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What is a packaged current account?

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Written by Dan Base, Financial Content Writer

6 December 2018

You can get rewards with some bank accounts for a monthly fee. The benefits can be cost effective and convenient, but only if it is the cheapest option. Here is how to check.

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What are they?

They are bank accounts that charge a monthly fee of around £10 and come bundled with features like:

  • Breakdown cover

  • Travel insurance

  • Insurance for gadgets and phones

  • Exclusive savings account rates

  • Home insurance

Should you get one?

Packaged current accounts are only worth it if:

  • You will use the benefits that come with the account (e.g. travel insurance is only worth paying for if you intend to go abroad)

  • The benefits are suitable and worth paying for (e.g. some insurance policies have exclusions that mean they would not pay out if you needed to claim)

  • You have not already paid for the benefits it offers (e.g. if you previously took out standalone insurance policies)

  • It will save you money compared to buying the benefits individually (i.e. the fee you pay on the account needs to be lower than paying for its features separately)

  • It offers what you need from a bank account like an overdraft, local branches or internet banking

When does insurance not pay out?

Insurance policies come with exclusions, which are situations they will refuse to pay out. For example, if travel insurance is included, check if it:

  • Only covers you in certain countries, e.g. only in Europe

  • Specifies a maximum age

  • Cannot cover people with existing medical conditions

What if you are covered twice?

If a packaged account includes insurance but you already have a separate policy for it, this can cause complications.

If you are covered twice, some insurers will only pay out a share of the amount you claim. For example, if you had two mobile phone policies and tried to claim to replace a £500 stolen phone, the insurers might make you claim for £250 from each of them.

This can be complicated and more expensive if you have to pay an excess on each policy.

How much they cost

Packaged bank accounts charge a monthly fee, usually between £1 and £50 per month.

Some also have requirements like:

  • Paying a certain amount into the account each month, e.g. £1,000 or more

  • Paying out a number of direct debits from the account each month, e.g. two

Some bank accounts charge a lower monthly fee as long as you meet its requirements.

Can you reclaim packaged bank account fees?

Yes, if you can prove your bank mis sold the account to you, you could get back the amount you paid in fees plus interest. This includes:

  • If they gave you no choice about taking out the account

  • If they did not tell you about the fees or how much they cost

  • If they recommended an account that is wrong for you

Here is how to complain to your bank and ask for your money back.

How to get a packaged bank account

You can find every packaged account in the UK using our comparison. Choose the best account by comparing:

Check it is worth it

Once you have found an account that offers everything you need, make sure the monthly fee is less than the benefits are worth.

Add up the value of all the benefits you will use by seeing how much you would pay for them separately. Check this comes to more than the account fee you have to pay.

Check the other fees on the account as well. For example, if you regularly use your overdraft, a bank account with a free overdraft could save you more money than a packaged account that charges you for being overdrawn.

How to apply

Once you have found one that offers the features you need, you can apply online or in a branch. Here is how to apply for a bank account.

Some banks let you choose which features you want with your account and only charge you for the ones you pick.

You may also need to activate the benefits too. For example, if your account includes phone insurance you need to register your phone to the policy to make sure you are covered.

Who can get a packaged bank account?

Each bank account has different rules on who is eligible to open it. Some accounts may not be available if you:

  • Have missed payments on your credit record

  • Earn less than their minimum

  • Are younger than their minimum age

Check you are eligible before you apply because otherwise you may be rejected and could damage your credit record.

You may be able to get a basic bank account or a prepaid card account instead. They do not have overdrafts or the benefits that come with packaged accounts, but they can accept your application without running a credit check.

New bank accounts are launched all the time, so compare all of the best options to make sure you get the right one for your circumstances.

Compare current accounts

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