Added value current accounts - is there any value?

Research by Defaqto has identified 32 different incentives that are on offer from added value (paid for) current accounts.

David Black, Principal Consultant of Banking for Defaqto and author of the report ‘Current Accounts - All change' says: "The banks are very keen to migrate their customers from free-in-credit current accounts to added value accounts as the latter provide them with an ongoing and guaranteed income stream. The carrot of incentives is the main method by which banks attract new customers to these accounts. Based on the monthly fees charged Defaqto has calculated that each incentive costs the customer an average of £1.27 every month.

"The array of incentives offered by added value current accounts varies considerably, and some, such as travel insurance, are clearly of more value to the consumer than others."

Black continues: "For the consumer the main decision on whether to transfer to a paid for account should be based on whether they actually want the incentives offered and, for those that they do want, whether they can buy those items that they actually require more cheaply independently. For example a preferential rate may be offered on, say, a savings account, but it is quite possible that a better rate will be available elsewhere."

"Added value current accounts are being increasingly heavily marketed and there is already significant variance in the accounts offered with some providers differentiating between entry level, medium and premium offerings."

The average number of incentives offered by added value accounts is just over 11.

The monthly charge for an added value account varies from £3 (Barclays Current Account Plus) up to £25 (Citibank Citigold Current Account; Clydesdale Bank Current Account Tracker; HSBC Premier; Lloyds TSB Premier; Yorkshire Bank Current Account Tracker). Monthly fee waived for certain customers.

The average cost of an added value current account is £14.24 each month.

NatWest's Advantage Private Account offers the most incentives (26) and costs £19.95 each month.

The incentives offered by added value current accounts include one or more of the following:-

Travel insurance
Mobile phone insurance
Home insurance
Car insurance
Motor breakdown insurance
Identity theft insurance
Other insurance (eg. gadgets)
Home emergency cover
Extended warranty cover
Price protection
Free card protection
Commission free foreign currency exchange
Commission free travellers cheques
Preferential rates/deals on savings accounts
Preferential rates/deals on mortgages
Preferential rates/deals on unsecured loans
Preferential rates/deals on credit cards
Holiday/travel related discounts
Health related benefits/discounts
Accidental death cover
Accidental death cover when using public transport
Identity theft assistance
Legal helpline
Concierge service
Cash back when open account
Shopping discounts / vouchers
Airport lounge access
Tax return service
Discounted share dealing
Will writing service
Savings sweep facility
Relationship manager.