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Bank accounts with benefits

You could get £600 insurance for £120

TOOL | Top Packaged Bank Account Analyser

Packaged bank account tool

A packaged bank account is a great way to get mobile phone, travel, breakdown and other insurance cheaply IF YOU’LL USE IT. If not, it can be a massive waste of money.

Joint Account?
Mobile Insurance?
Breakdown Cover?
Are you a high earner?
Travel Insurance? (Choose cover type first)
We estimate buying these insurance policies separately would cost
£0
per year. Find out how
This is based on the best value policies - not necessarily the cheapest as fee-paying account policies tend to be higher - giving a good standard of cover. They're a guide to what you could save depending on what you need. Always check policy limits.
Mobile Insurance: £0 Cheapest mobile insurance guide
Breakdown Cover: £0 Cheapest breakdown cover guide
Travel Insurance: £0 Cheapest travel insurance guide
Total: £0
Top packaged accounts based on your selection...
ALWAYS check the policies cover your personal circumstances.
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Joint Accounts: who can have one?

A joint account is held by two or more people. All account holders have equal control, and in turn are jointly responsible for debts on the account. You'll be required to sign a mandate to highlight how the account operates - for example, whether all parties must sign for withdrawals.

With packaged accounts, all account holders will be given cover under the included insurance policies, for the same single fee.

Mobile insurance: who can get it and why would you need it?

Mobile insurance will usually cover theft, loss, accidental damage and unauthorised calls if your phone is stolen or lost - although please check specific policy details. It's good for those with expensive phones, who have a habit of losing/damaging them.

All the policies here will cover an iPhone or other smartphones (at the very least, £750 per phone). Where it states more than one phone is covered, the phones must be registered to the same address, and held by the account holder(s) or their family. Family can include children, partners, nieces, nephews, aunty, uncle.

Breakdown: what does it include? What's the difference between personal and vehicle cover?

The aim of breakdown cover is to get you mobile, which may involve temporary or full repair at the roadside. Some include breaking down at home; others will only cover if you're approx ¼ mile away.

UK covering me
The policy will cover you, regardless of what car you're travelling, whether it's owned by you or whether you're the driver or the passenger.

UK covering my car
Cover applies to a registered vehicle. Who's driving at the time of breakdown is irrelevant.

Europe
Applies to driving in Europe - check specific areas in the policy documents if you're unsure of cover in a particular country - you’ll be given the same assistance ie with the aim of getting you mobile, possibly with the addition of accommodation.

High earning:

Some providers give certain fee-paying accounts free to eligible customers, generally those fulfilling some combination of the following (varies per bank):

  • Earning at least £100k
  • Hold high savings with the same bank.
  • Some also waiver fees for holding a mortgage with them (it's likely you'll need savings or a high income in addition).

If this applies to you, some options may be worth getting - even if they don't include all the policies you want (mobile and breakdown usually), it'll work out cheaper to insure separately for those on top.

Travel insurance: what does it cover?

The policies included here provide annual cover, good for those who travel more than once a year for around 30 days, against cancellation, illness, delay, baggage and loss of personal items.

Always check that the cover limits are suitable for you, plus read the policy carefully before assuming you're covered for anything out of the ordinary. Extra costs apply if you have any ongoing medical issues.

If the policy includes winter sports cover, you'll be protected if you're injured skiing or snowboarding on-piste only - if you go off piste, it's likely you won't be covered - generally for no more than 21 days total per year.

This is the first incarnation of this guide. Please tell us whether it works for you, your experiences with any of these accounts, and if there are any we've missed.

Are packaged accounts worth it for me?

Banks make money from these accounts - they want you to have them. But this doesn't mean that they're a waste of money for all - quite the opposite.

For those who are savvy enough to check policies and work out costs, they can SAVE you money. There's a simple way to work it out:

If you don't need the added extras, or can insure cheaper elsewhere, don't bother with a packaged account.

Start by multiplying the monthly cost by 12 - for example, £25/month is £300/year - then see if you can buy the 'freebies' for less. If you can, either ditch and switch to a fee-free account or shift for better value.

Packaged accounts DOs & DON'Ts

DO MAKE SURE you can't buy cheaper

DON'T let salespeople 'upsell' you

DO check whether you were missold

DON'T ignore joint accounts

DO check policy limits

DON'T assume they'll improve your credit rating

DO make sure everything you need is covered

DON'T need extras? Bag £100 bonus

DO declare any pre-existing medical conditions

Watch out for good junk mail

This is one of the few areas where junk mail can be positive. Very occasionally direct mail offers, targeted website offers or sign-up stalls in shopping centres offer better deals. Keep your eyes open, but ensure you ask about any fees.

Best buys: Packaged bank accounts

Many top bank accounts you can get free, but some monthly-fee accounts can be worth it IF you use the products bundled with them - usually breakdown cover, travel insurance and mobile phone insurance. More importantly, if they save you money, they're a definite winner.

