Are packaged bank accounts worth paying for?

Packaged bank accounts can be very convenient, but do your sums carefully to make sure you're getting your money's worth.

Old ladies playing golf ©  etty Images
Nationwide's FlexPlus account offers golf insurance up to the age of 70

Old ladies playing golf © etty Images

Packaged bank accounts can be very convenient, but do your sums carefully.

Nationwide is removing interest payments from its popular packaged bank account. From 1 November the FlexPlus current account, which costs £13 a month, will no longer pay 3% interest on balances of up to £2,500. The £250 fee-free overdraft facility on the account is going too, leaving customers paying an annual percentage rate (APR) of 39.9% if they stray into their overdraft.

Advertisement - Article continues below

So is the account still worth £156 a year? It comes with family travel insurance, including cover for winter sports and golf up to the account holder's 70th birthday.

This is "good cover" that "could easily cost £120 a year to buy on its own", says Miles Brignall in The Guardian. Account holders also still benefit from UK and European car breakdown cover, which could cost £110 a year if bought separately from the AA or RAC. But Nationwide has increased the excess on the mobile-phone insurance that comes with FlexPlus. It will be up to £75 if your phone is damaged or broken and up to £125 if lost or stolen.

On balance, customers should stick with it owing to the excellent travel insurance and car cover, reckons Brignall. But if you don't travel regularly, "there is a case for downgrading".

The changes are a blow to fans of packaged accounts, as the FlexPlus account had only just been named the best one. Independent consumers' organisation Which found that the perks were worth more than £300 a year, so customers could save £180 annually.

Next on the list

"Packaged accounts can offer a cheaper and more convenient way for people to get insurance," says Jenny Ross in Which. Still, "not all are created equal. Some offer lower-quality cover and limited value for money". For example, Barclays Tech Pack account costs £174 a year, but offers no travel insurance or car breakdown cover, merely mobile-phone cover. After fees it saves you just £16 a year.

Before you opt for a packaged bank account, "think long and hard", says Kate Hughes in The Independent. "Question whether the fees are affordable, if you'd use the benefits and check for any cover or benefits you already have that do the same job."



Bank accounts

Interest rates are dwindling fast

Banks and building societies are continuing to slash the interest rates on their current and savings accounts.
15 May 2020

The best savings accounts

If you're not getting much interest on your savings, you may want to consider switching your account. Here are the savings accounts offering the best …
24 Apr 2020
Bank accounts

Smartphone banking: why you should dial into digital banks

Smartphone banking is taking off. And no wonder: it is convenient and comes with features that help you budget and save.
26 Feb 2020
Personal finance

The benefits of sitting tight with your savings

Agreeing to lock up your cash can boost the interest rate on your savings significantly. Ruth Jackson-Kirby reports.
20 Aug 2019

Most Popular


House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020