Quantcast
Menu
Save, make, understand money

News

Warning over packaged current accounts as number of products soars

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
15/04/2013

The number of packaged current accounts on the market has soared by 66% over the past five years, new research reveals.

Packaged accounts tend to be paid for and include bolt-on extras such as insurance policies and motor breakdown cover.

In April 2008 there were 41 packaged or added value current accounts, a figure which now stands at 68. Since November 2009 there have been more packaged accounts available than standard, free in-credit current accounts, according to independent financial research company, Defaqto.

However, Defaqto is warning consumers to focus on the benefits offered by these accounts when comparing the different options.

Brian Brown, the firm’s head of consulting, said: “Although choice can be good for consumers, there are so many options available that it can be difficult for people to compare what’s on offer. Monthly fees haven’t increased massively over the last few years, but we are seeing more account variations with a greater number of pricing points. The challenge for consumers is to be able to identify which assortment of benefits, in relation to the account fee, represents the best value for money for their particular circumstances.”

The average monthly fee for a packaged account has gradually increased – from £12.79 in 2008 to £15.11 currently.

Brown added: “If someone is considering opening a packaged current account they should look at each of the incentives on offer, and the level of benefit they provide, as a first step and not focus primarily on price – as, ultimately, paying more for the right account is likely to be a better decision than paying even a small fee for something that won’t meet their requirements.”

New rules came into force last month to prevent people from being sold packaged current accounts with benefits they can’t use.

The rules, which were introduced by the Financial Services Authority and are now overseen by the new Financial Conduct Authority, mean banks now have to check that a customer is eligible to claim under each policy.

Firms will have to alert customers when they are not covered. They will also have to provide annual statements to customers with these accounts.


Share: