Smart Money: I rely on cash to budget, so how will I cope when my bank closes? - Jenny Ross

Question: I live rurally and news that one of the last bank branches in my nearest town is set to close is concerning – especially at a time when the cost of fuel is high and I rely on cash to budget.

Answer: For millions of people in this country, cash isn’t a relic of the past but an important part of everyday life.

New research by the lender Abound confirms cash’s importance. It estimates that just five per cent of people have not withdrawn cash from an ATM in the last 12 months. Some 80 per cent of Brits said that they took out money in the last three months. Earlier this year, the Post Office recorded a record £805m in cash withdrawals.

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There are plenty of reasons for wanting to use cash – not least to keep track of spending during the cost-of-living crisis. Which? research has found that millions of people think that cash makes it easier to budget, and even those who don’t typically use cash said they could turn to it if their finances become more strained.

More than 12,000 free-to-use ATMs – almost a quarter of the entire network – have vanished since 2018
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As convenient as digital payments can be, not everyone is ready or willing to do without cash altogether. Digital payments aren’t infallible, either. It’s important that those who want to use cash should be able to do so without the hindrances they currently face.

Yet the increasing reliance on cash comes against the backdrop of cuts to cash infrastructure – and unfortunately that is affecting you and many others.

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Which? has tracked the closure of ATMs and bank branches over the years and the changes have been drastic. Since 2018, more than12,000 free-to-use ATMs – almost a quarter of the entire network – have vanished. The number of bank branches, which enable consumers to both withdraw and deposit cash but also access face-to-face banking services, has dropped by over 4,600 since 2015 – with more scheduled to close by the end of the year.

Closing a bank branch is a commercial decision taken by individual firms, many of whom have cited changing consumer spending patterns for either reduced opening hours or the removal of a site. But the impact these closures can have on local communities can be devastating.

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Recognising the impact closures have on local communities, the banking industry has encouragingly come up with some alternative forms of accessing cash or in-person customer services. Banking hubs are being opened across the country but will have to be targeted and of sufficient scale if they are to plug the gaps left by the branch closures. Post Offices also have an important role to play in enabling people to withdraw and deposit cash.

Which? has long campaigned to protect access to cash for those that rely on it and earlier this year, the government announced legislation in the Queen’s Speech. The Financial Services and Markets Bill is currently making its way through the Houses of Parliament and would hand the oversight of the cash network to the Financial Conduct Authority (FCA), meaning branches can’t close in communities if there were no alternative methods to withdraw or deposit cash.

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Which? thinks this important piece of legislation could be a game changer for the millions of people across the country who rely on cash everyday. But currently the legislation doesn’t protect free access to cash.

Unless this is changed, we think that will undermine the purpose of the legislation – what’s the point of protecting access to cash if many people won’t be able to afford to access it? MPs will soon have a chance to vote on whether access to cash remains free – and Which? will be lobbying to ensure it does.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

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Jenny Ross is editor of Which? Money

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