HSBC has stopped paying interest on its Bank Account Plus, while Alliance & Leicester has increased the in-credit rate on its Premier 50 account – both are so-called 'packaged accounts', but what exactly does this mean?
What is a packaged account?
Packaged accounts are current accounts which offer a range of extra benefits such as travel insurance, breakdown cover, mobile phone insurance and preferential rates on other products from the bank. However, these benefits aren't thrown in for free – customers are charged a monthly fee.
The cost of a packaged account varies, as do the benefits included, but the monthly charge tends to be between £10 and £20 – £120-£240 per year.
Are they worth it?
Packaged accounts are often heavily promoted because banks make more money from them than they do a current account with no monthly fee. They're often marketed as an upgrade on standard accounts. However, it is important not to be taken in by the marketing spiel.
British consumers are lucky enough to benefit from a huge choice when it comes to current accounts – including an array of deals which don't levy a monthly fee. You should therefore take the time to evaluate which account is most suitable for your circumstances.
It may be that a packaged account is worth paying for. This will all depend on whether you will actually make use of the additional benefits. The bank will more than likely put a value on the range of benefits that come with the account and this will be considerably more than the annual fee.
However, if you will only use one or two of them, you may find it's better value to opt for a free current account and buy the products you need separately.