Packaged bank accounts are the Marmite of banking – some love 'em, some hate 'em. Used right, they can save you £100s off the cost of breakdown cover, travel insurance and mobile phone insurance. But many have been mis-sold.
Packaged bank accounts usually have a monthly fee, though are jam-packed with perks, offering many great value for money. This is a guide to getting the right account, including our top-pick packaged accounts.
Packaged account best buys
The six need-to-knows
You need to be aware of several things before getting a packaged bank account, to make sure the account's right for you and to avoid a nasty shock when trying to use the benefits.
Thousands have been mis-sold these accounts, but you can reclaim if so
This guide's about how to pick the best packaged account. But it's worth noting that many people have had them for years without being able to use the benefits, essentially because they were mis-sold the account. If that's you, this point's important.
Regulator the Financial Conduct Authority has been investigating how packaged bank accounts have been sold over a number of years. It found many customers were flogged fee-paying accounts with 'perks' such as travel and mobile insurance which didn't actually cover them, something often not discovered until a claim was needed.
If you got one of these accounts because the bank called you, or invited you in to say "you're a special customer" then upsold it to you, or it told you "you have to get it...", it's likely at best you're paying over the odds. At worst, you were mis-sold and are due cash back.
We've been deluged with successes from our Reclaim Packaged Account Fees guide which launched in 2013. EVERYONE who pays a monthly bank account fee should CHECK NOW to see if they were mis-sold.
These accounts can be great value, but make sure you can't buy the insurance cheaper elsewhere
Travel insurance, smartphone cover and a breakdown policy for a low monthly fee. It really does sound like an amazing deal – and that's exactly what you're meant to think.
For some, they won't be worth it. But if you're 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 of the account by 12 – for example, £25/month is £300/year – then see if you can buy the 'freebies' for less – see our Travel Insurance, Breakdown Cover and Mobile Insurance guides to help. The policies included with packaged accounts are deliberately high-end, so compare whether a decent standard policy covers what you'll need.
If you're saving, these might be worth it for you. If you're not, ditch and switch to a fee-free bank account.
Joint accounts can add even more value
With most packaged accounts the perks are valid for all account holders. Open it jointly and you're both covered, for the same fee, effectively boosting the account's value. So even if you both won't use the account, adding a partner can make sense (though be aware that joining finances means their credit record can affect yours, so trust is key).
You should still consider what policies you actually need, and whether you could get them cheaper elsewhere, but if you both travel worldwide, own cars and have smartphones, a packaged account could save you money. Check out the top picks below, all of which allow joint accounts for the same single fee.
Ensure the insurance policies cover everything you need
When signing up for an account, check the insurance policies cover you for everything you need. If they aren't going to pay out when necessary, they're worthless.
Plus, don't be caught out with heavy charges to upgrade. If winter sports and family cover aren't included in your travel policy, adding them can cost as much as £72.
Add that to the annual cost of your account and you could find you're spending far more than you need to. Instead, choose a more suitable account to begin with, or save by insuring separately.
Always declare any pre-existing medical conditions for travel insurance or they won't be covered
Failing to declare conditions when applying for an account – and therefore, the travel insurance cover, too – may invalidate the policy. You need to call the insurer and tell it, even if you're just having tests for a condition.
If you're diagnosed, or anything changes after the policy has been taken out, tell the insurer before you travel. It'll decide if it'll still cover you, with or without an additional charge. This will be reviewed annually, for as long as you hold the account, although it may not provide cover under the same conditions each year.
If you don't need extras, bag a £100 bonus instead
If you don't need the extras, or you're currently paying interest for using your overdraft in your current account, ignore packaged accounts and grab one of the overall best bank accounts.
These can give you up to £100 free cash when you switch, or interest rates up to 5% on small amounts of cash in them. See the fee-free Bank Accounts guide for full options, or if you're struggling to get a normal account, see the Basic Bank Accounts guide.
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There are a whole host of bank accounts with benefits out there, but you have to be careful that the one you choose is worth the money. Nationwide offers the most comprehensive cover for a low fee, but there are a couple of other decent options...
£600 of high-end travel, mobile & breakdown cover for £120
Nationwide FlexPlus* Monthly fee £10 (£120/yr)
Nationwide's* FlexPlus account is a cracking deal for £120/year – IF you'll use the features. You get the worldwide family travel insurance up to age 75 (which usually costs double the account charges alone), smartphone insurance for all the family (at the same address) and UK & Europe breakdown cover. Other accounts below have similar benefits (though not quite as good) but cost more each month.
- The travel insurance covers worldwide trips (including golf, business and winter sports) up to your 75th birthday.
- The mobile cover includes loss, theft, damage or breakdown, for all phones owned by family members living at your address (max value £1,000, children must be under 19 or 22 if in full time education).
- You get breakdown cover with the account, across the UK and Europe. It covers the account holder(s) driving any private car.
- You also get extended warranty cover for an additional 12 months on all new household electrical items between £50 and £2,000.
- We've calculated that all the insurances this account offers could be worth £600 or more. Here's how we worked this out
- Mobile cover for all the family's smartphones. Our cheapest iPhone insurance costs £70 a year so if there are four of you, that's £280's worth.
- World family travel insurance. Cheapest comparable cover we've found elsewhere is £60-£180/yr.
- European breakdown cover. Covers you in any car. Similar cover we've found elsewhere is £60-£70/yr.
- Golf cover. Similar cover costs £24/yr
- Warranty cover. Similar cover costs £10.99/mth (so £132/yr)
- Identity Theft Assistance. Similar services cost £14.99/mth (so £195/yr)
For a family of four needing it all, it could be worth almost £900, but we go with a lower figure as it's unlikely many families would actually buy all of this cover individually. Do bear in mind that the price of individual cover will also vary with the number of people in your family being covered.
- The account pays 3% AER in-credit interest on balances up to £2,500, beating top savings accounts. This works out at a max interest of about £75/year, which – if you've the savings to put in there – goes some way to offsetting the monthly fee.
- If you've a pre-existing condition, tell Nationwide as you may need to go through the insurer's medical screening process to see if it can cover you.
- In-credit interest: 3% AER up to £2,500
- Min monthly pay-in: 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)
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 our full Travel Insurance guide).
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 a claim) is a maximum of £50. If you've a pre-existing condition, tell Nationwide as you may need a medical screening before getting cover and could be charged.
I'm over 75. What about me? If you're over 75, you'll need to pay a £50/yr premium for your travel cover. This isn't necessarily the best deal on the market, so always compare with the premiums in Cheap Travel Insurance.
What does the mobile phone insurance cover? It covers repair or replacement after theft, loss or damage, insuring each handset up to the 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 under 22 if 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 breakdown cover include? It's for the UK and Europe including home assistance. Cover is for the person, and people travelling in your vehicle (so everyone would be taken to their destination). On a joint account both account holders would be covered.
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 it still has a 2% charge when using it for overseas purchases, so don't use it for this. Instead, 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 and 12 months 0% on balance transfers and purchases.
How is the bank rated? In our August 2016 poll, Nationwide was second, with 79% voting it 'great', 17% 'OK' and 4% 'poor'.
Are there any other perks? If you refer a friend and they successfully switch to a Nationwide current account, you will both receive £100. You can refer up to 10 friends a year.
Worldwide travel, mobile & breakdown cover plus 3% cashback on bills
NatWest Reward Platinum* Monthly fee £18 (£216/yr)
NatWest's* Reward Platinum account offers worldwide family travel insurance, smartphone insurance and UK breakdown cover. While its perks aren't quite as good as the FlexPlus account above, and it's more expensive, it's still a decent option if you spend a lot on bills. This is because you get 3% cashback on any you pay by direct debit, which can work to effectively bring the fee down.
- The travel insurance covers worldwide trips (including golf and winter sports) up to your 69th birthday.
