Packaged accounts are bank accounts that for a monthly fee offer extra services such as car breakdown cover, mobile phone insurance or travel insurance.
Banks love to sell packaged accounts to their customers, as they provide them with a regular stream of income, and while for some people they can be a great deal, for others they can turn out to be a waste of money.
Here’s what packaged accounts offer, their pros and cons and some of the best accounts on the market.
What do packaged accounts offer?
Every packaged account is different, but most of them will include things like travel insurance, mobile phone insurance and car breakdown cover for a fee of anywhere between £13 to £30+ a month.
Some accounts also offer:
- Home emergency cover
- ID theft protection
- Fee-free foreign currency
- Preferential rates for overdrafts
- Exclusive rates on other accounts
- Exclusive offers and discounts.
While getting one or more of these things as an add-on to your bank account might seem like a great deal, the coverage that packaged insurance policies offer tends to be fairly basic, so it’s important to read the terms and conditions carefully.
What are the advantages of packaged accounts?
The benefits of packaged accounts can include:
The benefits they provide may cost you less than buying them separately
The majority of packaged accounts will offer a combination of mobile phone insurance, travel insurance and breakdown cover, which if paid for separately would be more expensive than if you got them through a packaged account.
Although, of course, it’s important to make sure they provide the level of cover you need, and that you will actually use them, otherwise it could be a waste of money.
Exclusive access to preferential rates
While the biggest attraction to package accounts is their protection offerings, some offer a much wider range of benefits. One of these perks can often include preferential rates on other products from your bank. So if you pay for a packaged account, you might be able to open a savings account with a higher rate, or a fee-free overdraft on your current account. Bear in mind, however, that many current accounts which don’t charge fees also provide you with access to high-rate regular savings accounts.
What are the disadvantages of packaged accounts?
Packaged accounts won’t suit everyone and some of their disadvantages include:
Basic level of protection on insurance policies
As we’ve already mentioned, the level of coverage that most packaged account insurance policies offer is often pretty basic, and may not be as flexible or generous as policies you could buy direct from an insurer.
Travel insurance policies, for example, will usually include a number of exclusions, such as upper age limits and exclusions of pre-existing health conditions, and you might end up paying more to get the cover you actually need.
You might be paying for benefits you can’t or won’t use
Banks tend to overestimate the value of the extras and many people who have these accounts don’t use the benefits (or find they can’t). For example, if you don’t drive then breakdown cover is pointless for you, or if your mobile phone is already protected by your home insurance, you won’t need this either.
You might also find that you simply aren’t covered by the insurance policies, so if you are going to sign up for a packaged account, make sure you are 100% clear on what you’re buying. Either check the terms and conditions (do a word search on something like ‘exclusions’ to get an idea of what’s not covered) or ask the bank advisor to explain exactly what’s included.
What are the best packaged accounts?
There are lots of packaged accounts out there, but the current best buys, according to consumer website moneysavingexpert.com, are as follows:
Virgin Money
Monthly fee: £12.50
What it offers:
- No travel fees for spending or withdrawals abroad
- Worldwide family multi-trip travel insurance – maximum age 75, 31 days per trip maximum
- Worldwide family mobile & gadget insurance
- UK breakdown cover from Green Flag
- Mobile and gadget insurance – cover against loss, theft, damage and breakdown, up to a maximum of £2,000 per device
- Access to Club M saver which offers 3.03% AER on savings balances up to £25,000.
Nationwide
Monthly fee: £13.00
What it offers:
- Worldwide travel insurance for your family – maximum age 69, 31 days per trip maximum
- Mobile phone insurance for your whole family – covers loss, theft, damage and fault of phones up to a value of £2,000 per claim for you, your partner and dependent children
- Unlimited call outs for AA Vehicle breakdown cover in the UK and the rest of Europe
- Instant access to all benefits
- Access to other Nationwide products, such as the Flex Instant Saver which offers 2.50% AER for 12 months on balances up to £5m
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The Co-operative Bank
Monthly fee: £15.00
What it offers:
- Worldwide mobile phone insurance – covers loss, theft, accidental damage or breakdowns of phones up to a value of £1,500 per claim. Including cover for phone accessories up to the value of £350.
- Worldwide travel insurance – Maximum age of 79, no excess to be paid on claims
- UK and European breakdown cover from RAC
- The choice to opt into Everyday Rewards – Co-op Bank’s reward scheme.
Halifax
Monthly fee: £17.00
What it offers:
- Worldwide multi-trip travel insurance for you and your family – Maximum age of 70, trips must be 31 days or less, £75 excess
- AA breakdown family cover for you, your partner and your children, but also for extended family including parents, siblings, grandparents, aunts, uncles, nieces nephews and first cousins.
- Mobile phone insurance – covers loss, theft or accidental damage of your phone up to a value of £2,000. Including cover for phone accessories up to the value of £350.
- Home emergency cover – for up to £250 per claim including VAT to be used to make your home safe or secure, avoid further damage or get main utilities back after total failure
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