Whether or not a packaged bank account is value for money depends on whether you want the benefits offered, if you are eligible to use them and whether buying what you want in a package is cheaper than buying separately.
If you know that you’re going to spend in the eligible way to get cashback, use the discounts, deposit large enough balances to enjoy higher interest rates, or need the various insurance cover, then a packaged account can be worth paying a fee for. However, you should always consider non-fee paying alternative accounts as many can still offer the specific benefits you want free of charge. Researching other free or cheaper deals first will ensure you are choosing the option that suits you best.
Pros of packaged accounts
If you are eligible to use the benefits of a PBA, it could be good value for money. You could end up paying less for the combined benefits than if you bought them separately.
There are also a wide variety of extras available. While some accounts offer access to products like mortgages, others offer cashback on everyday spending, breakdown cover or home emergency cover. Many offer an interest-free overdraft or buffer zone, benefits which aren’t generally available with free accounts.
Cons of packaged accounts
Initially, a small monthly fee of £5 to £25 seems attractive. However, over the course of a year this cost can seem much less attractive. Furthermore, if you do not want or are not eligible for some of the benefits, the overall cost may not appear worth while and you could be wasting money.
Not all packaged accounts allow you to pick and choose what benefits you want. As a result, you could end up paying for things that you’ll never use. For example, if you don’t drive, you don’t have any need for breakdown cover.
Some benefits, such as insurance, you may not be eligible for when it comes to your age, hobbies or your profession. Therefore, reading any small print is imperative, especially since ineligibility can happen for a variety of reasons.
You may already have some of the benefits through your job or other existing home insurance policies.