Are packaged bank accounts always good value?

Nowadays, we’re all on the hunt for more value for money.

Buy one, get one free deals; summer sales; stocking up when prices drop, it’s all part of adapting to rising prices.

It’s also a good time to review your personal finances, and whether what you’re paying for is still offering bang for your buck.

One thing that always carries the affordability question is packaged bank accounts. Several banks offer them, and they provide additions to your ‘normal’ bank account for a monthly fee.

Most banks that offer packaged bank accounts bundle up travel insurance, mobile phone or gadget cover and car breakdown cover but the extra trimmings can cost as much as £390 a year.

To find out if they make financial sense, Which? analysed a dozen packaged bank accounts, taking into account the monthly cost and the quality of cover provided, to check which accounts are worth paying for and which you should ditch.

Once again Nationwide’s FlexPlus account achieved the highest account score (82%) in our analysis, offering comprehensive cover in all three core insurance elements. It also has the lowest fee (£13 a month).

We gave our lowest score of 59% to the Reward Platinum account by NatWest and RBS, which is only open to existing customers. It’s one of the more expensive accounts, at £20 a month, but achieved the lowest policy score for travel insurance.

Travel insurance is important to get right. 70% of Which? members with a packaged account told us they see it as the most important feature. Yet the small print can catch you out. Some policies have exclusions based on health, so if you experience any changes in your health then you could be rescreened, which could potentially raise the price of the policy.

Many policies will also have upper age restrictions, meaning you could lose cover entirely or face an increased premium. The level of Covid cover an insurance policy offers can vary, too.

When we reviewed 199 travel insurance policies earlier this year, just nine offered what we’d call ‘complete’ protection in the event 
of your holiday being disrupted by Covid, meaning you can claim for cancellation if you can’t travel as
the Foreign, Commonwealth & Development Office advises against travel to your destination (since you booked the trip) because of Covid, or because of regional or national restrictions on movement.

For the clumsy among us, cover for mobiles and gadgets can often be a useful addition to packaged bank accounts. However, most contents insurance policies cover loss or theft of your mobile in the home, and you can usually add cover for accidental damage at home fairly cheaply.

When Which? checked, cover away from home meant that items worth up to £2,000 added around 10% to an annual premium. Standalone cover is likely to cost £60 to £100 a year for a comprehensive policy (based on quotes for an iPhone 12).

Packaged accounts were widely mis-sold in the 1990s and 2000s, but banks have since cleaned up their acts. As long as your bank gives you clear information about the account and any significant exclusions, you just need to decide if it’s worth the fee. As a rule of thumb, if you’re not going to use at least two of the insurance benefits, then stick to a free account.

For more free money-saving tips and consumer rights advice, visit Which.

Do you have a story to share?

Get in touch by emailing [email protected].

Source: Read Full Article