Savvy Money: Charged accounts - better, not perfect
Despite tighter rules on banks charging for packaged extras, customers should still be wary
Saturday 30 March 2013
The parting gift of the Financial Services Authority (FSA) – abolished tomorrow to make way for the Financial Conduct Authority – is tougher rules on the selling of packaged bank accounts – the ones that charge a monthly fee for a random collection of benefits. Among the changes are:
Not only will banks have to check someone can use the benefits of a fee-charging account, but it will also have to monitor your continuing eligibility . For example, if it knows you've reached 65 and its travel insurance doesn't cover anyone over 65, it will have to tell you (and it can't add the letter to a pile of marketing bumph).
The rule tightening is welcome, albeit late. It was no secret in banking that staff flogged these accounts to people who didn't need or want them. Research by price comparison site uSwitch showed only a third of people regularly used the benefits of accounts they were paying for.
If you have a packaged account and have not yet received a letter or an "annual statement of benefits", look out for it. Banks have until next March to warn customers if they're throwing money away on benefits they can't use (although they may not use that phrase!).
Real value of benefits
But while packaged accounts are often criticised, it's estimated that one in five bank customers has one. So if you are wondering if its paying for an account, the first thing to do is to ignore what the bank says the benefits are worth. I guarantee that if you shop around you'd be able to get them cheaper. For example, HSBC's Advance bank account (£12.95 a month), includes worldwide travel cover, which it values at £243 a year, but if you shop around you can get policies for a fraction of the price (£36 a year for a basic one and £50-£150 for premium cover).
Some accounts include help if you've been a victim of ID fraud. But for the past 10 years, credit reference agencies have had a "victims of fraud" service, which will help you sort out your credit record and contact companies on your behalf free of charge.
Some fee-charging accounts, like Santander's, have had a makeover. Its 1-2-3 account charges £2 a month and gives you cashback on certain purchases, but no insurance extras.
Barclays has also revamped its packaged accounts and now sells pick and mix add-ons – you can choose from technology, home or travel packages. For example, it costs £13.50 a month for the travel pack with worldwide family insurance and car breakdown. You can get this cheaper by shopping around, although – to be fair – I wouldn't have saved much.
Lloyds TSB has stopped selling – for now – its accounts in branches and over the phone on 1 January although you can still buy them online.
Despite the new rules, some banks think such accounts have a future: M&S bank launched last October with two fee-charging accounts and no free option. The benefits are designed to appeal to loyal shoppers (such as M&S vouchers, coffee in the M&S café, M&S loyalty points). But it's a hefty £15 a month, or £20 a month if you opt for travel insurance.
These accounts are generally better than they used to be, but you can easily end up paying for benefits you don't need, won't use or that you could get cheaper elsewhere. Approach with extreme caution.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 2 Gingers face extinction due to climate change, scientists warn
- 3 Brazil vs Germany World Cup 2014: In defence of Mesut Ozil - the Arsenal midfielder works magic in the shadows
- 4 Pornhub pleads with users to stop uploading videos of Brazil 'getting f**ked by Germany' in World Cup match
- 5 Give childhood back to children: if we want our offspring to have happy, productive and moral lives, we must allow more time for play, not less
Sustained immigration has not harmed Britons' employment, say government advisers
British jihadist calls for 'flag of Islam' over Downing Street and Buckingham Palace
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£250 - £295 per day + competitive: Orgtel: Financial Accountant - IFRS - Glouc...
£30000 - £40000 per annum + excellent benefits: Deerfoot IT Resources Limited:...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£35000 - £40000 per annum + Benefits: Ashdown Group: HR Advisor - 6 Months Fix...
Day In a Page
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams