Packaged bank accounts have been in the news recently, because there are concerns that some people do not qualify for the benefits that come with their accounts. In fact, the FSA (Financial Services Authority) has called for better transparency with these accounts - as some customers are not eligible for the benefits they're paying for.
So if you are thinking about opening a packaged bank account, here are some of the things you need to know.
A packaged bank account is the same as any other account in the sense that you can pay money in, withdraw money and pay bills, Direct Debits and standing orders.
However, with a packaged bank account, customers get additional benefits, such as car breakdown cover, travel insurance, or preferential offers on financial products such as overdrafts.
Packaged accounts come in all shapes and sizes and the benefits vary between them. For example, one packaged bank account comes with additional help to budget for your bills and can predict if you're going to run short of money for a future bill. You'll find more information on this bank account, provided by thinkbanking, right here.
Packaged bank account facts and figures
Packaged bank accounts usually come with a monthly fee. Fees range from £6.50 to £40 per month at the moment. Figures from Defaqto indicate that these types of account now outnumber free in-credit accounts by 69 to 60. There are 54 million active current accounts in the UK at the moment and almost one in five (17%) of them are packaged accounts.
Choosing a packaged bank account
Choosing the right packaged bank account really depends on how much you are prepared to pay and the kind of benefits you feel you need; you could actually save money with a packaged bank account. For example, if you own a car, around 65% of packaged accounts provide car breakdown cover, so it may be worth opting for one of those accounts - depending on what other features it comes with, you could find it's significantly cheaper than paying for them all individually.
There have been complaints from customers paying for a packaged bank account who have tried to claim on one of their insurance policies it provided. Some have been told they are not eligible to make a claim.
So the FSA is calling for more transparency. It wants providers of packaged bank accounts to ensure their customers could claim on any of their policies - for example, a criminal conviction can invalidate some insurance claims.
At the same time, it is up to you to choose the bank account with the right benefits for you. If you don't own a car, for example, breakdown cover probably wouldn't interest you! On the other hand, if you want a bit of extra help managing your money, a bank account that provides budgeting help could be much more useful