Some of the poorest people in Wales are choosing to pay more for essential goods and services – because they don’t trust or are confused by the banking system.
A new report by Consumer Focus Wales reveals that people in Wales prefer to pay for goods in cash instead of with a debit card or by direct debit because they feel it gives them greater control of their money.
Report author Lindsey Kearton said: “It is clear that people who pay by direct debit are more likely to get better deals than those who use cash. However, confusion and suspicion surround direct debits and until these issues are effectively addressed many consumers will continue to use cash as their preferred payment method, regardless of the fact that in some situations they pay more as a consequence.
“We found that many people are savvy enough to know that the arrangements they make mean they end up paying more. But there is a lack of awareness that there is an alternative.
“Consumer Focus Wales recommends that banks and other financial institutions provide face-to-face support to those opening a bank account for the first time to improve their understanding of how direct debits work. This could include text alerts to enable people to keep track of their account and overcome any fears of losing control
“We also call for the Welsh Assembly Government and UK Government to work with the banking industry to develop the capacity of alternative financial service providers such as credit unions, Community Development Finance Institutions and the Post Office so they are also able to offer bank account services that are appropriate to the needs and circumstance of people living on a low income.”
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For further details or interview requests with the author of the report please contact Jamie Pike on 02920 787110.
Background notes
For further details of Consumer Focus’s report ‘Cost of Cash’ please got o the publications page on our website.
This research forms part of a wider study into what is often called the ‘poverty premium’ and how it affects families in Wales. The latter study covers such issues as the costs of education, financial services and fuel and is being led by the Bevan Foundation.
