Unlocking the Value of Packaged Bank Accounts: A UK Consumer's Guide

Explore the hidden benefits and pitfalls of packaged bank accounts in the UK, from insurance perks to monthly fees, and learn how to determine if they're worth the cost for your financial lifestyle.

In the diverse landscape of UK banking options, packaged bank accounts stand out as a premium choice for those seeking more from their day-to-day banking. For a monthly fee, these accounts offer a suite of additional benefits, from travel insurance to mobile phone coverage. But are they worth the cost?

What are packaged bank accounts?

Packaged bank accounts are a type of current account where the account holder pays a monthly fee in exchange for a range of extra benefits. Typically bundled services include worldwide travel insurance, mobile phone insurance, car breakdown cover, and sometimes even preferential rates on loans and savings.

The idea being that the monthly fee provides you with a range of services that are cheaper than having to source individual insurance policies by yourself. For individuals who travel frequently, the inclusion of comprehensive travel insurance can offer significant savings. Similarly, mobile phone insurance through a bank account often proves cheaper than standalone policies, providing peace of mind for the tech-savvy.

However, some would argue that packaged bank accounts can lead to consumers paying for services they don't need or could find cheaper elsewhere. The key to avoiding these pitfalls is to assess your actual usage of the offered benefits and select an account which best suits your requirements. Regularly review your needs and compare them against the services you're paying for to ensure they still align.

How to choose the right packaged bank account

Choosing the right account requires a careful assessment of your lifestyle needs against the benefits each account offers. It's crucial to read the fine print, especially the eligibility criteria for insurance benefits, which can vary widely.

Luckily, the UK banking scene is quite advanced and we have a good amount of competition with both traditional and modern banks. Below are some notable packaged accounts which are worth considering if you’re in the market for one:

The Virgin account definitely offers the best value for money considering it also offers gadget insurance giving it the edge over Nationwide. However, Nationwide do use AA for their breakdown cover and they have a service rating score of 84% compared to Virgin’s 43%. So if good customer service is a key item for you then it’s something worth keeping in mind.

Halifax do also boast offering home emergency cover and family breakdown cover which could be useful for a multi-car household. But their mobile phone insurance is only for the actual account holder or both account holders if you hold a joint account with them, plus it comes in to be £48 to £57.60 more expensive than Nationwide or Virgin.

Neobank comparison

I also wanted to review some of the newer fintech offerings from banks like Monzo and financial institutions like Revolut (who aren’t officially a bank, yet).

Both companies offer a few different tiers of packaged accounts but in this case, I’ll be focussing on Monzo Premium and Revolut Metal which are similar in pricing and perks.

The Monzo offering is pretty robust when you consider the mobile and travel insurances and the interest rates on offer which are some of the best for easy access accounts in the UK. However, the rest of the offering is a bit flat beyond this and can be beaten elsewhere.

The Revolut metal card definitely edges out the Monzo Premium card out when you start considering the available extras. It’s definitely geared more towards travelling and leveraging the rest of their platform with their stocks and shares offering. Also, although subjective I’d argue that their partnered discounts are more useful than Monzo’s but this is completely down to the individual.

I previously used to own Monzo Premium but switched over to the Nationwide FlexPlus account. Monzo Premium also offers nifty software features like custom categories, virtual cards and viewing your credit score in-app but I found none of these to be dealbreakers when moving across.

Making the most of your packaged bank account

To maximise the value of your account, conduct an annual benefits usage review. Are you making use of the travel insurance, or have you forgotten about the breakdown cover? Adjust your banking choices as your life circumstances and needs evolve. Also, keep an eye on any changes to your account's terms or benefits.

To put this into perspective, the reason I moved from Monzo Premium to Nationwide Flexplus was because I was paying Monzo £180 (£15 per month) mainly for phone and travel insurances. I’d then pay an additional £50 per year for my car breakdown cover bringing my total insurance outlay to £230 annually.

Switching to Nationwide’s Flexplus account has allowed me to do all of that now for £156 meaning I save £74 for arguably better insurance coverage which can also be extended to a future family setup.

It’s worth considering your financial commitments and what you need to suit your lifestyle to maximise the value you can get from your bank accounts.

Outro

Packaged bank accounts can offer remarkable value to the right customer. However, they necessitate a proactive approach to manage and maximise the benefits. Before diving in, weigh the costs against your actual needs and usage to ensure you're making a financially sound decision.

Do you use a packaged bank account? Leave a comment below so we can hear your thoughts on them.

See you next week 👋