Three in ten regularly use packaged current account benefits
Packaged current accounts are here to stay, with around 10 million consumers using one and more than 40 packaged accounts on the market. But despite their familiarity, consumers are still falling into some common traps. As a result, many see fee-paying accounts as a waste of money, according to new research by uSwitch.com, the independent price comparison and switching service.
Over six in ten consumers (63%) think that packaged accounts are a waste of money, with the benefits and preferential rates not worth the additional fee. But many of those who are paying for a packaged account are simply not using the benefits enough, or are unaware of the ‘extras' they are paying for. Just three in ten packaged account holders (30%) use the benefits regularly. One in ten (10%) have only used the benefits once, while two in ten (21%) have never used them at all.
Less than a quarter of packaged account holders (21%) can name all the benefits that come with their account, even though they are paying a monthly fee for them. And with fees of up to £300 a year, lack of usage and lack of awareness mean that many account holders are not getting value for money.
More worryingly, many packaged account holders are wasting their money because they have duplicate cover. This is because packaged accounts typically offer benefits such as travel insurance, mobile phone cover and breakdown cover for your car, which many consumers already have. While a savvy six in ten account holders (61%) have cancelled existing policies because they are now covered through their account, almost two in ten (18%) haven't done so and are therefore paying for duplicate cover.
But despite these common pitfalls, half (53%) of all non-fee paying current account holders would consider taking out a packaged account to save money on insurance. One in ten (10%) would be attracted by the convenience factor - the ease of having lots of services and policies under one umbrella. Just a third (34%) would never consider having one.
Michael Ossei, personal finance expert at uSwitch.com, says: "Packaged bank accounts are the marmite of the banking industry - people either love them or hate them. But the fact is that they can offer extremely good value and can make sense for those consumers who actually use the benefits. The problem is that many of those who are paying a fee are not using the benefits or are even unaware of them. As a result, they are not getting good value for money.
"Having a range of products and services under the umbrella of a current account can be cost-effective and convenient, but it's not right for everyone. Like any financial service, there will be accounts that offer better value and quality of cover than others - it depends entirely on what your needs and priorities are.
"With so many accounts out there to choose from, consumers need to be sure they have done their homework first before signing on the dotted line. It's also important to remember that whether it comes with or without a bank account, it's up to you to ensure that an insurance policy is adequate for your needs. You should always read the small print carefully."