Packaged bank accounts

1. Are packaged bank accounts worth it? a complete UK guide for 2025

Packaged bank accounts are one of the most debated products in UK personal finance. For a set monthly fee, they promise a bundle of valuable perks, from worldwide travel insurance to breakdown cover. For some, they represent incredible value, saving hundreds of pounds a year. For others, they are an unnecessary expense, a monthly drain for benefits they never use.

So, where do you stand? Is a packaged account a savvy financial move or a costly mistake?

This comprehensive guide will walk you through everything you need to know. We'll demystify the benefits, show you how to calculate if a packaged account is right for your specific circumstances, highlight the top accounts on the market, and explain what to do if you feel you were mis-sold an account in the past.

2. What exactly is a packaged bank account?

At its core, a packaged bank account is a premium version of a standard current account. While a free current account provides the essentials—a place to receive your salary, pay bills via Direct Debit, and spend with a debit card—a packaged account adds a layer of extra features and insurance policies in exchange for a recurring monthly fee.

Think of it like an all-inclusive holiday versus booking flights and a hotel separately. The packaged approach bundles everything together for one price, offering convenience and, potentially, significant cost savings. The monthly fee for these accounts typically ranges from around £10 to £25.

3. The core benefits: what's usually in the package?

While every account is different, most packaged deals are built around a core trio of insurance products. Understanding what these are, and their typical limitations, is the first step in assessing their value.

1. Worldwide travel insurance

This is often the headline benefit. Most packaged accounts include annual, worldwide travel insurance that covers you and your family (usually defined as your partner and dependent children living at the same address). This can be a huge money-saver for frequent travellers.

What to check:

• Age limits: Many policies have an upper age limit, often around 70 or 75. If you're an older traveller, you must check this. Some providers, like Nationwide, are notable for not having an age limit.
• Trip duration: Policies will have a maximum length for any single trip, for example, 31 or 45 days.
• Winter sports: Check if ski and snowboarding cover is included as standard or requires an extra fee.
• Pre-existing medical conditions: This is critical. You MUST declare any pre-existing conditions to the insurer. Failure to do so could invalidate your entire policy.

2. Car breakdown cover

Another high-value perk is UK and often European breakdown cover. This is typically provided by a major name like the AA, RAC, or Green Flag.

What to check:

• Level of cover: Does it just include roadside assistance, or does it also cover recovery to a destination of your choice ('nationwide recovery'), help at home ('home start'), and onward travel options?
• Who is covered: Is it the account holder(s) in any vehicle, or is it a specific vehicle regardless of who is driving? Some policies extend cover to eligible family members.
• Call-out limits: While many offer unlimited call-outs, some providers may cap the number you can make per year.

3. Mobile phone & gadget insurance

With modern smartphones costing over £1,000, dedicated insurance is a popular choice. Packaged accounts often include cover for theft, loss, and accidental damage.

What to check:

• Whose phones are covered?: Does the policy only cover the account holder's phone, or does it extend to all family members living at the same address?
• Gadget cover: Some policies go beyond phones and include cover for tablets, laptops, and other gadgets.
• Claim limits & excess: How many claims can you make per year? And crucially, how much is the excess you'll have to pay for each claim? A high excess can make the insurance much less appealing.

Other potential perks

Beyond the main three, accounts may also include:

• Home emergency cover: Provides access to a 24/7 helpline and covers the cost of call-outs for emergencies like a burst pipe or boiler failure.
• Fee-free debit card use abroad: Waives the fees for making purchases or withdrawing cash when you're on holiday.
• Preferential rates: You might get better interest rates on linked savings accounts or a slightly lower APR on loans.
• Interest-free overdraft buffer: A small overdraft amount (e.g., £50 or £100) that you can use without incurring interest charges.
• Cashback or rewards: Some accounts offer cashback on household bills paid by Direct Debit or provide lifestyle rewards like cinema tickets or a magazine subscription.

