When it’s worth paying for your bank account

Millions who pay for bank accounts that offer enticing extras such as travel insurance and TV subscriptions could find themselves out of pocket now that fess are rising.
These packaged accounts charge monthly fees of between £10 and £40 in return for perks that, if used wisely, could save you hundreds of pounds a year.
But some of the fees have gone up as much as 16 per cent over the past two months, according to the consumer group Fairer Finance. In June NatWest and Royal Bank of Scotland put up the monthly cost of their Premier Reward Black accounts from £31 to £36 — from £372 a year to £432. The accounts offer worldwide travel and phone insurance, breakdown cover in Europe, fee-free spending abroad, a concierge service for restaurant and hotel bookings, and access to more than 1,000 airport lounges.
The account, which also offers £10 a month cashback if you have two direct debits going out and log into your app, is available to NatWest or RBS premier customers, who must have £100,000 in income, savings or investments, or a £500,000 mortgage.
Lloyds Banking Group also increased the fees on Lloyds, Halifax and Bank of Scotland packaged accounts at the beginning of July. The Silver, Club Lloyds Silver and Silver Vantage accounts, which offer European travel insurance, UK breakdown cover and phone insurance, have risen from £10 a month to £11.50 (£138 a year).
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Halifax’s Ultimate Reward account, which gives you worldwide travel insurance, UK breakdown cover, phone and home emergency cover, fee-free spending abroad and a choice of monthly rewards of either £5 cashback, cinema tickets or magazines, has gone up £2 a month to £19 (£228 a year).
Lloyds said it had introduced fee-free spending abroad for some Lloyds and Bank of Scotland packaged accounts. Lloyds and NatWest said the cost of providing account benefits such as insurance and airport lounge access had risen considerably.
James Daley from Fairer Finance said: “Packaged bank accounts can offer great value if you use all the benefits. But they can also be a colossal waste of money if you don’t.
“And some of the recent price rises will be diluting the value even further for customers not making full use of all the perks.”
There were 12.7 million packaged bank accounts in 2020, according to the Financial Conduct Authority, the City regulator, while 26 per cent of the people it surveyed in 2022 said they held a bank account that came with a fee. Some 13 per cent said the fee they paid for their bank account was poor value for money.
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Since 2013 the regulator has required banks to send customers annual statements about what is included in their account. This came after years of complaints that customers who were not eligible for insurance perks were still being sold packaged accounts.
Daley said the FCA’s consumer duty rules mean that banks now have to ensure customers are using the services they are paying for.
“It’s no longer acceptable for banks to sit back and let their customers get poor value from these accounts,” said Daley. “They need to be making sure that they are using the benefits and if they are not, the banks should be ready to downgrade them to cheaper, lower-frills alternatives.”
If you only use the travel insurance or mobile phone cover included with your account, it might be cheaper to buy individual policies than fork out the £140 or so that a packaged account will cost you.
The average cost of insuring the latest iPhone 15 with 128 gigabytes of storage is about £72 a year, according to the website GoCompare. The average annual worldwide travel insurance policy costs £112 and the average cost of breakdown cover is £34.
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Remember to check whether you need these extra policies at all. Sam Richardson from the consumer group Which? said: “You could already be getting those benefits, your mobile phone and gadgets may be covered by your home insurance and some car insurers include breakdown cover as standard.”
If an added perk such as travel insurance is attractive, first check the small print to see if the policy will cover you for particulars, such as a pre-existing medical condition or a ski holiday.
Be aware of age limits — Lloyds’ Silver account will not cover you if you are over 65 and NatWest’s packaged accounts will not cover you over the age of 70, unless you pay an extra £75 a year.