Are you wasting money on your packaged bank account?
Are you paying between £72 and £300 a year for your bank account? Were you pressured into upgrading your account as the ‘must have’ benefits outweigh the cost? Chances are you’re not getting value for money…
It’s estimated that around seven million people have a packaged account and there are around 62 accounts on the market – more than double the amount there were five years ago.
In fact, we now have more packaged accounts in the UK than standard current accounts.
The problem is, not everyone’s using the benefits that accompany their account. If you’re not, it’s likely that you’re throwing your money away. Worse still, you can often get the extras for less by purchasing them separately.
Travel enough to make the insurance worthwhile?
In many cases we’ve found that the added extras are being overstated. For example, Lloyds TSB claims its travel and car breakdown cover is worth £672 (the annual cost of the account is £300). But we found you could get the equivalent for just £191 from providers that have done well in our assessments.
First Direct values its 1st Directory account’s travel insurance at £214, but the equivalent policy from a Which? Best Buy travel insurer can cost around £65.
What you need to consider is not the claimed value, but whether you can get the products you need, and will use, cheaper as a standalone product. And when we asked Which? members whether they used the travel insurance that came with their packaged account, only four in ten said they had done so in the past year.
Some people feel their accounts do offer value for money, as they use some of the other benefits. My colleague, for example, says his packaged account’s mobile phone insurance is worth the £7.50 a month he pays to protect his iPhone.
Would phone insurance sway you?
But before you opt for a packaged account it’s worth checking you’re not doubling-up on your existing insurance cover. We found that 26% of Which? members with a packaged account already pay for car breakdown cover elsewhere and 11% have separate travel insurance.
The Financial Services Authority has published new rules requiring banks and building societies to check whether customers are eligible to claim on insurance cover before selling them a packaged bank account. It would of course add insult to injury if customers paid for insurance products which they weren’t even eligible to claim – as we know all too well with the PPI mis-selling scandal.
Have you ever had a packaged account or do you use one at present? Are you tempted to suss out whether your account really is value for money by tallying up the costs of exactly what you get with the account?
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