4. The crucial question: is a packaged account good value for money?

This is the multi-million-pound question, and the answer is entirely personal. An account that saves one person £300 a year could be a £200 waste for another. To figure it out, you need to do a simple, four-step calculation.

Step 1: calculate the annual cost

This is the easy part. Take the monthly fee and multiply it by 12.

• Example: A £15/month account costs £180 per year.

This £180 is your benchmark. The value of the perks you actually use must exceed this amount for the account to be worthwhile.

Step 2: ask yourself: do I genuinely need these benefits?

Be honest. The value of a benefit is zero if you never use it.

• Travel: If you only take one UK-based holiday a year, a comprehensive worldwide policy is overkill.
• Breakdown: Do you or your partner already have cover through a car manufacturer or another policy?
• Phone: Are your gadgets already covered under your home insurance policy?

Make a list of the benefits you would genuinely purchase if they weren't included in the account.

Step 3: price up equivalent standalone policies

Now, for the benefits you do need, go online and get quotes for standalone equivalents. The key here is to compare like-for-like. The insurance offered by banks is often high-end, so don't just compare it to the cheapest budget policy you can find.

• Travel insurance: Get a quote for an annual, worldwide family policy that includes the cover levels you need.
• Breakdown cover: Price up a comprehensive policy from the AA, RAC, or Green Flag that includes roadside, recovery, and home start.
• Phone insurance: Look up the cost of a standalone policy for your family's phones with similar cover for theft, loss, and damage.

Example Calculation:

• Annual Family Travel Insurance: £110
• Comprehensive Breakdown Cover: £95
• Family Mobile Phone Insurance: £150
• Total Standalone Cost: £355

Step 4: do the maths and make your decision

Compare the annual cost of the packaged account with the total cost of the standalone policies you would otherwise buy.

• Annual Packaged Account Cost: £180
• Total Standalone Cost: £355
• Potential Annual Saving: £175

In this scenario, the packaged account offers fantastic value. However, if you didn't need the phone insurance, the standalone cost would drop to £205, making the saving a much smaller £25. And if you only needed basic UK breakdown cover (£50) and a European travel policy (£60), your standalone cost would be £110, meaning the packaged account would cost you an extra £70 per year.

In summary:

• A packaged account is likely good value if: You are a couple or family who travels abroad at least once a year, owns at least one car, and has expensive smartphones that you would otherwise insure separately.
• A packaged account is likely poor value if: You rarely travel abroad, don't own a car, or already have insurance cover through other means. In this case, a free current account is almost certainly the better option.

5. Essential checks before you commit: the fine print matters

If your calculations suggest a packaged account could work for you, don't sign up just yet. You need to dive into the details to avoid any nasty surprises.

• Check policy exclusions carefully: As mentioned, age limits and trip durations on travel insurance are common. Read the policy information document (PID) before you apply to ensure the cover is suitable.
• Declare pre-existing medical conditions: This cannot be overstated. For travel insurance, you must inform the insurer of any past or present medical conditions for anyone on the policy. They may charge an additional premium or exclude that condition from cover, but at least your policy will be valid.
• Confirm you aren't already covered: Double-check your home insurance policy documents for gadget or personal possessions cover. Some premium credit cards also offer travel insurance. Don't pay twice for the same thing.
• Understand the overdraft: Don't be blinded by the shiny perks. Check the interest rate (EAR) on the account's overdraft. Some are very high (around 40% is common), which could quickly wipe out any savings from the insurance if you regularly dip into the red.

6. Maximising value with a joint packaged account

One of the best ways to get maximum value from a packaged account is to hold it jointly with a partner. In most cases, the monthly fee remains the same, but the benefits—like travel and breakdown cover—extend to both account holders. This effectively halves the cost per person.

However, opening a joint account is a significant financial step. It creates a 'financial association' between you and your partner on your credit files. This means their financial behaviour and credit history can impact your ability to get credit in the future.

