Creatures of habit: When it comes to banking we like to keep it in the family

International Finance Desk — Thu, 17 Oct 2013 11:42:26 +0000

October 17, 2013

27% of current account holders in the UK use the same provider as one or both of their parents
Only 6% of Britons have switched their bank account in the past 2 years – compared to 37% who have switched car insurance provider

Britons’ relationships with their current accounts are long and are developed at a young age according to new research released by the Payments Council, the organisation spearheading the new Current Account Switch Service launching on the 16th September. At an average of 17 years our current account relationships last longer than the average British marriage at 11 years and six months*1.

The My Bank Account & Me report*2, which uses research from a Populus study of 2,055 UK adults found that our parents have a strong and often lasting effect on our choice of bank or building society. More than a quarter of UK current account holders (27%) use the same provider as one or both of their parents. Parental influence is particularly strong for those making their first banking decisions with almost three in five (59%) 18 to 24 year olds banking where their parents do. And even amongst those over 65, whose childhood days are long since passed, over one in ten (12%) have continued the family banking tradition.

Scotland has the strongest family ties, a third (33%) of Scots use the same bank or building society as one or both of their parents. Scots also have the longest relationships with their banks or building societies, currently standing at 19 years on average.

The research reveals that we are also creatures of habit, making our banking decisions at an early age and sticking with them. A fifth (22%) of us are still using the first bank account we ever opened and nearly two thirds of us (64%) only have one current account. The average age of opening the current bank account that respondents currently use is 29 years old – coincidentally the average age a British woman gets married for the first time*3.

This strength of loyalty is most profound amongst the older generation. Nearly a quarter (24%) of over 65’s use a bank account they opened aged 24 or younger – rising to 37% of 55-64 year olds. A sixth of the respondents (16%) are still using their very first bank account!

To switch or not to switch?

Switching bank accounts is not something that we do regularly. Only 6% of us have switched our current account in the past 2 years, rising to 10% for 25-34 year olds, – compared to 37% who have switched car insurance provider. Nearly three-quarters (74%) of us have had our current account more than 5 years, and 55% for over 10 years. (For a full table of Britain’s switching habits please see Notes to Editors4.)

However the research reveals we are not averse to switching; 43% of respondents indicated they would consider it, rising to 49% of 35-44 and 53% of 25-34. And for 70% of people open to switching, better deals are the overwhelming attraction. Reasons against switching however include the perceived hassle (22%) and difficulties expected when changing direct debits (18%).

Commenting on the findings, Adrian Kamellard, Chief Executive at the Payments Council said:

“Current accounts are a crucial part of our day to day financial lives and often form the primary reason for a relationship with any chosen bank or building society. The research shows that, as creatures of habit, the length of our current account relationships tend to be long, although the reason why remains unclear.

“The appetite to switch current accounts however is also clearly present and from the 16th September the new Current Account Switch Service will remove any perceived hassle or concern for those looking for a change.

“With 33 bank and building society brands offering the new service and using the supporting Current Account Switch Guarantee, would-be switchers will be able to change their current account quicker and easier than before – tapping into the incentives that wider competition will inevitably bring.”

Source:Payment Council

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Research reveals Universal Credit payment and budgeting advice gap

International Finance Desk — Wed, 16 Oct 2013 11:30:06 +0000

Payments Council has created a new free guide to help people receiving Universal Credit manage their money and understand payments.

October 16, 2013

Half of people eligible for Universal Credit concerned about managing
cash flow after change to monthly payments
Four in ten who are eligible for Universal Credit say they
prefer to manage their money using cash
Payments Council has created a new free guide to help people receiving Universal Credit manage their money and understand payments

More than 2.7 million people who are currently receiving benefits believe they will struggle to make sense of their payment options once Universal Credit is introduced, according to research released today by PayYourWay.org.uk, the Payments Council’s consumer education campaign.

One in every two people who are eligible for Universal Credit think that the change will make it more difficult to manage their money, with common concerns including running into or increasing debt, and struggling to pay bills or rent on time.

Pay Your Way research has identified that one of the key obstacles is that nearly half of people affected by the Universal Credit changes have not thought about how they will budget differently once they have been switched to monthly payments.

Under the new scheme, weekly or fortnightly payments will shift to monthly payments and Housing Benefit will be paid to the claimant’s bank account instead of going directly to a landlord or housing association. New claimants in six more areas (Hammersmith, Inverness, Rugby, Harrogate, Bath and Shotton) are being moved on to Universal Credit, starting from October.

In response to these concerns, Pay Your Way has created a guide to help people understand payment types and financial planning, which will help with budgeting and cash flow for people affected or concerned by the introduction of Universal Credit. The guide can be viewed at PayYourWay.org.uk.

Further research from Pay Your Way shows that advice on payments could benefit everyone – not just Universal Credit recipients. For example, over a third of UK adults don’t know the total of their household bills, including rent, each month, and a quarter admitted not knowing when money is scheduled to be going in or out of their account.

Adrian Kamellard, Chief Executive of the Payments Council said: “The introduction of Universal Credit means that people will have to be savvier about managing their money and will have to plan for the whole month instead of budgeting on a weekly basis.

“Understanding payments can help manage cash flow. Our guide explains different payment options which in turn can help pay bills on time, stay on top of your money and avoid missing payments or going overdrawn.”

Pay Your Way is teaming up with Working Families and Gingerbread to help ensure people who would benefit from advice on budgeting and managing their money – especially as Universal Credit rolls out across the country – receive the support they need.

Fiona Weir, Chief Executive of single parent family charity Gingerbread said:

“We know that families are good at managing small amounts of money coming in at different times, but moving to monthly budgeting under universal credit will be a big change. There will also be a big focus on online claims, so now’s the time to start getting ready by improving your computer skills, and getting a bank account set up.”

Will Hawden, Benefits Advisor from work-life balance charity Working Families said:

“It’s also a good time to consider your budget and work out how you would pay housing costs, fuel, childcare and other bills, and when these bills go out. In most cases, you’ll be responsible for paying everything out of your Universal Credit and any earnings you have (Child Benefit will still be paid separately). You’ll also be responsible for making and maintaining your claim online.”

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Creatures of habit: When it comes to banking we like to keep it in the family

Research reveals Universal Credit payment and budgeting advice gap