Poorest Britons becoming poorer as they miss out on banking deals

It costs more to be poor, according to a report released by online current account provider Pockit, which says impoverished Britons who fail to qualify for a bank account each end up paying almost 500 pounds a year in additional costs as a result.

The report says 1.2 million Britons without bank accounts — mostly those in extreme poverty or on the fringes of society — pay a "banking poverty premium" by using cash to pay for everyday essentials such as rent, energy, and utilities because their lack of a bank account means they are unable to take advantage of deals and discounts offered to account holders for such things as personal loans, utility bills, broadband services, and mobile phone contracts.

"For many of us, having a bank account is a basic fact of life, yet the unbanked face a banking poverty premium, which can put a real strain on their finances," said Virraj Jatania, the founder and CEO of Pockit.

The government said last month that more than 1 million people who could not get bank accounts a decade ago now have them, thanks to new, no-frills accounts. But it added that the 1.23 million people who continue to be without accounts are "still 1.23 million too many".

Pockit, which has almost 500,000 United Kingdom customers, analyzed official data and pricing information to compile its report, finding typical charges for electricity and gas, mobile phone usage, broadband, and the fees associated with a 300-pound loan over the course of a year came to around 1,118 pounds for people with bank accounts and 1,603 pounds for those without. It said people also struggle to rent a home without a bank account.

Those who have difficulty opening an account include people with a poor credit history and those unable to provide proof of a permanent UK address.

Many companies offer better deals to individuals who pay by direct debit, something that is not an option for people without a bank account.

The government's own analysis of banking habits, conducted last month by the Treasury and the Department for Work and Pensions, found people aged 18 to 24 are more likely to be without a bank account than other age groups, and that the phenomenon is more common in London and other big cities.

The government said it is "committed to helping all consumers across the UK access suitable banking products and supports a variety of options across the financial services market".

It said the government is "working closely with industry to improve access to basic bank accounts, which are specifically designed to support the unbanked, but also work to promote awareness of local credit unions".

UK Finance, the organization that represents the UK banking industry, said it is working to ensure people are not excluded.

"The banking industry is committed to ensuring banking is accessible to all," it said in a statement. "There are over 7 million basic bank accounts in the UK, helping customers across the country access vital banking services."