Holiday season is almost upon us and beyond the sunscreen, passport and engrossing beach book, there’s one travel essential you shouldn’t leave behind – insurance. And new Which? research has found paying for travel cover via your bank account could be a great deal – provided you use all of the perks on offer.
‘Packaged’ bank accounts offer a range of benefits – including travel insurance, breakdown cover and mobile phone insurance – in exchange for a monthly fee. We analysed 34 packaged accounts to see how they compared with buying the insurance they offer separately.
With more than half of the accounts we looked, the value of the cover on offer outstripped the annual cost of the account.
Nationwide’s FlexPlus account stood out. For just £10 a month (£120 a year), its worldwide travel insurance, breakdown cover and mobile phone insurance were valued at around £252 for someone aged under 65 and £294 for someone aged aged 65 to 69 (when travel insurance is more expensive).
After fees, we valued Nationwide’s account at £174.
Best packaged account perks
The table below shows the top three bank accounts that are worth more than what you spend. While Clydesdale/Yorkshire Bank’s account doesn’t come with car breakdown cover, the combination of both gadget and mobile phone insurance, along with worldwide travel insurance, means that the value of the account is £138 after annual fees.
Meanwhile Barclays’ Travel Pack comes with no mobile or gadget cover, but offers breakdown and worldwide insurance totalling £258 – offsetting the annual cost of £126.
|The most valuable packaged bank accounts|
|Account||Mobile/Gadget cover||European Breakdown cover||Travel insurance||Total insurance value||Cost of account||Total value|
|Clydesdale/Yorkshire Signature Current Account||Both||No||Worldwide||£300||£162||£138|
|Barclays Bank Current Account with Travel Pack||No||Yes||Worldwide||£258||£126||£132|
Total value is calculated using the Best Rate travel insurance price for someone aged between 65 and 69.
Should I pay for a packaged bank account?
Packaged bank accounts can be good value – provided you make use of the benefits you pay for. If you’re an infrequent traveller, only going on holiday once in a year, or don’t need mobile phone insurance, you may well be overpaying for unnecessary perks and would be better off buying standalone cover.
Before you leap into paying for a bank account, ask yourself the following questions:
- How many of the benefits do I really need?
- Does the insurance give me the right amount of cover?
- Can I get any of the benefits cheaper elsewhere?
- If the account offers an interest-free overdraft, am I currently paying overdraft fees and charges that are higher than the cost of the fee-charging bank account?
It is worth checking whether the travel insurance within a packaged account will cover any medical conditions you might have, which can drive the cost of standalone travel insurance sky high.
Banks will often cover people with some illnesses, such as diabetes or high blood pressure with no additional charges, but may ask you to pay more for other conditions. Even still, this may be more cost-effective than buying travel insurance on its own, even with the annual fees packaged accounts charge.
Packaged account mis-selling
The Financial Ombudsman Service – the independent body that resolves complaints between consumers and financial companies – has reported an increase in complaints about packaged accounts in recent years.
In 2015/16, it dealt with around 44,000 new cases about the accounts, finding in favour of the consumer in more than one in 10 cases.
There are rules in place to prevent insurance mis-selling within fee-charging bank accounts. These force banks and building societies to:
- check whether you are eligible to claim under each policy and make sure you know that information;
- establish whether each policy is suitable for you and alert you if some aren’t;
- and provide you with annual eligibility statements prompting you to check if the policies still fit your needs.
If you want to complain about your account, talk to your bank or building society first. If after making a formal complaint, you disagree with their final decision, or if you don’t hear from them within eight weeks, you have the right to take your complaint to the Financial Ombudsman Service.