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Packaged Bank Accounts

Packaged Bank Accounts

Category: Money

Updated: 31/10/2008
First Published: 11/10/2006

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

According to a recent moneyfacts.co.uk user poll, around 19% of us have a packaged bank account. Packaged bank accounts are bank accounts that come with additional benefits. With most of these bank accounts there is a monthly fee. Although these benefits may seem attractive, it is a good idea to make sure you are not paying over the odds.

Packaged bank accounts have a typical monthly fee of around £10. Incentives include:

  • Discounted loans
  • Discounted insurance
  • Discounted mortgages
  • Preferential overdraft rates
  • Leisure discounts
  • Will writing
  • Green flag motoring
  • Pet insurance
  • Discounts on restaurants
  • Holiday discounts
  • Shopping discounts
  • Commission-free currency and travellers cheques
  • Discounts on utilities

Some of the above may be appealing. However, when paying around £120 a year for these facilities you should make sure you are going to use them and that they equate to the account fee in monetary value. For instance, discounts on insurance and mortgages sound fantastic. However, even with these discounts applied better deals can often be found with other providers.

You also need to look at the rate of interest paid on these bank accounts. Typically rates of interest are 0.1-0.5%. However, looking at the banking best buys reveals that rates of over 4% can be earned on bank accounts. On a balance of £1,000 this can make a difference of almost £40 in interest.

Ultimately if you are going to use these benefits, for instance if you regularly use an overdraft, packaged bank accounts could save you money. However, it is still worth comparing these incentives with standalone products to check you are getting a good deal. If you are not going to use them why pay for a bank account which gives you a poor rate of interest when better rates can be obtained for free?

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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