Portugal's new cheapo bank account scheme has attracted 11,000 accounts holders since it started last year, a third of which were downgrades from existing account holders avoiding fees for account services.
The scheme aimed to force banks to encourage customers to join a Banking Lite system with no overdrafts or credit but with a cash card, direct debit and ATM facilities.
The maximum annual fee was set at €5.30 but the banks have been pushing people onto another low cost account with an annual cost of €24 but claiming some additional features.
In 2015 customers opened 11,299 of these low cost accounts, and managed to close 1,115 which in 72% of cases was at the request of the customer.
The July 2015 law came into force on October 4th last year with banks having to offer these accounts and obliged to advertise them prominently in their branches. Many have failed to do so with customers having to ask staff for details or look on-line and see where in the banks’ websites the information is hidden.
The new minimum banking services has to provide a range of banking services considered essential, including the opening and maintaining an account, the provision of a debit card, direct debits and interbank transfers - but only within Portugal, a nicety that of course has put thousands off applying for these accounts as foreign transfers are needed by most foreigners living in Portugal and those with family or income overseas.
The banks are prevented from charging commissions, fees and other charges if they add up to more than 1% of the national minimum wage, currently an annual charge of €5.30.
A town survey of high street banks in one Algarve town revealed few banks had the obligatory leaflets on display nor were keen to explain the low fee account option.
With 5,424 bank branches in Portugal, each has averaged two new low-cost accounts activated in the past 4 months, hardly a roaring success but hardly surprising as these accounts almost certainly are unprofitable.
