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27 Jul 2019

Revealed: the best and worst packaged bank accounts

Which? reveals the true value of packaged account benefits

Packaged bank accounts have been put to the test by Which? Money, with the very best saving you almost £200 a year, while the worst offer insurance bundles that barely cover the fees. So, which providers offer the best value for money?

These current accounts with frills typically offer core insurance benefits in exchange for a monthly fee.

All the packaged accounts we looked at offer better value than buying each policy separately. Yet our analysis reveals a gulf between the best and the worst bundles, and if you don't make the most of the benefits, you'll pay much more than you need to.

Here, we scrutinise all 13 packaged accounts offered by high street banks, calculating the true value of each insurance element to help you decide whether they're worth the fee.

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Best and worst packaged accounts

To rank the accounts, we've calculated the total value of each bundle based on the cost of the equivalent best-rate travel insurance, car breakdown cover from AA (a Which? Recommended Provider), mobile phone insurance and any other included policy, such as gadget insurance and home emergency cover.

As an example of costs:

  • Best-rate worldwide travel insurance for the whole family is worth £62 (£86 with a winter sports add-on).
  • Comprehensive car breakdown cover is worth £140.
  • Mobile phone insurance is worth £110 (based on a quote for an iPhone X at Insure&Go).

The account score is weighted by the annual cost and value after fees (30%), plus quality of travel insurance (30%), car breakdown cover (30%) and mobile phone insurance (10%).

You can see the full results below, or in our guide to best packaged bank accounts.

FlexPlus from Nationwide is a clear winner

FlexPlus is our top pick overall. It doesn't scrimp on cover, achieving the highest score of 87%, and we think its key benefits are worth £336. Once fees are deducted, you could save as much as £180 a year compared with buying standalone policies.

The Signature account from Clydesdale/Yorkshire Bank is worth £189 after fees - largely thanks to extra gadget cover. However, FlexPlus offers more comprehensive cover for the three core benefits, detailed below:

  • Car breakdown cover: We awarded full marks for Nationwide's car breakdown cover, provided by Britannia Rescue UK and European personal breakdown cover for all account holders. No call-out limit.
  • Travel insurance: Worldwide cover for all account holders, their partners and dependent children. Includes winter sports, golf, wedding and business cover as standard. At 70 an age extension fee of £65 applies per account. Excess £50 for some claims.
  • Mobile phone cover: Worldwide cover up to £1,000 for any mobile phones owned by account holders, their partners and dependent children. Excess from £25 to £50 per claim (up to £100 for Apple devices). Max four claims a year.

It's worth noting that the upper age for travel insurance dropped from 75 to 70 as of the beginning of the year, and the monthly fee rose from £10 to £13 in September 2017.

Nationwide has also announced that it will stop paying FlexPlus customers 3% interest on balances up to £2,500 and remove the £250 fee-free overdraft buffer from November 2019, as a result of rising insurance costs.

It's not all bad news. Transaction fees for overseas debit card payments will be scrapped from August.

Are you paying too much for your packaged account?

Several providers have increased fees recently with little or no improvement to the benefits included. If you're a customer, it's worth reassessing the value of these accounts.

For example, the TSB Silver packaged account will cost £12 a month from 2 September 2019 (was £9.95) while the Platinum account is rising to £20 (was £17), though both are temporarily unavailable to new customers.

The Halifax Ultimate Reward account is also far less attractive following its price increase from £15 a month to £17 a month last year (although you get a £2 discount if in the previous calendar month you pay in at least £750, have two different direct debits set up, and remain in credit).

Both TSB and Halifax offer decent travel insurance but we think other providers offer better-quality car breakdown cover for a similar or lower price.

At the beginning of the year, Barclays upped the cost of Travel Plus Pack from £15.50 a month to £18, though it did enhance cover in some areas - see here for details. Insurance-wise, there is no difference between the Travel Pack and the Travel Plus Pack, so you're paying the extra £66 a year for six airport lounge passes and discounted airport parking.

NatWest/RBS Reward Platinum increased from £19 to £20 a month in October 2018. While it's the most expensive packaged account we looked at, you can find superior levels of car breakdown cover and mobile phone insurance with cheaper packages.

Bucking the trend, the cost of the NatWest/RBS Reward Silver was reduced last year, from £12 a month to £10. However, it only offers European travel insurance for an individual (most packaged accounts offer worldwide cover for families), permits one mobile phone claim a year (other banks allow unlimited claims or at least two a year), and has no breakdown cover.

Both accounts do offer discounted cinema tickets (up to 40% at selected cinemas) and a free Tastecard, but we don't think these extras justify such a steep fee (Platinum) or low cover level (Silver).

How to find the best packaged account

A packaged account can save you money if you plan to use the benefits - otherwise, you may be left out of pocket.

Before signing up, think carefully about the types of insurance products or other perks you'll need in your day-to-day life. If you mainly holiday in the UK, for example, there's little point in paying for worldwide travel insurance, no matter how good value it is.

It's also worth weighing up the level of cover you need, and whether you qualify to use all the benefits. Your provider has an obligation to check whether you're eligible to claim under each policy, and alert you if any aren't suitable.

To find out more, you can read our guide on the best packaged bank accounts.