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 over the last few years.
Yet despite all these negative headlines, packaged current accounts can still prove to be a savvy option.
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 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 already have.
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 may be worth considering.
Monzo Premium and Monzo Plus
Monzo's Premium Account, which costs £15 a month, comes with a host of features for that 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 to make a few trips overseas over the next 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 get discounted airport lounge access to over 1,000 lounges worldwide for both you and your friends, plus you’ll 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 without charge.
Both Plus and Premium account holders can take advantage of a host of deals with partner firms too, like 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.
Revolut Metal and Revolut Premium
Beyond the attraction of a brushed steel card, the Revolut Metal account (£12.99 per month) from mobile-only provider Revolut has several benefits for travellers.
For example, you get up to £800 per month in free ATM withdrawals abroad, emergency overseas medical and dental cover, delayed flight and baggage insurance, as well as free airport lounge passes for you and three friends 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 can also earn cashback when you spend with the card, at 1% outside Europe and 0.1% inside the continent, as well as get access to Revolut’s Savings Vault. You can choose what currency you want cashback to be paid in ‒ including cryptocurrencies.
Revolut Metal customers can also spend, exchange and transfer money at ‘great exchange rates’ with no fees on Mondays to Fridays, as well as get 10 commission-free stock trades every month.
With Revolut Premium (£6.99 a month), you’ll get overseas emergency medical and dental cover, delayed baggage and flight insurance. You’ll also get fee-free ATM withdrawals of up to £400 per month, access to Revolut’s Savings Vault and five commission-free stock trades every month.
You can also spend, exchange and transfer money at ‘great exchange rates’ with no fees on Mondays to Fridays.
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, which are listed in alphabetical order.
Most packaged accounts include travel insurance but may offer different perks such as cashback, interest on in-credit balances or fee-free withdrawals overseas so make sure you choose the right account for you.
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 among other benefits.
Worldwide travel insurance is currently offered to account holders up to the age of 80 and covers you and your family for up to 31 consecutive days in any calendar year (including winter sports). 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 family 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 £3,999 and 1.5% for balances between £4,000 and £5,000, as well as up to 15% cashback.
At the time of writing, you can get £150 when you switch to the Club Lloyds Platinum or Club Lloyds account (a £3 monthly fee applies if you pay in less than £1,500 a month).
Free equivalent: You can earn up to 15% cashback with Lloyds Classic Account.
Co-op Everyday Extra Account
Co-operative Bank’s Everyday Extra account costs £15 a month. It offers worldwide family 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 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.
You'll also need to set up at least four Direct Debits, stay in credit or within your arranged overdraft limit, log in to the app or online banking at least once a month and opt-in for paperless statements.
Find out more 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 every month.
Halifax Ultimate Reward Account
The Ultimate Reward Account from Halifax isn’t cheap, costing £17 per month, but 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, three digital magazines or two online film rentals. You’ll also get access to Cashback Extras.
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 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, 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 family cover 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 the same rewards and access to Cashback Extras with the standard Halifax Reward Account, which is fee-free so long as you pay in £1,500 each month and stay in credit.
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 you should check what’s covered as there are limitations and exclusions you should be aware of.
You can also get family mobile phone insurance and benefit from no transaction fees when you use your debit card abroad, as well as access to exclusive member-only products.
In addition, you get UK and European breakdown cover, with unlimited call outs for your vehicle and any that you’re travelling in.
At the time of writing, Nationwide is offering £200 cash to those who switch.
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 5% on balances of up to £1,500 for the first year, so long as you pay in £1,000 each month, plus you can get £200 when you switch.
NatWest/RBS Reward accounts
NatWest and RBS operate several packaged accounts, including the Reward Silver account, which costs £10 a month.
It’s worth noting that some of the reward packaged accounts, including the Reward Silver account, are only available to existing customers.
You can earn up to £5 a month in cashback and get other benefits like mobile phone insurance, UK and European travel insurance and fee-free purchases overseas.
The Reward Platinum account includes all of the above plus worldwide family travel insurance and UK 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).
Virgin Money Club M
The Virgin Money Club M account costs £14.50 a month and offers worldwide multi-trip travel insurance for you and your family, including winter sports and golf.
You’ll also get worldwide family mobile and gadget insurance covering loss, theft, and accidental damage, 24-hour access to a doctor, a concierge service, as well as UK breakdown cover, plus no fees when you use your card abroad.
It’s worth checking what the travel insurance on offer covers so it meets your needs.
You'll also get in-credit interest of 2.02% AER on balances of up to £1,000, as well as a linked savings account offering 2.02% on balances of up to £25,000 and 1.51% on balances above this amount.
Free equivalent: Virgin Money’s free M Plus account offers the same in-credit interest and no fees when you use your card abroad.
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 were pressured into selling products that were unsuitable for customers in the past, leaving them with an account that included benefits they couldn’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.
If you don’t get anywhere, it’s time to contact 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.