Monzo is the latest bank to launch a packaged bank account – a current account with added benefits. But instead of shaking up the market, as so many of the challenger bank’s other initiatives did, Monzo Premium is a good example of a bad account. In return for £15 a month, Monzo Premium users get a metal debit card, a 1.5% interest rate on balances up to £2,000, travel and phone insurance and discounted access to airport lounges.
Monzo made losses of £113.8m in the 2019-2020 tax year, so it has realised that “while it is cool to be young and disruptive, if you want to make money you have to behave like a grown-up. So it finds itself having to imitate... the dinosaurs of its industry, even if it means launching a rotten packaged account”, says Jessie Hewitson in The Times.
Monzo Premium fails the basic test of a packaged account: are the perks worth more than the fee? In return for paying £180 a year you can earn £30 interest, get a steel debit card you probably don’t care about, mobile-phone insurance with a £75 excess, and travel insurance. The only really worthwhile feature in there is the travel insurance, but you can get that cheaper elsewhere.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
For instance, Nationwide’s FlexPlus account costs £13 a month – £24 a year less than Monzo – but comes with better travel insurance. Monzo Premium’s account offers worldwide insurance covering medical bills up to £10m, cancellation cover up to £5,000 and lost valuables up to £750. Nationwide’s cover is similar, but it protects lost belongings up to £1,500. Moreover, the Nationwide account comes with UK and European breakdown cover worth £120 a year, plus mobile-phone insurance.
Getting a packaged bank account can really pay off for older travellers looking for good-value travel insurance. Monzo and Nationwide have an age limit of 69 on their travel insurance, although you can buy an age add-on with Nationwide.
Co-op’s Everyday Extra account costs £15 a month and offers worldwide travel insurance up to the age of 80 alongside UK and European breakdown cover and smartphone insurance. You can also earn £5 a month cashback, potentially cutting the annual cost to £120. Similar travel insurance for a 75-year-old would cost around £300 for a standalone policy.
When looking at packaged accounts check whether they have a joint account facility. Some “packaged accounts let you share the benefits with a partner, effectively doubling their value”, says David Byers in The Sunday Times. Monzo’s account can’t be held jointly, but Nationwide and Co-op’s packaged accounts can.
You don’t always have to pay for the perks of a packaged account with a monthly fee. Many banks also offer premium accounts to their wealthy customers. If you have a big salary or a large sum of savings or investments held with a bank you can access added extras on your current account.
For example, MoneySavingExpert rates HSBC’s Premier account. This offers worldwide family travel insurance with no monthly fee. You do have to have a salary of at least £75,000 plus a HSBC mortgage, investment or insurance product, or at least £50,000 held in savings with the bank.
-
Paying the grandkids’ school fees could generate a shock IHT billPrivate school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?
-
Number of savings deals hits record high – as interest rates slump to two-year lowSavers have more choice than ever when it comes to choosing a savings account or cash ISA. But, the interest rates on offer continue to fall. What’s next for the savings market?
-
A new wealth tax is a terrible idea. The rich are already being hit by sneaky taxes – Merryn Somerset WebbOpinion Ideologues want to squeeze more tax out of the rich with a wealth tax. They’re already wrung dry, says Merryn Somerset Webb
-
What MoneyWeek writers read and watched in 2024Here's a roundup of MoneyWeek's favourite books, films and TV shows in 2024
-
Parents face £1,000 'nanny tax' – how to afford itHiring a nanny is about to become even more of an expensive hassle for families, especially those in London. Here's how to cut costs
-
Is it cheaper to be a sole trader?It might be cheaper to be a sole trader due to changes to the tax system
-
The best fintech apps on the marketFrom digital banking to investment platforms, here are the top fintech apps on the market right now, according to David C. Stevenson
-
What pension providers don't tell you about your retirement moneyCheck the small print from your pension provider or risk losing thousands.
-
Britain’s stifling tax burdenChancellor Jeremy Hunt's Autumn Statement will see the tax burden rise in each of the next 5 years.
-
Brace for a year of tax risesThe government is strapped for cash, so prepare for tax rises. But it’s unlikely to be able to squeeze much more out of us.
