Looking for a packaged account? We look at what the top packaged accounts offer and what you should watch out for.
Packaged current accounts have – rightly – been slated by personal finance sites like loveMONEY in the past.
There was the massive mis-selling scandal for a start (more on that later), not to mention the hefty monthly fees.
Then there's the fact that the perks on offer have been scaled back of late.
Yet despite all these negative headlines, packaged current accounts can still prove a savvy option, as our own editor-in-chief found out.
You just need to make sure you are using as many perks as possible to justify the costs.
So, is a packaged account right for you? Read on, do the sums and don’t forget the small print.
Packaged accounts explained
Before deciding whether you want one, let's look at exactly how a packaged account works.
Essentially, it's a current account with bolt-ons like insurance and more generous in-credit or borrowing rates.
They come with a monthly fee, so you need to check whether the perks on offer outweigh this cost as you can get many of the same benefits with fee-free accounts (we’ve noted these below).
It’s also vital you read the small print before you sign up as there are a load of exclusions that can catch you out, such as age limits on insurance.
Finally, check that you’re not doubling up with another policy you've already bought elsewhere or receive through your company.
We’d recommend checking the price of insurance now to see if you’d be better off getting a free bank account and buying the insurance separately.
In most cases, we've listed the best free 'equivalent' for each account.
New packaged accounts
If you’re confident banking on your mobile, these relatively new banks could be worth considering.
Monzo's Premium Account, which costs £15 a month, comes with a host of features for that fairly hefty price tag, and not just the fact that you get a white, metal debit card.
For example, you get phone insurance cover for theft, loss, accidental damage and cracked screens for phones worth up to £2,000 and for accessories worth up to £300 (with a £75 excess).
You’ll also get worldwide family travel insurance (with a £50 excess), underwritten by AXA, which includes multi-trip cover, so it’s useful if you plan on making a few trips overseas this year.
But it’s worth checking out what coronavirus cover is included before signing up.
On top of the insurance, you’ll earn a rate of 1.50% AER on balances of up to £2,000 in your account balance and regular ‘pots’, though not in dedicated ‘savings pots.’
You’ll also be able to withdraw up to £600 cash abroad, without charge, every 30 days. That’s three times more than with the regular Monzo account, providing another perk for regular travellers.
Monzo Plus is a step up from the free Monzo account and comes with a £5 monthly fee.
With this account, you’ll earn 1% on account balances of up to £2,000 (excluding savings pots) and enjoy a £400 ATM withdrawal allowance overseas every 30 days.
Both Plus and Premium account holders can take advantage of a host of deals with partner firms too, like Hello Fresh and Naked Wines, but both accounts also have a minimum contract of either three or six months.
Free equivalent: As well as the free account from Monzo, travellers should also take a look at Starling Bank, which has no fees or charges for spending overseas.
Beyond the attraction of a brushed steel card, this £12.99 per month current account from mobile-only provider Revolut has several benefits for travellers.
For example, you get up to £800 per month in free ATM withdrawals abroad, global travel insurance, overseas medical insurance and even free lounge passes if your flight is delayed by longer than an hour.
It’s worth checking what is covered under Revolut’s travel insurance so you’re covered if you have a coronavirus-related issue before or during any trips.
You also earn cashback when you spend with the card, at 1% outside Europe and 0.1% inside the continent. You can even choose what currency you want that money to be paid in ‒ including cryptocurrencies.
There’s also Revolut Premium (£6.99 a month), which offers overseas medical, delayed baggage and delayed flight insurance, as well as fee-free ATM withdrawals of up to £400 per month.
Free equivalent: Again, Starling’s account sets the standard for traveller-friendly accounts, while Monzo’s free account is a contender. Revolut’s free Standard Account is also worth considering.
Best traditional packaged accounts
If you’d rather go with a more familiar name, these are some of the top accounts worth looking at.
The FlexPlus account will set you back £13 a month, but it’s another one that will appeal to those who like spending time outside of the UK.
Account holders get worldwide family travel insurance, but this doesn’t cover cancellations due to COVID-19 or a pandemic (before you travel) unless it’s for medical reasons. Unfortunately, this applies to all trips booked and new accounts opened from 1 January.
You can also get worldwide family mobile phone insurance and benefit from no transaction fees when you spend or make withdrawals overseas.
In addition, you get UK and European breakdown and recovery assistance, with unlimited call outs for you or the person driving your car.
Free equivalent: If you’re a frequent traveller and want a free account, then Starling and Monzo remain the eye-catching choices.
And if you want a return on your balance then you could do worse than check out Nationwide’s own FlexDirect account, which pays 2% on balances of up to £1,500 for the first year, so long as you pay in £1,000 each month.
