The eternal hunt for the best interest rate makes banking complicated enough. But now many of us have to deal with our banks trying to lure us into paying for our accounts. In return for a monthly fee - around £13 a month according to Defaqto - these "packaged accounts" offer a whole host of extras from travel insurance to breakdown cover to a personal "relationship manager" to deal with your day to day queries. But is it worth forking out nearly £160 a year for these extras?
What you get for your money
Packaged accounts have been receiving a lot of press following the launch of the Abbey Reward bank account. It offers a 6% interest rate fixed for a year that's much better than most savings accounts, never mind current accounts. The account also comes with travel insurance, commission-free foreign currency and identity protection. So for £10 a month you'll get the benefit of rewards that Abbey say are worth up to £430 per year.
Lloyds offers similar goodies on its Added Value accounts. You choose from a menu of four different accounts costing from £3 a month for the first two months after which you pay £7.95 a month to £25 a month.
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How good are these deals?
For most people the answer is "not very". To justify the monthly cost you would really have to go to town on the benefits because you could probably save money by buying the various insurances, breakdown cover, travel money and so on elsewhere. For example if it's the travel insurance that attracted you remember that you can get annual comprehensive policies with winter sports cover which isn't usually covered on the packaged account policies for around £40 per person or £60 for a family by hunting onMoneysupermarket.com.
The insurances and breakdown cover on offer are also usually very basic unless you go for the more expensive packaged accounts. And you'll be doubling up your cover on some items. For example many home contents policies cover your mobile phone.
What about Abbey's offer of commission-free travel money? With so many places offering commission-free currency Abbey's offer is only any use if they also offer market-beating exchange rates. And chances are they won't. The online foreign exchange agencies usually offer the best deals, with Travelex offering to match any deal you find elsewhere.
What about the exclusive offers?
As well as the array of financial products that packaged accounts come with, many also promise access to "exclusive services". For example some Lloyds' Added Value Accounts come with an airport meet and greet service. This means Premier account holders parking their cars at UK airports get a valet parking service. However, you only get this service if you have a Premier account AND booked your travel and parking with the Lloyds TSB Airmiles Travel Service. So this isn't any good if like the vast majority of people you like to shop around and get the best deal on your holiday.
Packaged accounts will only suit some people
But let's not completely write off packaged accounts. Older people may find travel insurance from their provider is cheaper than on the wider market as premiums tend to rise as you get older. Just make sure that the travel insurance your bank is offering has sufficient cover for your needs and any existing medical conditions have been declared.
In short then the package on offer needs to suit you make sure you'll use all of the perks and check that the same products are not cheaper elsewhere.
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