and high/low balance. This account also shows customers their overall income and spending patterns, as well as how their spending breaks down into different categories over time, to allow customers to rethink how to spend their money.
RBS/Natwest – Your Savings Goals
Awarded a 4 Star Fairbanking Mark. A regular savings account which allows customers to set up savings ‘pots’, which can be personalised, including specific ‘rainy day’ funds for emergencies. Customers can find out how much they need save for a particular goal, and for long, and makes it easy for them to easily set up regular payments to their savings account. The account is attractively presented, with graphics and numbers.
thinkmoney – Personal Account
Awarded a 4 Star Fairbanking Mark. A current account without overdraft which keeps customers updated on their account through regular messages. It aims to prevent customers the costly business of going over their agreed overdraft limit by alerting customers via a system called Your Money Manger if their account balance is insufficient to pay upcoming bills, and uses simple graphics such as a smiley or sad face depending on account status. Customers can also see their overall income and spending and how they change over time, giving customers the opportunity to identify patterns in their spending.
Secure Trust Bank – Current Account
Awarded a 4 Start Fairbanking Mark. A current account without overdraft which provides 24/7 phone and internet services to help customers stay informed about their balance and recent transactions. Customers can set an overall budget and keep money to pay regular bills separate from disposable income. It allows customers to break down spending into different categories, petrol, for instance, or eating out, and set budgets by individual category.
What these accounts have in common is the element of control they give customers over their money. They keep customers informed about their finances through spending breakdowns and regular alerts but insist upon ultimate personal responsibility. The visual factors such as the smiley and sad faces give customers an instantaneous assessment of how they are managing their money and make the whole business of managing money easier.
These accounts are particularly useful for young people, particularly those between the ages of 17-25, who for the most part have lower incomes, but fairly simple banking needs – they may still be supported by their parents, and apart from student debt, are unlikely to have any significant financial burdens, such as a mortgage. By getting into the habit of regularly checking their accounts early , banks are helping them to sow the seeds of good financial practice, which will eventually take them towards financial independence.
For more information, visit http://www.fairbanking.org.uk/