The best packaged bank accounts
Packaged bank accounts can offer great value with useful additional perks – but get it wrong and you could be out of pocket. Ruth Jackson Kirby outlines the best packaged bank accounts on the market today.
A packaged bank account is a current account where you pay a monthly fee in return for a range of extras. The benefits that come with the account will depend on the bank, but common benefits include: travel insurance, home insurance, mobile phone and gadget insurance, breakdown cover, cashback, higher savings interest rates and discounted overdrafts.
The amount you’ll pay depends on the bank and which account you choose. Some banks offer different levels of packaged account, with the price rising in line with the number of services it includes.
Below, you'll find a selection of the best packaged bank accounts available now.
The best packaged bank accounts
Nationwide FlexPlus
£13 a month
What you get: Family mobile phone insurance, worldwide family travel insurance (up to age 69, or 70+ if you pay a £65 a year upgrade), UK & European breakdown cover for account holders.
Pros: Worldwide family travel insurance includes most winter sports. The phone insurance covers all family members living at the same address with up to four claims per year up to a maximum £1,500 per claim.
Cons: Nationwide charges 39.9%APR on its overdraft.
Currently, you can earn up to £125 if you switch to a FlexPlus account and move two direct debits as part of the switch.
Virgin Money Club M
£14.50 a month
What you get: Family mobile phone and gadget insurance, worldwide family travel insurance (up to age 75), UK breakdown cover for account holders, 2.02% interest on balances up to £1,000
Pros: Mobile phone and gadget insurance covers devices owned by family members at the same address. Each device is covered up to £2,000 and you’re limited to four claims a year.
The travel insurance covers winter sports, wedding and golf cover for you, your partner and up to four children under 18 living at the same address.
The 2.02% interest could help recoup some of the monthly cost. You can also earn 1% interest on balances up to £25,000 in the linked Club M Saver account.
Cons: Watch out for the overdraft rate – it can be up to 39.9%APR.
At present you can earn 20,000 Virgin Points – that’s enough for a flight to New York – if you switch your current account to a Club M account and use it for two direct debits. You also need to save £1,000 into the Club M Saver and use the Virgin Money banking app.
The Co-op Bank Everyday Extra
co-operativebank.co.uk
£15 a month
What you get: Mobile phone cover for account holders, worldwide family travel insurance (up to age 79), UK & European breakdown cover for account holders, up to £2.20 back each month
Pros: It has the oldest age limit on travel insurance and it includes winter sports and golf cover.
Cons: Mobile phone insurance only covers the account holder.
If you pay in £800 a month, pay out four direct debits, opt for paperless banking, log into online or mobile banking and stay within your credit or overdraft limit you will get £1 of your monthly fee back. You also get 2p per debit card transaction back (up to £1.20 a month). If you get the full £2.20 back every month this account works out cheaper than Nationwide and Virgin M, but it is a lot of hoops to jump through.
Halifax Ultimate Reward
halifax.co.uk
£17 a month
What you get: Mobile phone insurance for account holders, worldwide family travel insurance (up to age 70), UK breakdown cover for account holders, home emergency cover.
Plus, if you pay in £1,500 or more a month, stay in credit and spend either £500 a month on your debit card or keep a minimum balance of £5,000 in your account you can choose from the following extra rewards: £5 a month cash, three digital magazines, two digital film rentals, a free cinema ticket and a half-price popcorn voucher.
Pros: If you want home emergency cover as well as the other insurance this account could offer good value. The travel insurance covers winter sports and golf.
Cons: The phone insurance only covers the account holder, not family members. You are limited to two claims a year.
This is the most expensive account unless you can get the £2.20 cashback, but there are a lot of hoops to jump through to get it. You must choose if you are going to spend £500 a month on your credit card or maintain a balance of £5,000 in your account. You can only change your option after 12 months.
Should I get a packaged bank account?
A packaged bank account might be a good option for you if:
You will use the perks: if an account comes with travel insurance, do you go abroad enough to make it worthwhile? Will you use those free cinema tickets?
The insurance is suitable: check the exclusions on insurance policies to make sure they would pay out if you made a claim. For example, are you under the age limit for a travel insurance policy and is your mobile phone model covered?
You don’t already have the benefits: make sure you don’t already have the insurance coverage elsewhere. For example, have you got breakdown cover included in your car finance package or car insurance?
You will actually save money: if you were to pay for the service separately it could work out cheaper than the account fees. Double-check before you open an account.
The account suits your needs: don’t forget to check that the bank account is suitable too. Does it have the overdraft you need? If you need a branch, is there one local to you?
What to consider before opening a packaged bank account
Packaged bank accounts can offer enticing extras, but before you open an account make sure you consider all the elements of the account.
Take a close look at any insurance policies being offered. If you’ll get travel insurance included, make sure you that are under the maximum age for cover, that you have no existing medical conditions that would affect the cover, and check that it covers the countries you want to travel to.
If you have any existing medical conditions, make sure you tell the bank when you open your account.
Also, make sure you read about any coronavirus exclusions. You want a policy that covers you if you need treatment for Covid 19 while you are abroad and your cancellation costs if you test positive and can’t go on your trip.
Check if you have to pay extra for winter sports cover or to protect your whole family. If you need those extras, is the account still offering good value for money?
Are packaged bank accounts good value?
Working out if a packaged bank account offers value for money is straightforward: take the monthly charge and multiply it by 12 to get the annual cost. Then shop around to see what the benefits would cost you separately.
If the packaged bank account costs less, then it is good value. Just make sure you repeat those processes each year rather than sticking with a packaged account for years that may no longer offer you good value.
Tips for opening a packaged bank account
If you are opening a packaged bank account, it usually pays to make it a joint account if you can. With most accounts, all account holders are covered for the same fee. This means you could both get breakdown cover and insurance protection at no extra cost.
While you are looking at bank accounts that come with perks, consider whether a premium account might offer you better value than a packaged bank account. Premium accounts often offer similar benefits to packaged accounts but without the monthly fee. But to qualify, you usually need to be a high earner; typically, your annual salary will be over £75,000.