Our top picks

Nationwide

FREE travel insurance & no fee*

Nationwide Flexaccount* Monthly fee - £0

A great way to get completely free European travel insurance is Nationwide's* FlexAccount. It's a decent policy and provides cover up to age 75, which alone usually costs a fortune. Plus if you need to upgrade to worldwide, it's just £20 - the cheapest standalone policy costs from £27.

Need to knows
  • You must switch and pay in £750+/mth to qualify.
  • If you have a pre-existing condition, tell Nationwide as you may need a medical before getting cover and could be charged.
Stats box
  • In-credit interest: None
  • Min monthly income: £750 (explanation)
  • Arranged overdraft cost: 3 months fee-free then 18.9% EAR
  • Unarranged overdraft cost: Up to £15 interest charged at 18.9% EAR. Over £15 interest at 18.9% EAR plus £15 paid / unpaid item fees (max £75/mth)
Key questions

How does the travel insurance compare? Upgrades are very reasonably priced. At £20/year for worldwide cover, £30 for family and £40 for winter sports, they can be cheaper than some top value policies, even if you need all three - see Cheap Travel Insurance. See the Key Facts PDF and Policy Wording PDF for full policy details.

Are there any other perks? If you're accepted, you'll also be eligible for the Nationwide Select credit card. It gives 0% load on overseas purchases, as well as 0.5% cashback on UK spending, 26 months 0% on balance transfers, cheap overseas spending and 0% on purchases for 15 months. See Cashback Cards for more details.

Also, If you refer a friend and they successfully switch to a Nationwide current account you will both receive £50. You can refer up to 10 friends a year.

How is the bank rated? In our February 2014 poll of the nine big banks, Nationwide was 4th, with 67% voting it great, 26% OK, and just 7% voting it poor.
Nationwide

£600 of high-end travel, mobile & breakdown for £120*

Nationwide FlexPlus* Monthly fee £10 (£120/yr)

For the cheapest worldwide family travel insurance up to age 74 (which usually costs double the account charges alone), smartphone insurance for all the family at the same address and UK & Europe breakdown cover, Nationwide's* FlexPlus account is a cracking deal for £120/year - IF you'll use the features.

Need to knows
  • Extended warranty cover for an additional 12 months on all new household electrical items between £50-£2,000.
  • 3% AER in-credit interest on balances up to £2,500, beating top savings accounts.
Stats box
  • In-credit interest: 3% AER up to £2,500
  • Min monthly income: None
  • Arranged overdraft cost: 3 months fee-free, £100 fee-free buffer after, 50p per day above that
  • Unarranged overdraft cost: Up to £10 charged 50p/day. Over £10 charged £5 per day (max £50/month)
Key questions

What does the worldwide family travel insurance cover? It allows multiple trips worldwide and includes winter sports, business, golf and wedding cover. The cheapest you could normally get this for is £50, but for a top value policy like this you could pay over £130 per year (read the full Travel Insurance guide).

Cover is up to age 74, but those over 75 can be covered for a £50 premium. It'll cover you, children under 19 (or 22 if in full-time education) providing they live at the same address, and your partner, even if it's not a joint account. The excess (the amount you pay towards the claim) is a maximum of £50. If you have a pre-existing condition, tell Nationwide as you may need a medical before getting cover and could be charged.

What does the mobile phone insurancecover? It covers repair or replacement after theft, loss or damage, insuring each handset up the to value of £1,000, so it'll cover all smartphones. The excess is a maximum of £100 for an iPhone. Unusually, it covers the phones of all family members, provided they live with you (children must be under 19, or 22 if they are in full-time education, and cannot be married or in a civil partnership) - so maxed out, this gives serious value. See mobile insurance for more details.

What does the LV breakdown cover? It's for the UK and Europe including home assistance. Cover is for the person, and people travelling in your vehicle. On a joint account both account holders would be covered. For more policy details, see the travel insurance, mobile insurance, and UK & Europe breakdown cover documents.

Can I use the card abroad? The debit card with the account has no fee or load for cash withdrawals abroad, making it a leading debit card for overseas use, but still has a 2% charge when using it for overseas purchases, so don't use it for this. For overseas purchases, if you have the FlexPlus account, you're also eligible for the Nationwide Select credit card. It gives 0% load on overseas purchases, as well as 0.5% cashback on UK spending, 26 months 0% on balance transfers and 0% on purchases for 15 months. See Cashback Cards for more details.

How is the bank rated? In our February 2014 poll of the nine big banks, Nationwide was 4th, with 67% voting it great, 26% OK, and just 7% voting it poor.

Are there any other perks? If you refer a friend and they successfully switch to a Nationwide current account you will both receive £50. You can refer up to ten friends a year.

Santander

Top alternative: 3% savings & bills cashback*

Santander* Monthly fee £2 (£24/yr)

The Santander* 123 Current Account operates an entirely different way. There's no insurance, but it pays up to a massive 3% cashback on household bills plus 3% AER in-credit interest on £3,000-£20k - even lower bill-payers could be quids in.

