Finding the right bank account Should I pay a fee for my bank account?
You can often get packaged account benefits cheaper elsewhere
Some bank accounts offer extra benefits in return for a monthly fee – typically between £5 and £25 a month depending on the account.
Commonly known as 'packaged' accounts, the extras they offer range from travel insurance and preferential savings rates to will-writing and share-dealing services.
Are they worth it?
Which? has been analysing the value of packaged bank accounts for many years and we always find the same thing – that you can often get the extra benefits they offer cheaper elsewhere. And some of the 'benefits' just aren't that much use.
Our research shows that annual worldwide travel insurance and breakdown cover are the two most useful and valuable benefits on offer.
But you can get a Best Buy travel insurance policy and Best Buy breakdown cover for less than the annual cost of most of the packaged accounts.
So to make the account fee worthwhile, you need to know that you'll use these two benefits as well as some of the other benefits on offer.
Before choosing to pay a fee for your bank account, ask yourself how many of the benefits you will use or need.
In our last survey of Which? members with a packaged account, 30% told us they had never used any of the benefits offered.
Packaged account benefits
Below are some of the bank account benefits which are unlikely to be of any use to you:
Mobile cover
Most packaged accounts include mobile phone insurance. But check your home contents insurance as you may already be covered.
If your contents policy doesn't already cover you, ask how much it would cost to add it to your policy and factor this in when deciding if it's worth paying for a packaged account.
Bear in mind too that mobile phone policies are notoriously full of exclusions, which can make it difficult to claim.
ID theft packages
A small number of packaged accounts have identity theft insurance, which usually consists of a telephone helpline, or identity theft insurance, which can include access to your credit reports, emergency cash and cover for irrecoverable losses or the expense of sorting out the problem.
However, if money is taken fraudulently from your account, your bank must refund you, as long as you have taken reasonable care.
The most you can be liable for if your card is lost or stolen is £50. You can also get your credit reports for £2 each from the credit reference agencies.
Other benefits
These include commission-free foreign currency or travellers cheques, discounts on home insurance or car insurance and holiday or travel discounts, but this doesn't necessarily mean that you would get these items cheaper than you could elsewhere.
Better rates
Bank accounts with monthly fees tend to offer a selection of preferential rates on products such as savings accounts, credit cards, unsecured loans and mortgages.
These offers may look attractive at first glance, but our research shows that you usually find better rates by shopping around for products individually.
The majority of packaged accounts do not offer better credit interest than our regular Which? Best Rate current accounts, which all have no monthly fees and get at least an average score for customer satisfaction.
And although the overdraft rates and interest-free deals that come with packaged accounts are often better than you would normally get from the bank, similar deals may be available from Best Rate accounts.
Automatic upgrades
Some Which? members have told us that their bank has automatically upgraded them to a packaged account. Banks should not do this.
In fact, FSA regulations state that although banks can offer their customers the opportunity to move their current account from a 'free if in credit' account to a packaged account, they should not move your account unless they have your express consent or if it's your bank's intention to move all their customers on the previously free account to a packaged account.
If your bank has upgraded you without your permission, complain – and, if necessary, take your complaint to the Financial Ombudsman Service.
- Take a look at our guide to what fees banks charge
- Problems with your bank? Read our guide on how to complain about financial services
- Call the Which? Money Helpline for further guidance on the banking best options for you
