subject: Credit Card, Bad Credit Rating, Borrowing, Personal Finance [print this page] The start of this article is going to have to be a quick explanation but before we get to that let's have an explanation of the explanation.
Packaged current accounts have always existed but they've been under the radar, generally unpopular and certainly unpublicised, for years. So even though they've never really gone away it's necessary to clarify what they are.
This is itself should show that packaged current accounts have the potential to confuse - and therefore be poor value - for many consumers in the UK and elsewhere.
So what is a packaged current account?
It's an account that comes with bells and whistles - usually in the form of insurance of various kinds, car breakdown cover, VIP access or discounts on various other products.
Packaged current accounts are often called reward or ultimate current accounts and are offered by some of the biggest banks in the world including Halifax, Santander, RBS and Natwest.
UK building societies tend not to carry them as a rule which might give some indication of the fact that they're viewed with suspicion by many consumers and even some prominent consumer groups.
When you compare current accounts you'll be able to spot these by the fact that to pay for the bells and whistles there is often a monthly or yearly fee charged.
This fee is usually of around 5 to 15, depending on the rewards on offer.
As with balance transfer credit cards, though, packaged current accounts can often end up being more than they're worth both in terms of cost and in terms of effort and stress.
So, to answer the title question, when are packaged current accounts a good idea?
The answer is, simply, when you can save money elsewhere on products that are included in the current account and when those products are actually useful to you.
For example, some current accounts come with a payment protection insurance policy.
Payment protection insurance or PPI is generally regarded as pretty useless when sold with many financial products and consumers are often advised to check the terms of these policies carefully before signing up.
With packaged current accounts you may not have a choice but to sign up for the insurance, even though you don't really need it and wouldn't buy it in the first place given the chance.
As another example, there might be a benefit to a current account that you can get elsewhere with a product you don't want to get rid of.
For example, many use abroad credit cards come with travel accident insurance and many of these current accounts do too.
However, you might not want to ditch your use abroad credit card which could be useful elsewhere - not least, one might hope, abroad - so you'd end up with two policies which is pointless and unnecessary.
This is also the case with breakdown cover which is often included in car insurance anyway. So, in the same way, might be duplicated between products.