- The mobile cover includes loss, theft or damage, but only covers the account holders, not family phones too.
- You get Green Flag breakdown cover with the account, which covers all cars you own registered at your home address. It includes home assistance services too.
- You can get 3% cashback on council tax, gas, electricity, water, home phone, mobile, TV and broadband bills, as long as you pay by direct debit.
- The same account is available with RBS but you'll need to live in Scotland & head into a branch to get it.
- You also get a Tastecard membership, which gives 2for1 or 50% off at various restaurants across the UK, and two annual National Trust family day passes.
- In-credit interest: None
- Min monthly pay-in: None
- Arranged overdraft cost: £250 interest-free, then £6/month plus 19.89% EAR interest
- Unarranged overdraft cost: £10 buffer, then £6/day fee (max charges of £90 per month) plus £6 unpaid item fee (max charges of £60 per month)
What does the worldwide family travel insurance cover? It allows multiple trips worldwide of up to 31 days per trip and includes winter
It'll cover you, children under 18 (or 23 if in full-time education) providing they live at the same address and aren't married or in a civil partnership, and your partner, even if it's not a joint account. The excess (the amount you pay towards a claim) is a maximum of £50. If you've a pre-existing condition, tell NatWest, otherwise your insurance won't be valid.
To add people to your policy, or to declare a medical condition, call NatWest on 0345 609 0453.
I'm over 69. What about me? If you're over 69, you'll need to pay a £50/yr premium for your travel cover. This isn't necessarily the best deal on the market, so always compare with the premiums in Cheap Travel Insurance.
What does the mobile phone insurance cover? It covers replacement after theft, loss or damage of your phone (and the other account holder if it's a joint account), with a £75 excess. It also covers unauthorised calls up to £2,500 for contract phones and £100 for pay-as-you-go.
What does the Green Flag breakdown cover include? It's for the UK including home assistance. Cover includes all vehicles owned by you that are registered at your home address. You're limited to five call-outs in any 12-month period.
For more policy details, see the insurance policy summaries.
How can I redeem the cashback? You can cash in your rewards as soon as you reach £5, and can take this in the form of cash, vouchers with retailers such as Cineworld and Caffè Nero or a donation to one of four charities (Barnardo's, Cancer Research UK, Macmillan Cancer Support or the NSPCC).
How is the bank rated? In our August 2016 poll, NatWest was voted 'great' by 48%, while 35% said it was 'OK' and 17% 'poor'.
Decent cover and get £100 to switch
Halifax Ultimate Reward Monthly fee £15 (£180/yr)
If the accounts above don't suit you, another option is the Halifax Ultimate Reward account. It comes with worldwide family travel insurance up to age 70, plus smartphone insurance for the account holder(s) and UK breakdown cover.
Switch to the account and you'll get £100, and for every month that you spend more than £750 you'll get a fee reduction of £5 (£3 from February 2017).
- Every month you pay in at least £750, pay out two direct debits and remain in credit, your fee for the next month will be reduced to £10 (£12 from February 2017).
- The travel insurance covers worldwide trips (including golf and winter sports) up to your 71st birthday.
- The mobile cover includes loss, theft, damage or breakdown, but only covers the account holders, not family phones too.
- You get AA breakdown cover with the account, which covers you (not the car) and includes 'Home Start' services too.
- You also get home emergency cover. So if your electrics fail, it'll cover an electrician coming out to fix them (up to a value of £250 each time).
- This account includes a card cancellation service, where you register all your cards, and if your purse or wallet is stolen, it takes just one call to cancel them all.
- If you switch an existing current account to the Halifax Ultimate Reward account, you'll get £100, paid before your switch completes.
- You won't be able to get the bonus if you've received any incentive for switching to Halifax since January 2012, or if you're switching from a Bank of Scotland account.
- In-credit interest: None
- Min monthly pay-in: None (£750 to get fee reduction)
- Arranged overdraft cost: £50 buffer, up to £300 fee-free (subject to approval); then charges are tiered. Up to £2k: £1/day. £2k-£2,999: £2/day. Over £3k: £3/day.