Need to knows
  • After the fee, we worked out low users would be up by £47 a year, average users by £115 and high bill payers could be £226 in profit.
  • 1% cashback on water, council tax bills and repayments up to £1,000/mth on Santander mortgages, 2% on gas and electricity, 3% on mobile, home phone, broadband and TV packages.
  • 1% on balances over £1,000, 2% over £2,000 and 3% on the whole amount if you save £3,000 - £20,000. Anything over £20,000 gets no interest. If you get 3%, this beats the current Top Savings Accounts.
  • Overdraft is 0% APR for four months if using Santander's switching service. Then it's £1/day (max 20 days/month) for arranged overdrafts. £5/day for unarranged overdrafts. Max £95 fees/charges in any calendar month.
Stats box
  • In-credit interest: 1% AER if you've £1,000-£1,999.99; 2% if you've £2,000-£2,999.99; 3% if you've £3,000 - £20,000
  • Min monthly income: £500 (explanation)
  • Cashback: 1% on water, council tax & Santander mortgage, 2% on gas & elec, 3% on phone, internet & TV
  • Arranged overdraft cost: £1/day, capped at 20 days/mth. 0% for 4mths after switching
  • Unarranged overdraft cost: £5/day

Key questions

How do I get the cashback perks? To get the cashback perks, use its Account Transfer Service to move at least two direct debits and standing orders, and have a monthly income of at least £500. If you can't pay the monthly deposit, you won't earn the cashback in that month. Existing current account holders can upgrade to this if they wish. Applicants must pass a credit check.

How good is it? A 'typical' billpayer with a Santander mortgage could make £115 a year profit, before interest. Without the mortgage this drops to £50 (see Santander 123 Analysis for more stats). But bigger spenders can push it further - @KellyAJackson told us via Twitter:

"I have a 123 account and I'm getting about £18/month back after my fee - it's fantastic. £6 just for paying the mortgage"

How is the bank rated? In our February 2014 poll, 74% voted Santander 123 great - putting it in 2nd place - 22% OK, 4% poor.

Top Premium Accounts

While you can pay for the accounts above, most banks also have a 'premium' account. This is generally for people earning high salaries (usually £100,000+) or who have significant investments or mortgage debt.

These premium accounts are generally seen as a halfway house between the paid-for accounts above, and proper private banking. Perks associated with the accounts vary. Some include insurance, access to concierge services, or discounts on mortgages or other associated products.

HSBC's our top pick, as it's free and gives free, worldwide family travel insurance as well as big discounts on mortgages.

HSBC

Free worldwide travel insurance

HSBC Monthly fee - £0

Premier account holders with HSBC get worldwide, free family travel insurance, plus can save £300 on mortgage fees and often get mortgage rate discounts.

This account's worth getting, if you can, for the travel insurance. The mortgage discounts are good, but HSBC isn't always going to be able to provide the best mortgage for you. It's always wise to look at the whole mortgage market when choosing a new mortgage.

Need to knows
  • It's fee-free, but to get it, you must hold over £50,000 of investments with HSBC or have a salary of £100,000 plus a HSBC mortgage, investment or life insurance product.
  • If you're not eligible, you may want to consider the Advance account costing £12.95/month. The deals aren't as good but you'll still get £200 off fees - good if you're considering a HSBC mortgage anyway. It also comes with UK breakdown cover.
Stats box
  • In-credit interest: none
  • Min income: £100,000 salary
  • Arranged overdraft cost: 0% on the first £500 then 11.9%
  • Unarranged overdraft cost: £25 paid or unpaid fee of £0, £10 or £25

Key questions

What do you get with the insurance? It's up to age 69, including winter sports and business cover for a maximum of 31 days per trip. Children under 18, or 23 if still in full-time education and living at home outside term time, are covered if they're travelling with the account holder or staying with relatives abroad. Pre-existing conditions may not be covered, so check before you travel. See the full policy document. The HSBC Advance only - UK breakdown cover with Mondial Assistance, includes home assistance. It's a personal policy so will cover all account holders if opened in joint names. See the full policy document.

How is the bank rated? In our February 2014 poll, 42% voted HSBC great, 43% OK, 15% poor.

Do I need to activate policies?

Many people get caught out after they've signed up to one of these accounts. They wrongly assume that they'll automatically be covered, when in fact some policies require you to register your details to initiate cover. This particularly applies to phone insurance.

Failing to do this is another way packaged accounts can become a monthly black hole for your cash. Check you've done all you need to before embarking on that holiday or long car journey.

Check below whether your bank requires you to register or not.

Bank Travel insurance Breakdown cover Mobile insurance
Bank of Scotland
Barclays
Halifax
HSBC
Lloyds Bank
NatWest
Nationwide
RBS

Have you been mis-sold?

The financial regulator, the FCA, has been investigating how packaged bank accounts have been sold over a number of years. It found many were sold these accounts even though they were unable to claim on the insurance, something that isn't often discovered until a claim's needed.

Like all insurance products (which is what these really are), the bank needs to ensure it's suitable for you. It's starting to look like banks systemically failed to do that. A common example is customers aged over 65 not being told they weren't eligible for travel insurance.

Our full Reclaim Packaged Bank Accounts for Free guide has got all the info you need to work out if you may have been missold, including a full mis-selling checklist, and template letters to send to your bank if you think you were.