Banking, loans and cards

Is it worth paying for a packaged bank account?

Banks like to encourage their customers to upgrade to “packaged” current accounts – but what are these accounts, and are they right for you?

In a nutshell, they are accounts that charge you a monthly fee in return for a host of add-ons. Banks will tell you how much they think these add-ons are worth, and you can be sure they will insist that you’ll benefit from services worth far more than your monthly fee.

But banks never offer something for nothing, and many of them are keen to find new revenue streams to make up for the loss of things such as PPI income, and cover the fines they have been forced to pay for their misbehaviour over the past few years. Remember this whenever your bank tries to sell you something.

There are now more packaged accounts on the market than standard “free” accounts. But while packaged accounts can prove useful to some people, many customers find that the services they come with are of no use to them.

Holiday discounts, improved interest rates, discounted loans, mobile-phone insurance and breakdown cover are the sorts of extras included with these accounts, but you need to ask yourself if they will benefit you.

For example, it’s all very well being given a discount off selected holidays, but if you want to book your own accommodation and travel independently, a discount with a specific packaged-holiday provider is worth nothing to you.

Similarly, you might find your mobile phone is already covered under your home-insurance policy, while better breakdown cover is available elsewhere.

The regulator has introduced rules that put the onus on banks to make sure the products are suitable for you, and annual reminders are sent to customers outlining the benefits they have signed up for. But you need to keep your wits about you and make sure you don’t simply keep paying the monthly fees – which can add up to hundreds of pounds a year – without putting proper thought into it.

“If you’ve already got a packaged bank account, check your bank’s website and remind yourself exactly what you’re paying your fee for each month,” said Andrew Hagger, an analyst with

“Consider just how many of the benefits you actually use, and if it’s clear you’re not making regular use of the add-ons, save yourself some cash and ask your bank to switch you back to a standard no-fees account.”

Charlotte Nelson, of, said: “There are several reasons that can make a packaged current account worth having – customers will receive a variety of benefits including travel insurance, breakdown cover and gadget cover.

“However, packaged accounts can be very costly if spending habits are not considered, and you need to decide whether you will use the incentives and whether you are eligible.

“Weighing up the account fee and the benefits is a vital process.”