Packaged bank accounts – what you need to know
Call them what you like – the banks certainly do.
But whether they’re dubbed ‘premium’, ‘gold’, ’select’ or ‘platinum’, these accounts are all about selling you more than just a bank account.
They all offer extra features – the package – and these can be a variety of things, from mobile phones and insurance, to breakdown cover and travel insurance.
For these extras you’ll have to pay a monthly fee, usually around £10 and up.
But, because these services are all bundled together, it can be hard to unravel whether they offer good value or not.
And, as you might expect, what suits one customer might be a waste of money for another.
On the whole, our advice would be to approach them with caution.
They are big earners for banks and so their staff have a big incentive to sign up customers.
What are the problems with packaged accounts?
The Financial ombudsman gets plenty of complaints about packaged accounts and the way they’re sold.
One of the most common is that complainants say they were pressured into buying one, but in fact in most cases the ombudsman takes the bank’s side, arguing there’s a big difference between drawing attention to a product and pressuring someone into buying it.
Others lodge complaints saying they didn’t know they had a packaged account and the bank charged them without telling them, or they weren’t told there was a ‘free’ alternative account.
Another common complaint is that the account is taken out with the bank but offers services the customer already has.
While a bank should ask what cover you already have to check your suitability for the packaged account they’re offering, it’s best for you to make sure it all adds up to your advantage.
Having said all that, these accounts, carefully picked, can offer terrific value.
Are packaged accounts right for you?
Here’s our checklist …
Work out the costs
The first (but not the only) thing to do is to add up the cost of the account over a year and compare this to the cost of the same services if you bought them independently.
Are there extra benefits, beyond what you’d normally have access to?
The question then is: would you actually use them?
Is the product right for you?
When looking at what’s included, especially insurance, you should be careful to check that the product on offer is right for you – is the sum insured correct for you, are there exclusions that don’t suit and so on.
So look at price, but don’t stop there.
The account might offer cheaper travel insurance, for example, but does it cover you for what you need?
Have you already paid for the benefits?
Basically, if you already have, say insurance policies running that you’ve paid for in full, don’t forget to factor in what you’ll lose if you cancel and rely on those provided by the packaged account.
If you compare car insurance and find a cheap deal, adding it as part of a packaged deal might not be worth it.
Be careful that you appreciate all the account’s requirements.
Some require not only a fee but a minimum balance or a set number of direct debits or that a certain minimum of amount of money passes through the account each month.
Think about whether you’re even eligible
A bank may well send out info on these accounts without first filtering for eligibility.
You won’t qualify if you’re below a minimum age, have a poor credit history or earn below a certain threshold.
If you don’t meet the criteria, then don’t apply because when you fail to qualify, it will impact negatively on your credit history.
Here’s a quick guide to five packaged accounts that we like the look of, plus one if you have a few more quid than average.
But remember to check that they actually suit YOU!
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