What is a packaged current account?

Many banks offer packaged bank accounts that give you all sorts of perks in return for a monthly fee. These include financial rewards such as free travel, home insurance, or better savings rates. Some banks also offer extras such as cinema tickets, money off subscriptions, free roadside assistance and cashback on your shopping.

Some financial benefits can be convenient, for instance, if your travel insurance is automatically covered, but you need to check the levels of cover. It’s also worth doing the monthly sums to check you’ll be better off – this means calculating how much the perk would cost you (or save you) and comparing that to the monthly fee.  

Here are the main things to check before selecting a packaged account.

What is covered in a packaged bank account?

These are bank accounts that charge a monthly fee and come bundled with a selection of features and perks such as:

• Breakdown cover

• Travel insurance

• Insurance for gadgets and phones

• Exclusive savings account rates

• Home insurance

• Cashback

• Cinema tickets

• Money off with certain retailers

Fees vary considerably depending on the bank you choose and which packaged account you select. Several banks have different pricing levels, such as Silver, Gold and Platinum, which each come with a different set of benefits linked to how much you’re willing to pay.

Some fees are quite small, costing just a few pounds a month, and some banks waive the costs if you pay in a certain amount each month or set up a specified number of direct debits.

Other banks offer fully comprehensive packages, but these cost people hundreds of pounds a year. Whatever account you’re looking for, the most important thing to examine is not just the cost but the value for money and whether you’re getting out more than you pay in.

Should you get a packaged bank account?

Packaged current accounts are only worth it if:

• You will use the benefits that come with the account (e.g. travel insurance is only worth paying for if you intend to go abroad)

• The benefits are suitable and worth paying for (e.g. some insurance policies have exclusions that mean they would not pay if you needed to claim)

• You have not already paid for the benefits it offers (e.g. if you previously took out standalone insurance policies)

• It will save you money compared to buying the elements individually (i.e. the fee you pay on the account needs to be lower than paying for its features separately)

• It offers what you need from a bank account like an overdraft, local branches or internet banking

When does insurance not pay out?

Insurance policies come with exclusions, which are situations under which they will refuse to pay out. For example, if travel insurance is included, check if it:

• Only covers you in certain countries, e.g. only in Europe

• Specifies a maximum age

• Cover people with existing medical conditions

What if you are covered twice?

If a packaged account includes insurance, but you already have a separate policy, this can cause complications.

If you are covered twice, some insurers will only pay out a share of the amount you claim. For example, if you had two mobile phone policies and tried to claim to replace a £500 stolen phone, the insurers might make you claim for £250 from each of them.

This can be complicated and more expensive if you pay an excess on each policy.

How much do packaged accounts typically cost?

Some also have requirements like:

• Needing you to pay a certain amount into the account each month, e.g. £1,000 or more

• Insisting you add a number of direct debits from the account each month, e.g. two

Some bank accounts charge a lower fee as long as you meet these requirements every month.

Can you reclaim packaged bank account fees?

Yes, if you can prove your bank mis-sold the account to you, you could get back the amount you paid in fees plus interest. This includes:

• If they gave you no choice about taking out the account

• If they did not tell you about the fees or how much they cost

• If they recommended an account that is wrong for you

Here is how to complain to your bank and ask for your money back.

How to get a packaged bank account

You can find packaged account in the UK using our comparison tables. Choose the best account by comparing:

• The benefits that come with the account

• Whether it offers the other features you need from your bank account

Check the package account is worth it

Once you have found an account that offers everything you need, make sure the monthly fee is less than the benefits are worth.

Check the other fees on the account as well. For example, if you regularly use your overdraft, a bank account with a free overdraft could save you more money than a packaged account that charges you for being overdrawn.

How to apply

Once you have found one that offers the features you need, you can apply online or in a branch.

Some banks let you choose which features you want with your account and only charge you for the ones you pick.

You may also need to activate the benefits too. For example, if your account includes phone insurance, you need to register your phone to the policy to make sure you are covered.

Who can get a packaged bank account?

Each bank account has different rules on who is eligible to open one. Some accounts may not be available if you:

• Have missed payments on your credit record

• Earn less than their wage requirements

• Are younger than their minimum age