Halifax Ultimate Reward Account
The Ultimate Reward Account from Halifax isn’t cheap, costing £17 per month, though you get a fair bit back.
For example, every calendar month you’ll either get £5 cashback or one of a range of ‘lifestyle benefits’ ‒ such as a free Vue cinema ticket, digital magazines or online film rentals.
But you’ll need to meet certain conditions, like either spending £500 on your debit card each month or maintaining a balance above £5,000 for the full month.
Plus, you’ll have to pay in at least £1,500 into your account every month and keep your account in credit.
Account holders will benefit from worldwide multi-trip family travel insurance, underwritten by Axa, which includes things like winter sports and golf trips.
You should check the terms and conditions to make sure you’re covered for any coronavirus-related claims.
There is also AA breakdown cover, which includes Home Start, and home emergency cover for up to £250 should you find yourself in a bind, to help you make your home safe and secure or get the energy or water back on after a failure.
Finally, there’s mobile phone insurance, which provides cover for the repair or replacement of your phone, worth up to £2,000, should it break down, get damaged or be stolen or lost.
It covers one phone for a single account holder, or two for joint accounts.
Free equivalent: You can get that same cashback or monthly reward with the standard Halifax Reward Account, which is fee-free so long as you pay in £1,500 each month and stay in credit.
Co-op Everyday Extra Account
Co-operative Bank’s Everyday Extra account costs £15 a month. It offers worldwide travel insurance provided by AXA, UK and European breakdown cover and mobile phone insurance.
You can also opt into the bank’s Everyday Rewards scheme with the account, which currently pays you up to £2.20 per month so long as you pay in £800 each month and make a certain number of debit card payments.
Before July, you could get up to £5 per month, as you received £3 a month if you did 60 transactions and £2 for meeting the above criteria.
Find out more about the changes in: The best bank accounts for cashback.
Free equivalent: The Everyday Rewards scheme is also available on the Co-op’s main current account, which is absolutely free, providing you with the chance to earn up to £2.20 cashback.
Club Lloyds Platinum
For up to £24 a month (£21 if you pay in at least £1,500 a month), Club Lloyds Platinum offers worldwide travel insurance to account holders up to the age of 80 and covers you and your family for up to 45 consecutive days per trip.
Winter sports are covered for a maximum of 31 days in any calendar year.
Similar to the other accounts listed in the article, you should check if coronavirus cover is included.
Other extras with this account include AA breakdown cover, mobile phone insurance and a ‘lifestyle benefit’ of your choice every year. You can choose from six cinema tickets, an annual digital Gourmet Society membership or magazine subscription or 12 digital movie rentals.
With this account, you can also earn 0.6% interest on balances up to £4,000 and 1.5% for balances between £4,000 and £5,000.
Free equivalent: You can earn up to 15% cashback with Lloyds Classic Account.
NatWest/RBS Reward Silver
NatWest and RBS operate several packaged accounts, including the Reward Silver account, which costs £10 a month.
You can earn £5 a month in cashback and other benefits like mobile phone insurance, European travel insurance, mobile phone insurance and fee-free purchases overseas.
The Reward Platinum account includes all of the above plus worldwide travel insurance and breakdown cover.
It will cost you £20 a month but it’s worth checking whether coronavirus cover is included in the travel insurance (for both Reward accounts).
Comparison of packaged accounts
This table is ranked by price, not quality – you should decide which features are most important to you:
If you're offered a packaged account that doesn't fit your needs, be vigilant.
Part of the reason we’ve been so scathing in the past is that packaged bank accounts have been wrapped up in a number of mis-selling scandals.
Salespeople have been pressured into selling products which are unsuitable for customers, leaving them with an account that includes benefits they can't use.
In many cases, a 'free' standard account would have been much better for their needs.
If you’re mis-sold a packaged account
You’re not alone if you’ve been mis-sold a packaged account.
The first step is to establish whether or not you were actually mis-sold.
Look out for these signs:
- You were signed up without being told;
- You weren’t told you could have a free bank account;
- You were told that having one would improve your credit score;
- You were told you could get a market-leading deal on other financial products or services with this account but found you could actually get them cheaper as a new customer;
- You needed the account to access a loan or mortgage;
- Your bank knew you wouldn’t be eligible for one or more of the benefits;
- It failed to tell you that you’re no longer eligible for one of the benefits.
Try complaining to your provider first. Tell them how you’d like the problem to be resolved – perhaps you’d like your fees refunded or to be switched back to a standard current account.
Pop in-branch or ring up first but failing that you should write them a letter with bank statements detailing how much you’ve paid.
However, if you don’t get anywhere then it’s time to get in touch with the Financial Ombudsman Service.
You can read about how to complain in more detail here: How to claim compensation for mis-sold packaged bank accounts.
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