Packaged accounts - worth the cost or a waste of money?
Paying out a monthly fee for a packaged current account offering a host of incentives may seem to make financial sense. But while these so-called
"premier" accounts might appear attractive at first sight, they could, on closer inspection, turn out to be a waste of money, as you could end up forking
out for a range of extra benefits you don't need and will never use.
Packaged accounts - or "value-added accounts" - offer a variety of perks such as worldwide travel insurance, breakdown cover, will-writing and
share-dealing services in exchange for a fee that can start from as little as Â£5 a month to as high as Â£25 a month.
The number of packaged accounts in the market has surged in recent years as banks have tried to migrate customers away from free current
accounts and to paid-for accounts. These accounts certainly make good financial sense for the banks as they bring in a guaranteed monthly revenue
stream, whilst also enabling providers to cross-sell other products.
This is especially important for the banks at a time when they face losing revenue from the crackdown on unauthorised overdraft charges by the Office
of Fair Trading.
Don't pay for benefits you don't use
The banks have employed some very clever marketing techniques to promote their "VIP" accounts, but it's important not to get sucked in without
making sure you know exactly what you are signing up for. You might like the idea of getting a wide range of perks, but you have to question whether
these benefits and insurance policies are suitable for you - and whether you are actually going to take advantage of them.
Of the incentives offered, the travel insurance and breakdown cover are the ones that tend to offer peace of mind and give the best value for money,
but mobile insurance and commission-free currency may be unnecessary, and can almost certainly be sourced more cheaply elsewhere. The key
thing to remember is that unless you're making full use of all - or the vast majori