Many current account providers now offer a range of add-ons to your usual banking service, in return for a regular fee. But are the extra perks worth the extra cost?
Current accounts that come with a package of features can offer real convenience to banking customers, but getting such benefits of course involves a monthly fee.
So if you’re considering opting for a packaged account, it’s important to weigh up this fee with the benefits you’ll be getting.
But is this fee ever really worth it, and if so, when? We take a look at whether or not package current accounts can be a worthwhile choice or are simply a waste of money.
Why go for a packaged account?
There are many reasons why getting a package current account can be appealing. You’ll get a range of benefits including travel insurance, breakdown cover, and preferential rates of interest. You might even get VIP treatment such as having a personal account manager, who can be your exclusive point of contact at the bank.
If face-to-face customer service at the bank is important to you, having a personal account manager in this sense can be very valuable. You’ll also be made to feel like a valued customer, who is given preferential rates on other products the bank offers, such as savings accounts or ISAs.
Having all these features included in your current account means they are all in one place, saving you the hassle of shopping for each one individually. This can offer real convenience, as well as real value for money.
So what’s the catch?
Of course the main catch of a current account such as this is the fact that, as opposed to regular current accounts which are free to use, packaged accounts charge a monthly fee. This will usually be between £10-20 a month, adding up to between £120 and £240 a year.
The extent to which a packaged current account offers value for money will vary greatly from person to person. This is because the services offered by one account might suit you down to the ground while others would simply mean paying out for things you don’t need.
This is why when looking at a packaged current account you will have to make sure that the benefits associated with it are ones that you would make full use of. Otherwise, you could find yourself paying a monthly fee for something you don’t need.
What else should I look out for?
Although packaged accounts often come with travel or motor insurance, you’ll have to make sure the cover offered will be sufficient for your requirements. For example the travel insurance offered may not be enough to cover you comprehensively, meaning you’ll have to buy more cover from elsewhere – so you’ll end up paying out much more than you have to in order to get what you want.
Another thing to consider is if the package account offers you all you need from everyday banking features, as well as the perks. You’ll need to check if there are charges for going over your overdraft limit, or whether you can transfer money, if you are given a chequebook, and so on. If the account you’re interested in offers perks but not enough of the basic features you need, it will probably not be worth the cost.
Some package accounts are only made available to higher earners, meaning you have to be on a minimum salary or pay in a minimum amount each month. They are also quite often targeted at a select group of people, including those who are homeowners, car owners, and are over a certain age. This means package accounts are certainly not the ideal choice for everyone.
Often the bank will give you an estimate of how much your packaged benefits are worth; for example they might state that the account comes with travel insurance, breakdown cover and VIP treatment worth around £400. However, this estimate shouldn’t be taken at face value – instead it might be worth shopping around a little first and seeing how much you’d have to pay for the services if you bought them separately.
So when is it worth it?
What it comes down to is looking at the value of the benefits offered by a package account balanced against the monthly cost. If the monthly fee is more than the extra features are worth, getting a package account is likely to be a waste of money for you.
Try not to be too drawn in by the appeal of becoming a ‘VIP’ customer of your bank and instead look practically at what you’ll be getting from the account, and if you really need the benefits offered.
If you can find a package account that offers all the features you need for everyday banking, plus offers additional features that you’ll make full use of, and comes at an affordable monthly fee, then it may well be worth the money.
