Avoid paying over the odds for packaged current accounts

Customers with, or considering taking out a ‘packaged current account', are being warned against paying over the odds for an account that doesn't meet their individual needs, according to the UK's number one comparison site moneysupermarket.com. Analysis looking at current interest rates, overdraft charging structures and fees across a variety of packaged accounts, revealed customers can make huge savings if they look beyond introductory offers and benefits.

The analysis looked at the overall monthly fees customers would pay across a range of packaged accounts issued by the main high street banks, which can range from free to £20 per month. However, these fees do not tell the whole story, as the charges and benefits included by different providers vary enormously.

For example, Halifax Ultimate Reward Account customers would pay £150 per year in fees, but receive of £60 per year in interest when depositing over £1000 a month, meaning in theory they are paying just £90 per year. For customers unable to meet this minimum monthly funding criteria, a suitable alternative could be the RBS Royalties Gold account offering zero per cent AER and a competitive authorised overdraft facility.

Kevin Mountford, head of banking at moneysupermarket.com said: "The decision to pay for a current account should not be taken lightly, and with such a wide range of rates and fees on offer, choosing the most appropriate product can seem like a daunting task. In the first instance, consumers need to consider factors such as how much money will be going into the account each month and how often they will be using their overdraft, before looking at the other benefits on offer. Packaged accounts can be perfect for people who are ‘time poor' and prefer to bundle all their requirements in one product rather than shop around for several different deals."

Packaged accounts offer a wide range of benefits, giving additional value to customers. Most providers include services such as worldwide travel insurance, motor breakdown cover, home cover, card loss and mobile phone insurance, however some also offer extended warranty on home electrical goods, exclusive deals on mortgages or personal loans, discount on car insurance or discount cards for high street shops.

Kevin Mountford continued: "Consumers need to compare how these packaged accounts stack up against free current accounts and then work out whether the additional benefits will be used, or they'll simply be throwing away money for cover they don't need. Comparing the levels of cover against stand alone deals will give a good indication of whether they really do provide value for money. It is also worth checking that you are not paying for benefits which you may already have elsewhere, for example travel insurance and motor breakdown cover.

"Customers should also make sure they are aware of the steps needed to activate benefits such as breakdown insurance and card loss, as often they will need to register their details before the cover kicks in. It is worth checking the terms of benefits such as travel insurance terms before going away and establishing who else may be covered under any policies - such as a partner or children, which may save them money in the long term."

For more information, visit moneysupermarket.com.