- Unarranged overdraft cost: £5/day
What does the worldwide family travel insurance cover? It allows multiple trips worldwide of up to 45 days per trip and includes winter
sports (max 31 days) and golf cover.
It'll cover you, children under 18 (or 24 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 a claim) is £50 per claim. If you've a pre-existing condition, tell Halifax, otherwise your insurance won't be valid, and you may need to pay more.
What does the mobile phone insurance cover? It covers repair or replacement after theft, loss or damage of your phone (and the other account holder if it's a joint account) up to £2,000. There's a £30 excess for all handsets except iPhones, which have a maximum £100 excess.
What does the AA breakdown cover include? It's for the UK including roadside assistance and home start. Cover is for the person, even if you're travelling in someone else's vehicle. The policy will only tow you to a destination of your choice.
For more policy details, see the Ultimate Reward account guide.
How is the bank rated? In our August 2016 poll, Halifax was voted 'great' by 63% of voters, while 32% said it was 'OK' and 5% 'poor'.
Are there any other perks? You can earn cashback at some retailers, though you need online/mobile banking to do this. Halifax's 'Cashback Extras' means that if you shop at selected retailers, including Argos, Homebase and The Body Shop, you'll get some cashback if you use your Halifax debit card.
You need to have online or mobile banking as you need to activate your cashback offers before using them. Cashback offers are tailored, so not every customer will get the same offers.
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Top premium bank 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 borrowing.
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.
Here are our top picks...
Free worldwide travel insurance & mortgage discounts
HSBC Monthly fee – £0
Premier account holders with HSBC get worldwide, free family travel insurance, and can save on mortgage fees. They often get mortgage rate discounts too. This account's worth getting, if you can, for the travel insurance. The mortgage discounts are good, but it's likely HSBC isn't always going to be able to provide the best mortgage for you.
- It's fee-free, but to get it, you must hold over £50,000 of investments with HSBC or have a salary of at least £100,000 plus a HSBC mortgage, investment or life insurance product.
- You can get £150 if you're accepted for the Premier account, then switch to it within 30 days including switching over two or more direct debits or standing orders.
- If you register for mobile/internet banking within 60 days, and continue to meet the eligibility criteria for the account, you'll get an extra £50 after a year.
- The travel insurance covers worldwide trips (including winter sports and business cover) up to your 70th birthday. To be eligible you must have lived in the UK for at least six months and be liable to pay UK taxes.
- You can transfer cash fee-free between different HSBC accounts you hold in different countries.
- If you're not eligible, you may want to consider the Advance account. Though you don't get free travel insurance, you'll get a discount on mortgage fees – good if you're considering an HSBC mortgage anyway.
- If you hold either of these accounts you'll have access to a linked 5% regular savings account.
- In-credit interest: None
- Min income: £100,000 salary
- Arranged overdraft cost: 0% on the first £500 then 11.9% EAR
- Unarranged overdraft cost: £10 buffer then 11.9% EAR
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 under 23 if still in full-time education and living at home outside term time are covered if 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.
How is the bank rated? In our August 2016 poll, 38% voted HSBC 'great', 44% 'OK', 18% 'poor'.
Free worldwide travel insurance
Citigold Monthly fee – £0
If you have cause to bank in different currencies, the Citigold account from Citibank could be a good option, as you get worldwide family travel insurance, plus access to US dollar and euro accounts alongside your sterling one.
- It's fee-free if you maintain a minimum average monthly balance of £150,000 across all accounts held with Citi UK or if you hold an account with Citi International Personal Bank in London or Jersey. Otherwise it's £75/month.
- The travel insurance covers worldwide trips (including winter sports) up to your 80th birthday.
- You can switch your debit card to link to any of your currency accounts online – handy if you're travelling and paying in different currencies.
- You can transfer cash to other Citi accounts held in over 20 countries with no transaction fees.
