The best UK packaged bank accounts


Updated on 13 November 2019 | 2 Comments

As Nationwide scraps the fee-free overdraft and 3% in-credit interest on its FlexPlus account, we look at whether there are any accounts out there that really offer value for money.

Packaged current accounts have – rightly – been slated by personal finance sites like ourselves 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 are constantly being scaled back.

Nationwide is the most recent provider to act, announcing this week it has scrapped its generous 3% rate for in-credit balances and done away with the £250 fee-free overdraft on its FlexPlus current account. 

Applying to both new and existing customers, you can read more about the changes in the dedicated 'Nationwide FlexPlus' section lower down in this article.

Not always a bad deal

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 making use of 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.

We’ve noted some good free equivalents, or you can simply compare bank accounts here.

New packaged accounts

If you’re confident banking on your mobile, these relatively new banks could be worth considering:

N26 Metal

N26 is a mobile-only bank similar to Monzo or Starling.

In addition to the metal debit card (pictured below – other colours available), this account has other benefits to justify its £14.90 monthly fee.

These include fee-free spending and cash withdrawals in any currency, travel insurance and discounted access to airport lounges through Lounge Key.

For a similar price, you can get better perks from more traditional packaged accounts, so you are mainly paying for the card itself.

Be warned that N26 isn’t yet covered by the Financial Services Compensation Scheme (FSCS). Deposits are covered by the FSCS' German equivalent, up to €100,000.

It's not yet clear if this will still apply after Brexit but N26 says it’s got ‘measures in place to ensure it’s as painless as possible in terms of your N26 account, no matter what the outcome.’

Free equivalent: Starling’s free current account has fee-free foreign spending and withdrawals, in-credit interest and FSCS protection.

N26's metal debit card (image: N26)

Revolut Metal

Beyond the attraction of a brushed steel card, this £12.99/month current account from mobile-only provider Revolut has several benefits for travellers.

That includes medical, delayed baggage and flight insurance and ‘an exclusive concierge service’.

You also get fee-free foreign spending at the Interbank Exchange Rate and withdrawals (the latter up to £600/month), a European IBAN account and cashback on spending worldwide.

If you don’t need the fancy card, Revolut’s Premium Account is just £6.99 and also includes insurance.

Note that the insurances in these accounts aren’t that extensive and your balances aren’t protected under the FSCS.

Free equivalent: Again, Starling’s account sets the standard for traveller-friendly accounts. Revolut’s free Standard Account is also worth considering.

The best fee-free credit cards to use abroad

Best traditional packaged accounts

Just because these accounts have been around for a while, it doesn’t mean you should ignore them:

NatWest Reward Platinum Account

This is an expensive option at £20 a month, and the benefits – family travel insurance, breakdown cover and mobile phone insurance – aren’t that different from other accounts.

Plus, if you’re over 70, you’ll have to pay a £75 annual premium for travel insurance.

But you can earn 2% cashback on seven types of household bills paid by Direct Debit and NatWest is currently offering £150 if you switch your banking to them by 6 December.

That equates to the Platinum account's annual fee being reduced from £240 to £90, or you could get the Silver account entirely free. Read more about this offer here.

There are other benefits such as discounted cinema tickets and money off restaurant bills, but they’re not deal-breakers.

Some of the monthly cost can be offset by NatWest’s rewards scheme for bill payments, which will earn around £83 (excluding the monthly fee) for the average household.

Cheaper equivalent: For half the price (£10) NatWest’s Reward Silver Account gives you nearly the same insurance cover (no UK car breakdown cover or worldwide travel insurance) and rewards.

Nationwide FlexPlus Current Account

Nationwide's packaged account leads the pack (image: Shutterstock)

At £13, Nationwide's FlexPlus packaged account comes with one of the lowest monthly fees around.

It includes travel insurance for the family (children under 19 or full-time students under the age of 22), although you'll have to pay an extra £65 a year for the cover if you're aged 70 or over.

You also get mobile phone insurance, as well as UK and European breakdown and recovery assistance.

Winter sports, weddings and airline failure due to natural disasters are covered.

Cash withdrawals abroad are also fee-free and there's no transaction fee for debit card payments overseas. 

Unfortunately, the building society has made a couple of major changes regarding the borrowing and saving rates linked to the account that could make it far less attractive (depending on how you use it).

Firstly, the generous 3% paid on in-credit balances has been scrapped, meaning you could miss out on up to £75 in interest if you're regularly in the black.