A serious warning: Never feel pressured into opening a joint account. It can be a tool for financial abuse, a serious form of domestic violence. Only enter into a joint financial product with a partner you trust completely in a healthy, non-abusive relationship.

7. A look at the UK's top packaged accounts

The market for packaged accounts is competitive, with several major banks offering compelling packages. Here’s a rundown of some of the leading options. (Note: Details and fees are illustrative and can change. Always check directly with the bank before applying).

Nationwide FlexPlus

• Monthly fee: £18
• Best for: Older travellers and those who value excellent customer service.
• Key insurance features:
  • Travel: Worldwide family travel insurance with no upper age limit, a rare and extremely valuable feature.
  • Breakdown: UK & European cover for the account holder(s) in any eligible vehicle.
  • Mobile: Family mobile phone cover (covers phones belonging to you and family living at the same address).
• Noteworthy points: Nationwide consistently scores very highly for customer service. The account also includes a small £50 interest-free overdraft buffer.

Virgin Money Club M

• Monthly fee: £12.50
• Best for: Families looking for comprehensive gadget cover at a low price.
• Key insurance features:
  • Travel: Worldwide family travel insurance (up to age 74).
  • Breakdown: UK & European breakdown cover for account holder(s).
  • Mobile & gadget: Excellent family mobile phone and gadget cover, protecting items like tablets and laptops.
• Noteworthy points: At £12.50/month, this is one of the cheapest comprehensive packages available, making it a strong value proposition.

Co-op Bank Everyday Extra

• Monthly fee: £18
• Best for: Couples, and it often comes with an introductory offer.
• Key insurance features:
  • Travel: Worldwide family travel insurance with a generous upper age limit of 79.
  • Breakdown: UK & European breakdown cover for the account holder(s).
  • Mobile: Mobile phone cover for account holders only, making it less suitable for families wanting to cover children's phones.
• Noteworthy points: Co-op frequently runs a 'three months free' promotion for new customers, which can sweeten the deal.

Halifax Ultimate Reward

• Monthly fee: £19
• Best for: Homeowners who would also pay for home emergency cover.
• Key insurance features:
  • Travel: Worldwide family travel insurance (up to age 70).
  • Breakdown: UK roadside breakdown cover that extends to eligible family members.
  • Mobile: Mobile phone cover for account holders only.
  • Home emergency cover: A key differentiator, providing cover for home emergencies.
• Noteworthy points: At £19/month, it's one of the more expensive options, but if you need all four insurance types, it can still be good value.

8. The mis-selling scandal: could you be owed a refund?

In the past, packaged bank accounts were widely mis-sold. Many customers were signed up without their knowledge, pressured into taking an account to secure a mortgage, or sold a package with benefits they were ineligible to use (e.g., selling travel insurance to someone over the age limit).

Regulators have cracked down, and banks must now check your eligibility for the insurance products. However, if you've had a packaged account for a long time, it's worth checking if you were mis-sold.

You may have been mis-sold if:

• You were signed up without your knowledge or consent.
• You were told you had to take the account to get a mortgage, loan, or overdraft.
• The bank knew you were ineligible for a key part of the insurance (e.g., you were too old for the travel policy) but sold it to you anyway.
• You were not informed that free bank accounts were available.

If you believe you were mis-sold, the first step is to complain directly to your bank. If you are unhappy with their final response, or they don't respond within eight weeks, you can escalate your complaint to the free and independent Financial Ombudsman Service (FOS).

9. Final verdict

Packaged bank accounts are not inherently good or bad—they are a tool. Used correctly by the right person, they are a powerful way to simplify your finances and save a significant amount of money on essential insurance. For the savvy family that travels, drives, and uses smartphones, the value is often undeniable.

However, for the person who is tempted by the perks but doesn't actually need them, they are a pointless monthly expense. The key to success is to ignore the marketing and focus on the maths. Be ruthless in your assessment of what you need, diligent in checking the small print, and honest about whether the numbers add up for you. Do that, and you'll make the right choice every time.