Packaged bank accounts offered by traditional banks offer better benefits and value for money than those from challenger banks, new Which? analysis has revealed.
Which? analysed 13 , looking at each one's annual cost, travel insurance, car breakdown cover and mobile phone insurance, as well as interest-free overdraft limits and extra benefits such as cashback limits.
Here, we reveal which packaged accounts came out as best and worst in our analysis, and offer tips on what you should consider before signing up to any packaged account.
To rank each of the 13 accounts, we've calculated a score out of 100, weighted by the annual cost and value after fees (30%), quality of travel insurance (30%), car breakdown cover (30%) and mobile phone insurance (10%).
Our research identified Nationwide's FlexPlus and The Co-operative Bank's Everyday Extra packaged accounts as the top picks, both scoring 77% (more on these below).
At the other end of the scale are newer packaged accounts from 'challenger' mobile-only banks Revolut and Monzo.
Revolut's Metal account scored 36%. Costing £155.88, it doesn't offer car breakdown cover or mobile phone insurance, but it does include worldwide family travel insurance including winter sports, up to 1% cashback, accidental damage cover for a year and reimbursements of up to £1,000 for cancelled events.
Scoring 48%, Monzo Premium costs £180 a year and also includes worldwide family travel insurance including winter sports, along with mobile phone cover up to £2,000, the ability to withdraw up to £600 abroad every 30 days without incurring fees and pays 1.5% AER on balances up to £2,000 held in your account balance and regular pots. At the time our research was carried out, Monzo did not offer car breakdown cover, but this has since been added to Monzo Premium and Monzo Plus accounts. The policy, provided by RAC, can be added to the account for an extra £5 a month.
Nationwide's FlexPlus and The Co-Operative Bank's Everyday Extra accounts both got a top score of 77%, and both performed strongly across the board.
While Nationwide's account is cheaper - costing £156 for the year, compared to £180 a year for The Co-Operative Bank's account - note that FlexPlus doesn't provide any extra benefits like cashback.
The Co-operative Bank's cashback scheme means you can earn up to £2 cashback and 5p per debit card purchase (up to £3) each month, as long as you pay in £800, pay out at least four direct debits, stay within the agreed overdraft limit, get paperless statements and log into mobile or online banking. Do all this, and you can make up £60 of the account cost per year.
When it comes to car breakdown cover, both policies offer almost identical levels of cover, but Nationwide has a bit of an edge as it doesn't have any limits on call-outs for roadside assistance, whereas The Co-operative Bank's deal has a five-per-year limit.
As for travel insurance, The Co-operative Bank's cover is better for Covid-19-related incidents; while Nationwide's policy did still score highly overall, you wouldn't be covered if you had to cancel your holiday due to self-isolating or if the government's travel advice changes.
Due to the impact of Covid-19 on the travel industry, it's more important than ever to make sure you read the terms and conditions of any travel insurance policy before you take it out - and this goes for policies that come with packaged bank accounts, too.
As noted above, the travel insurance policy that comes with Nationwide's account won't cover you for cancellations due to self-isolating or changes to the government's travel advice.
In our survey of , we found most travel insurance policies include 'basic' cover, offering emergency coronavirus-related medical cover and repatriation. Just over half include cancellation cover if you are diagnosed with coronavirus, and only a few also offered cover for self-isolation without a positive Covid-19 test.
Even if your trip isn't affected by the pandemic, older travellers will need to watch out for age restrictions. The upper age limits for standard travel insurance policies tend to range from between 64-79. You can pay to extend this with Nationwide for £65 per account.
If you have a pre-existing medical condition, you'll also need to make sure this can be covered by your policy. These aren't covered automatically, so you'll need to declare them when you open the account - you may be asked to pay more if extra cover is added, or asked to accept limited cover.
A packaged bank account can be a great way to save on a range of financial products - but only if you'll make use of them.
It's a good idea to think about all of the types of insurance or other perks you'll realistically use on a regular basis. For instance, if you always tend to go on holiday in the UK, there's little point in paying for worldwide travel insurance - regardless of whether it's good value. Similarly, if you don't have a car, you don't need to pay for breakdown cover.
If you will use the insurance products, you should make sure the policies offer the level of cover you need, and whether you qualify for all of 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.
Editor's note: This article has been updated since it was first published. Details of Monzo's car insurance policy were added on 6 May 2021; this feature had been left out of our analysis as it wasn't available at the time the research was undertaken.