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Government: basic bank accounts should help people manage their money better

Published 17 July 2012 by

Last week, thinkbanking reported that the EU wants basic bank accounts to be available to all. Now, the UK Government is proposing that basic bank accounts should help the 'financially vulnerable' to manage their money better. They want to help people who claim benefits to manage their money when universal credit is introduced next year.

Lord Freud, the Welfare Reform Minister, wants to help those who may need extra help with budgeting. Though accounts already exist that offer many of the suggested features, the Government wants to see all the features combined in one account.

The Government wants these accounts to include features like the option to create 'piggybank' accounts for bills inside the main account. This would allow them to put money aside for rent / mortgage, utilities and other essentials. The idea behind this is that it stops people accidentally spending money they need for bills. The thinkbanking account is already split into two - with one account containing funds for essential monthly costs, and the other account there to hold the remaining 'spending' money.

The Government also wants the accounts to allow people to set up Direct Debits. On the thinkbanking account, Money Managers are responsible for making sure all Direct Debits are dealt with every month.

Lord Freud commented that: "Most people on low incomes manage their money well, but the introduction of universal credit provides us with an opportunity to offer all claimants access to suitable banking products so that they can budget their benefits and earnings from work effectively."

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