There is no doubt that when it comes to operating a personal checking account, known as a current account in the U.K., the U.S. banks are far more costly to have an account with. Free banking has been the norm in the U.K. for several decades now, with banks primarily limiting their fees to penalty fees. American bank customers most often pay monthly maintenance fees or follow a list of caveats to avoid them.
Debit card use is far more common in the U.K. as it was a regular practice far sooner than the use of credit cards. On both sides of the Atlantic debit card use has overtaken the use of checks, though in the U.K. cheques are issued free of charge to customers rather than charged for. A common practice shared by both nations’ bank customers is to pay ATM surcharges if an out of network cash point machine is used for withdrawals, but internet banks are now leading the way in reimbursing these surcharges.
Another common feature is overdraft charges and charges for returned or bounced checks. Payments in the U.K. are commonly automated by two methods, direct debits and standing orders, and are common practice as a method of paying bills. U.S. bank customers have been slower to sign up to automated payments, reflected in the discounts sometimes offered by loan providers to those who choose to pay by automated debits.
To successfully open a bank account one invariably needs good credit. This does not apply to new applicants, but those who have sullied their reputation by constantly overdrawing or writing bad checks will find that they may have difficulties opening a new account. However, bad credit bank accounts exist on both sides of the Atlantic, allowing those with bad credit the opportunity to re-establish a bank account, albeit with it limits imposed.
In the U.S. the Chex system monitors bank accounts and reports on bad usage. Basic bank accounts for bad credit are available in the U.K., more commonly known as bad credit bank accounts in the U.S. In the U.K. basic bank accounts fall outside the remit of free banking and charges are applied by the bank to operate them.
The differences between checking accounts in the two countries is being closed with the advent of internet banking, with several U.S. internet accounts now offering features more commonly established in the U.K., such as interest paid on balances and fee free accounts. Indeed in the U.K. the current market leader on high yield current accounts is the internet bank Santander.
Traditional bricks and mortar banks retain their differences with far more complex charges imposed in the U.S., which the British people would baulk at paying, having become accustomed to the concept of free banking. Attempts by some high street banks to offer high status bank accounts that include monthly maintenance fees have been resisted for the most part.