22/11/2024

The ‘best’ packaged bank accounts: Are they really worth it?

News

At first glance, packaged bank accounts seem like a great deal. Pay a minimal monthly fee, get insurance cover for your phone, breakdown cover and for travelling.

But they’re not all what they make out to be. While the allure of convenience can be tempting, you could end up paying for protection that doesn’t fully cover your needs – possibly leaving you underinsured. Before you sign up to one, or if you’re currently signed up: are you getting the cover you think you are?

In this article, we’ll delve into what to look out for with packaged bank accounts, break down what they actually offer and suggest how having a tailored policy through a specialist insurance broker is likely a smarter and safer option.

Let’s see what you’re really paying for.

What are packaged bank accounts?

Packaged bank accounts are current accounts that offer additional perks in exchange for a monthly fee.

More often than not, these are insurance products bundled together, marketed as a convenient way to cover you without shopping around for separate policies. The main products that make these accounts up are for travel insurance, mobile phone insurance and breakdown cover.

There’s no denying that packaged bank accounts are convenient and cost-effective, but the insurance cover you get is often sacrificed. This is totally okay if you want to minimise costs, we get it.

Do you even need all of those extras? Historically, packaged bank accounts were once known to be one of the most complained about financial products. 90% of complaints to the Financial Ombudsman Service from consumers b elieved they were mis-sold the accounts, in recent years.

Nationwide recently announced they will be hiking their FlexPlus packaged bank account fee from £13 to £18 a month – a 27% increase – from December 2024. If you currently have a packaged bank account, be wary as you may see similar increases too.

If you’d prefer to get quality coverage where you can be confident that you’ll be fully paid out in the event of a claim, you’re in the right place. With us, you’ll also get your own dedicated Personal Client Manager who you can call directly for any queries relating to your policy for no extra cost.

Comparing some of the ‘best’ packaged bank accounts

We have analysed some of the top packaged bank accounts selected by the credible consumer website, Money Saving Expert. These accounts are selected purely on their value for money where insurance cover is less than a standalone policy through a specialist insurance broker like us.

A little about the accounts we’ve analysed:

Virgin Money Club M: Supposedly suitable for families. Annual cost is £150.
Co-op Bank Everyday Extra: Supposedly suitable for older travellers or couples. Annual cost is £180.
Club Lloyds Silver: Supposedly suitable for older travellers or couples. This account requires a minimum pay-in of £2,000/month, or there is an extra fee of £3/month. You can choose an annual reward. Annual cost is £138 to £174 depending on your minimum pay-in amount.

Each of these accounts include travel insurance, mobile phone insurance and breakdown cover. Let’s take a look at how they compare, looking closer at the cover you get and how they compare vs insuring with us.

Please note that information is correct as of 22nd November 2024. The cover and cost may change in future months.

1. Travel Insurance

The coverage is varied in each of these packaged bank accounts. Whilst some cover Europe, other cover worldwide. Whilst some cover people up to the age of 65, another covers up to 79.

These accounts also are limited with the payout you would get if you were to claim. For example, generally with these accounts you can expect:

Trip cancellation is generally up to £5,000.
Medical cover is generally up to £10m.
Baggage cover is generally up to £2,500, with a single item limit of £250.

Whereas by insuring with a specialist travel insurance broker like us with access to our range of insurers, you can get additional cover if you need it. For example:

Trip cancellation up to £10,000 (with £0 excess).
Medical cover up to £15m (with £0 excess).
Baggage cover up to £3,000 (with £0 excess), with a single item limit of £750.

We can also look to provide a quote for people of all ages, so we can insure people over the maximum age that these packaged bank accounts restrict you to. If you have a severe medical condition that you struggle to get insurance for, we have insurers that can help with that. And if you wish to exclude your medical condition from your cover (which we don’t recommend), we can look to do this for you.

We recommend you consider what level of cover you require based on your travel plans. We’re only a phone call away if you’d like to chat to us about anything.

2. Mobile Phone Insurance

To be honest, the cover here for mobile phones is sufficient and seems like it would meet most people’s needs. There are nuances to the cover between these different accounts. So if you currently have an account, we advise reading your policy wording so you know what you’re covered for in the event of a claim.

As a specialist insurance broker, we prefer to focus on protecting our clients’ assets that matter most to them such as for travelling, homes and vehicles. But we can still insure your technology through a home insurance policy where we can provide cover for your mobile devices when they’re damaged, lost or stolen away from your home.

3. Breakdown Cover

The protection you get for breakdown cover through these packaged bank accounts are very limited. Club Lloyds Silver only covers you in the UK, and all three will only tow you to a garage within 10 miles. This isn’t good if you do a lot of driving away from your home/preferred garage, or if you have a specialist vehicle that you like to take on a run every so often.

If you break down with this cover in the UK, you’re faced with paying more down the line to get towed where you need to. If you break down abroad, you will only be taken to the nearest garage and not taken home.

By insuring with a specialist insurance broker like Norton, here’s what you can expect:

Nationwide assistance and recovery wherever you are in the UK or mainland Europe.
Your vehicle to be inspected by a mechanic who understands specialist vehicles.
The option to add multiple vehicles to your policy.

All for a very competitive price. Feel free to speak to us if you’re interested in finding out more about our breakdown cover.

A text graphic exploring whether packaged bank accounts are worth it.

Are packaged bank accounts worth it?

The decision comes down to what kind of cover you need and how much you’re willing to compromise on quality for convenience.

While these accounts do offer a range of perks at a relatively low cost, they’re often designed as a “one-size-fits-all” solution. For some, this might be enough. But if you’re someone who needs more flexibility or enhanced protection, it’s likely you’ll find these accounts lacking when it matters most.

It’s also important to consider the hidden costs. Although packaged accounts appear affordable at first glance, their limitations – like age restrictions on travel, restrictions on breakdown location and excess fees – can leave you with additional expenses. And if banks increase their monthly fees, like we’ve seen with Nationwide, you could find yourself paying more for less cover over time.

If peace of mind and comprehensive cover are what you’re after, it’s worth exploring a specialist policy. This approach ensures that your coverage fits your lifestyle, travel habits and personal needs. You won’t be paying for extras you don’t need or left underinsured when it comes to claiming.

If the convenience of a packaged account aligns with your needs, it might be suitable for you. But for those seeking full confidence in their cover, opting for a more tailored policy could be the safer and smarter long-term investment.

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