Packaged current accounts

Packaged bank accounts are a type of current account that offer a range of features for a fixed monthly fee.

Bank accounts with benefits

Fee-paying current accounts, or "packaged" accounts as they're otherwise known, charge monthly fees in return for additional benefits. These may include 'free' annual travel insurance, car breakdown cover, discounts on package holidays, free card protection and mobile phone insurance. They usually cost around £10-£15 a month although one or two charge as much as £25 so it's important to evaluate what you're getting for your £300 a year!

Is it really worth it?

The fact is many customers get suckered into moving to one of these accounts, yet few make full use of their extra facilities and often they're of limited value. There are usually caveats in the small print which make you wonder whether you even qualify for the benefits and most of them can be found more cheaply elsewhere anyway.

Avoid card protection schemes

A prime example is the inevitable 'card protection' scheme. A typical policy will offer cover for fraudulent use of credit and debit cards but under the Banking Code your maximum liability is only £50 for fraudulent transactions made before the card issuer is told of the problem. So once you've reported the card as lost or stolen, there's no liability anyway. It's the bank's problem so why pay a monthly fee for something you're covered for anyway?

So unless you can make good use of the benefits offered, avoid fee-paying accounts and go for one that simply pays a decent interest rate if you're usually in credit or has cheap overdraft charges if you're not.

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