- You can also use Citi's Globeshopper concierge service.
- In-credit interest: None
- Min income: N/A but must hold average monthly balance of at least £150,000
- Arranged overdraft cost: 0% on the first £500, then 9.9% EAR
- Unarranged overdraft cost: 29.8% EAR, plus £25 per paid or unpaid item (max four per month)
What do you get with the insurance? It's up to age 80, including winter sports cover for a maximum of 30 days per trip, or 90 days over a 12-month period. Children under 18 (or under 23 if still in full-time education) who aren't married and live at home outside term time are covered if travelling with the account holder or an adult known to them. Pre-existing conditions may not be covered, so check before you travel. See the full policy document.
Packaged accounts Q&A
Will I be credit-checked when applying for a packaged account?
Banks use the same credit scoring procedures, where they assess whether they want you as a customer, for packaged accounts as they do with normal accounts.
So, if the account includes an overdraft, even if you don't use it, you'll be credit-checked in the normal way. For more info on how this works, and what lenders are looking for, see Credit Scores.
Do I need to activate the insurance policies?
Usually, no. It's automatic. But if action is needed, we'll highlight it in the need-to-knows.
How long does a cheque take to clear?
It depends on which bank you're with, but the basic principle of 2-4-6 applies to all banks.
After two working days any interest will start to be earned on the money from the cheque. After four working days the funds will be available for you to use. And after six working days the money cannot be taken from you (unless you have acted fraudulently).
Cheques could take a day longer than the 2-4-6 system if you pay in a cheque late in the business day, as it may not be processed until the next working day.
How long does it take for money I pay in to count towards my balance?
If you pay the money in over the counter in your branch then the money will count towards your balance immediately. However, if you pay the money in via one of the bank's ATMs, it will vary and can take up to two more days to count towards your balance.
What's the difference between a direct debit, standing order and recurring payment?
A direct debit is where you give permission to a company to take money from your bank account, and the amount can vary depending on what you're paying for. You have very little control over how much money is taken, though the company you're paying will tend to send you a statement informing you of how much will be taken and when.
A standing order is an instruction from you, to your bank, to pay a fixed amount of money to an account. You can send a standing order to any account, bill, mortgage provider or organisation. You have full control over how much and how frequent the payments should be.
A recurring payment is where you give a company your card details, and it uses them to set up a regular or continuous payment from your card. You'll know if it's a recurring payment if you give the company your 16-digit card number, rather than your bank account number and sort code.
They're usually used if you're paying for a subscription, or for such things as payday loans or gym memberships. With these payments you have very little control over how much or when a company will take your money, and you usually won't be informed that it will be taking a payment.
However, you can ask your bank to cancel them, as well as asking the retailer, if you want to end the service. See Recurring Payments.
How do I set up a direct debit or standing order?
Direct debits are set up by the company you're paying. In most instances, the company will ask for your account details, and it'll set up a direct debit for you. However, sometimes it'll send you a direct debit form that you need to fill out, and hand in to your bank or send back. You can't set up a direct debit yourself.
But you can set up a standing order by yourself. You'll do this via your bank, in branch, on the phone or online. To set one up you'll need the details of the account you're sending money to and you'll need to put in a set amount you want to send each time (you can change the amount with a day or two's notice).
How does it work with reward payments and tax?
A few current accounts pay rewards for holding the account and meeting certain criteria, such as paying in a set amount each month or having direct debits. Some of these, such as the Halifax Ultimate Reward account scheme, are paid with basic-rate tax already deducted.
With the introduction in April 2016 of the personal savings allowance (PSA), meaning interest is now paid tax-free, some people hoped that they'd see an increase in the reward amounts paid to them.
However, these payments don't count as savings income for tax purposes and instead are classed as either 'annual' or 'miscellaneous' payments. This means that the rewards don't count towards your PSA, and they're still liable to be taxed.
If you're a non-taxpayer, you should claim back any tax taken using the R40 form. Higher- and additional-rate taxpayers may need to pay more via tax returns.