It has also pulled the £250 fee-free overdraft buffer that came with the account, replacing it with a hefty 39.9% interest rate that will apply to all overdrafts.

It means you'll find this account a lot more expensive if you made regular use of the £250 overdraft buffer. On the upside, it has done away with unarranged overdraft fees, which cost £5 a day (capped at £35 a month).

Nationwide said it has made the changes in response to calls from the financial regulator to simplify overdraft costs, so it'll be interesting to see whether rival accounts also become less attractive in the coming months.

Free equivalent: Nationwide’s free FlexDirect Account offers an interest rate of 5% AER, plus you'll get a 12-month interest-free overdraft.

Halifax Ultimate Reward Account

For £17 a month – or £15 if you pay out two Direct Debits, pay in at least £750 a month and remain in credit – you’ll get worldwide family travel insurance (albeit with a £50 excess), mobile phone insurance and limited home emergency cover.

The account also offers a £300 fee-free arranged overdraft, but there aren’t any savings account benefits.

Bear in mind that all insurance ends on your 71st birthday.

Free equivalent: Halifax’s Reward Account also offers a £2 a month reward if you pay in at least £750 a month, set up two Direct Debits and stay in credit. It also offers cashback on certain purchases.

Top bank accounts for switching services: get free cash, gadgets or holiday vouchers

Co-op Everyday Extra Account

The Co-op is great for older travellers, offering worldwide family travel insurance up until your 80th birthday. 

You also get UK and European breakdown cover from the RAC and mobile insurance for the individual account holder.

Although the fee is £15 a month, this can be offset with the Everyday Rewards scheme, which Co-op claims offers up to £5.50 a month for your normal banking.

Free equivalent: You can also get the £5.50 monthly Everyday Rewards with Co-op’s basic no-fee current account.

Co-op's Everyday Extra account pays you £5.50 a month (image: Yui Mok PA Images)

Club Lloyds Platinum 

For up to £22 a month (£19 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 is covered for a maximum of 31 days in any calendar year.

Other extras with this account include AA breakdown cover, mobile phone insurance and a £300 fee-free overdraft, as well as up to 2% in-credit interest. 

Free equivalent: You can earn up to 15% cashback with Lloyds Classic Account. 

Clydesdale/Yorkshire Bank Signature Account

Good value at £13.50, this account includes family travel insurance and, for the account holder, mobile phone insurance, breakdown and gadget cover.

The age limit for the insurance is slightly lower than Co-op’s, at 75.

Free equivalent: Nationwide’s FlexDirect account is free, has excellent benefits and a much better customer service score than Yorkshire Bank in a recent survey.

Comparison of packaged accounts

This table is ranked by price, not quality – you should decide which features are most important to you:

Bank Account

Monthly Cost

Insurance

Perks

Other benefits

Revolut Premium

£6.99

Travel

Fee-free spending / limited free withdrawals abroad

 LoungeKey Pass access

NatWest Reward Silver

£10.00

Travel / mobile

Cashback on bills and partner retailers

£150 switching bonus* + discounts on cinema and dining

Revolut Metal

£12.99

Travel

Fee-free spending / limited free withdrawals abroad / cashback

Metal card, LoungeKey Pass access, concierge access

Nationwide FlexPlus

£13.00

Family travel / family mobile / UK & European breakdown cover

Fee-free foreign withdrawals

 

Clydesdale/Yorkshire Bank Signature

£13.50

Family travel / mobile / UK breakdown cover / gadget

My Signature Rewards  

 

N26 Metal

£14.90

Travel

Fee-free spending/withdrawals abroad

Lounge access, metal card

Co-op Everyday Extra

£15.00

Family travel / mobile / UK & European breakdown cover

Up to £5.50/ month in rewards 

 

Halifax Ultimate Reward

£17.00**

Family travel / mobile / breakdown cover / limited home emergency

Fee-free overdraft

 

NatWest Reward Platinum

£20.00

Family travel / mobile / UK breakdown cover

Cashback on bills and with partner retailers

£150 switching bonus* + discounts on cinema and dining

Club Lloyds Platinum

£22.00***

Worldwide family travel insurance / breakdown cover /mobile phone insurance

Fee-free overdraft, in-credit interest

Six free cinema tickets, free Gourmet Society membership or magazine subscription

* Until 6 December
** Can be reduced to £15
*** Can be reduced to £19 if you pay in £1,500 a month

Mis-selling scandals

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.

Packaged accounts not for you? Compare standard and basic current accounts with loveMONEY instead.

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