The new Which? magazine has a long piece this week on the financial consequences of not being online. It makes for irritating reading – particularly for older people, six million of whom have never used the internet.
If you bank in branch, very few of the best market deals are available to you. Just one of the 20 highest paying instant access accounts on the market allows you to use it via a branch rather than via the internet.
Worse, that one is with Santander, the bank that sits at the bottom of Which?’s satisfaction table for savings accounts.
There’s more: with branches closing all the time, many elderly people struggle to find anywhere to bank. According to the Campaign for Community Banking, there are now 1,000 communities with no local bank at all, and another 1,000 which are stuck with just one whether they like it or not. Given that only 35% of the over 75s are happy to use ATMs in the street, that makes life pretty difficult for a good many of them. You might say that it is what it is. Branches are expensive and why should the young subsidise the old more than they do already?
However, this isn’t the only area where the elderly suffer: they also get charged premiums (£1-£2 a month) for having their bills delivered in the post – as they very often prefer to – rather than online; they sacrifice savings by not being able to compare prices online; and they lose out massively if they insist on paying their bills by cheque rather than direct debit.
This last one isn’t necessarily related to being offline. But it is important simply because of the scale of the difference. On numbers from Which?, those who pay by cheque can end up paying anywhere from £60 to £185 extra a year for their energy (the worst offender here is Scottish Power). I went on the BBC last week to talk about this. I imagine they expected the general view to be that everyone should instantly change their payments to direct debit and bank the savings.
But it isn’t so straightforward. Why? Control of your cashflow. If you pay by direct debit, you pay in advance and you pay the same amount each month be it winter or summer. This is fabulous for the energy company cashflows (which is why they encourage you to do it) but it isn’t always that good for you. Not only will your account usually end up in credit (you are effectively lending money to your energy company) and your monthly payments rise with remarkable regularity, but if there is a dispute you won’t find it easy to get a refund: in any argument about money, the person holding the money always has the upper hand.
That’s why I still pay all my own bills with a cheque and why I completely understand why so many other people do. They are choosing between cost and security and going for the latter.