Do you pay for your current account? If so, your bank’s probably convinced you it’s great value with endless ‘must-have’ benefits. Still, if you’re not using them, it’s likely you’re pouring money down the drain…
New research by financial research company Defaqto has revealed that fee-charging current accounts – known as packaged accounts – are on the rise.
There are now 69 on the market – more than double the amount there were five years ago and even more than the number of standard current accounts.
The Financial Services Authority (FSA) estimates that one in five of us now has one of these accounts. So, even in these belt-tightening times, it seems people are keener than ever to pay monthly fees for bank accounts with all the trimmings – usually extras like car breakdown cover and mobile phone insurance.
The problem is, not all of these people are using the extras. Worse still, you can often get the extras cheaper by purchasing them individually.
In August, I explored packaged accounts and found that 30% of Which? members with one as their main account had never used any of the benefits offered. As some packaged accounts now cost more than £300 a year, that’s a lot of money being wasted. In fact, we calculated that it could amount to between £240m and £320m in bank fees each year.
Packaged accounts – for and against
Which? Conversation recently took to Twitter to gauge public opinion on packaged accounts after Martin Lewis spoke about them on Watchdog. There was quite a response, with over 70 tweets back. While some people defended the benefits of the accounts, many thought they were a waste of money.
@referee3103 told us they had a Smile packaged account, and they used the travel and mobile insurance, among other extras. But @M3kx tweeted us to say that her mum had a packaged account and had never used any of the benefits.
@Fridaygirl5 told us that while she doesn’t drive or go on holiday, she feels that her account is worth it for the mobile phone insurance. The reality is, it’s more than likely she could get the cover cheaper elsewhere if that’s all she’s using it for.
FSA to investigate packaged accounts
The FSA has called for increased customer protection when it comes to packaged accounts. It wants banks and building societies selling insurance as part of an account to check the customer is eligible to claim under each policy before they take out the account.
It also wants sales advisers to make sure the policies they sell are suitable for the customers in question, alerting them if some are not. It’s a good start, but more can be done. Which? executive director Richard Lloyd says:
‘People should only have a packaged account if they’re absolutely certain that it will be cheaper for them and they’ll use all of the separate benefits offered. Banks have a responsibility to make packaged accounts more transparent by clearly explaining what each of the individual elements are worth, so customers can compare.’
In the meantime, it pays to compare the value of packaged account benefits yourself before signing up. While they can be worth it in some cases, if you have an account and aren’t making use of at least two of the benefits it offers, it’s highly likely you’re not getting value for money.
Loading ...
