When is a packaged bank account right for you?Co-operative Bank puts account fees back in spotlight

30 April 2014


The Co-operative Bank’s decision to raise fees on its Privilege account has put packaged accounts back in the spotlight.

The Privilege Premier account’s fee will rise by nearly 20% - from £156 a year to £186 a year - on 1 July 2014. Privilege accounts are packaged with travel and mobile phone insurance, though are currently closed to new customers.

The announcement comes as a Which? poll revealed the unpopularity of account charges. In a poll for Which? Conversation – to which over 1800 people responded – 81% of respondents declared they wouldn't pay for a standard current account.

Go further: Best packaged current accounts - dozens of fee-charging accounts compared 

Should I opt for a packaged bank account?

We think that, before committing to a packaged account, you should ask yourself the following four questions…

How many of the benefits do I really need?

The add-ons included with your packaged accounts may often seem attractive, but offer little benefit in reality.

Card protection and ID fraud monitoring are often included. However, cards can be easily cancelled over the telephone. Meanwhile, ID fraud can be detected by checking your £2 credit report with each of the three credit reference agencies (Experian, Equifax and Callcredit) every six months or so.

It's also possible that you already own some of the products on offer, and there is little point in paying for additional current account features that you own in standalone form.

If the account offers insurance, does it give me the right amount of cover?

You need to look carefully at the policy to check what it covers and if you are eligible to make a claim, especially if you are older or have pre-existing medical conditions. Many of the travel insurance products packaged with current accounts, for example, will only cover customers up to a certain age.

Can I get any of the benefits cheaper elsewhere?

It is important to assess the value of your packaged account’s add-ons. By shopping around, you may find that the benefits attached to the account are available elsewhere at a better price and can be arranged independently of your current account.

Will my interest-free overdraft actually save me money?  

Interest-free overdrafts can be a useful add-on, but are only worth paying for if the fee amounts to less than the interest you are currently paying on your debts.   

Go further: Packaged accounts explained - learn more about what these accounts can offer

 More on this:

• Finding the right bank account - our comprehensive guide makes it simple 
Call the Which? Money Helpline - your financial queries answered 
Best Rate Travel Insurance – dozens of insurers compared