Money Insider: Added-value bank accounts can pay off


The arguments surrounding the end of free banking and accounts with monthly fees are doing the rounds again, fuelled by the recent product announcement from M&S Bank, soon to be the newest bank on the high street.

Customers can register now for M&S Premium Current Accounts ahead of the official launch in October.

There are two accounts to choose from, but neither is free. You'll have to stump up £15 a month to obtain a range of M&S-themed benefits, rewards and discounts, or £20 if you want comprehensive, worldwide, multi-trip travel insurance included too.

Last November the Financial Services Authority (FSA) announced new rules to protect customers with a packaged or "added-value" current account.

Under the proposals, customers must be checked to ensure they are eligible for the individual insurance elements within the package of benefits, and they will receive an annual statement to check that the product remains suitable for their needs

This was seen as a welcome, albeit long-overdue, move by the City regulator, and should prevent these fee-paying accounts being sold to people who won't make sufficient use of the component parts to make them financially worthwhile.

Packaged accounts frequently receive negative press due to reports of accounts being sold to customers without their consent or without a full explanation of the benefits.

So when the Financial Services Authority made its announcement last year, there was the inevitable outcry from consumer groups branding all these products as little more than moneyspinners for the banks and a waste of money for account holders.

While I agree that the practice of selling these accounts to customers without checking suitability needs to be stamped out, when it comes down to the value of these accounts, not all products are the same – far from it.

For example, the NatWest Select Silver account includes European travel insurance (if aged over 70 you pay an extra £50 a year), mobile-phone insurance (one phone per account holder) and identity-theft insurance, plus five music track downloads and three DVD rentals a month – for a total monthly cost of £8.

In comparison, you might think the Privilege Premier account from Co-operative bank, at £13 a month, looks expensive, but before dismissing it out of hand, take a closer look at the package of benefits.

For a start there is a £300, interest-free and fee-free overdraft facility which can be worth up to £4.50 a month on its own.

Then there is RAC breakdown cover for the UK and Europe, worldwide (not just European) multi-trip travel insurance, including volcanic ash situations, with cover up to age 79.

The mobile-phone insurance covers up to four smartphones in the family, and you can choose one additional benefit from the traveller, gadget or safeguard categories.

It's also worth looking at the cost of some of the cover if you were to buy it from a stand-alone provider. For example, insuring a single iPhone with Vodafone costs £12.99 a month. While the NatWest account may be more suitable for some customers, my point is that even though some accounts initially appear more expensive, the package of benefits can far outweigh cheaper alternatives, and the extra £5 a month for the Co-operative account is actually good value for money if you're going to make use of most of the elements on offer.

It's likely that the new current accounts from M&S Bank will be shunned by many purely because of the fee

However, those who are already big fans of this highly trusted retail brand when it comes to shopping for food, clothing and household goods will be first in the queue to take advantage of the banking benefits on offer.

Excellent low rate mortgage deals if you've got a decent deposit

The rates on fixed rate mortgages are being slashed by some of the biggest players in the home loan market. This is excellent news for those who are looking to reduce their monthly outgoings, however the downside is that these deals are only on offer to borrowers with a 30% or 40% stake to put towards the purchase price.

HSBC was first out of the blocks with a record low five year fixed rate of 2.99 per cent with a £1,499 fee for advances to 60 per cent LTV. This was quickly mirrored by Santander at the same rate and LTV and £1,495 fee.

On Wednesday, Barclays announced a new best buy two year deal priced at 3.29 per cent and no product fee for borrowing up to 70 per cent LTV.

Whether these new low rates are down to the Government's new 'funding for lending' scheme or falling Money Market costs it's great news for borrowers.

Let's hope the cheaper borrowing offers are soon made available for those with smaller deposits too.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning:The British actor says viewers have 'not seen the last' of his character
The Etihad Stadium, home of Manchester City
premier league

The Independent's live blog of today's Premier League action

Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Life and Style
Couples have been having sex less in 2014, according to a new survey
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam