Understanding what to expect from fee-charging bank accounts is important to ensure that you’re getting exactly what you need from the account. These fee-charging accounts often give you added ‘extras’ like insurance or access to a special overdraft that are useful, as long as they’re what you’re looking for. Sometimes the terminology used in your bank won’t always be easy to understand, and you could be being sold something that isn’t useful to you, so you should always be sure you know what you’re expecting when you go in.
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What you need to know about fee-charging bank accounts
You may have already taken out an account, or are in conversation with your bank about the possibility of opening one of these accounts, so you should make sure that you know everything you need before you enter into any agreements you’re unsure about. There are a few things that you need to know about packaged bank accounts:
- Fee-charging bank accounts can be great value as long as you’re sure that you can’t buy your insurance for cheaper anywhere else – especially if the insurance you’re offered isn’t particularly helpful for you. For some people travel insurance, breakdown policies or smartphone cover won’t be worth paying a monthly fee. Because of this, you should check that any policies you’re offered are available to you elsewhere for cheaper – the policies that you’re offered are usually high-end when you could make do with a standard policy. If you don’t need these added extras, then you shouldn’t bother with a packaged account.
- Always ensure that pre-existing medical conditions are declared for your travel insurance or they won’t be covered and your policy will be void, so you should always let the insurer know before you open the account. Then, if you’re diagnosed or anything has changed after you’ve taken out the policy then you should tell the insurer before you travel. The insurer will then decide if they’ll still cover you, although your health insurance will be reviewed annually for as long as you hold this account (but it might not provide you cover under the same conditions each year).
- If you don’t need the insurance then you should get a switching bonus instead – if the insurance isn’t necessary or you’re already paying interest for using your overdraft in your current account then you should ignore packaged bank accounts and go for an account that gives you a switching bonus instead. These switching rates can give you cash bonuses or great interest rates and will be better for your situation.
- Having a joint account could be more valuable. Most packaged accounts are valid for all account holders for the same single fee, so why not open it jointly with your partner so that you’re both covered? This way, even if you don’t both use the account at least adding your partner will boost the accounts value – however you should be aware that joining your finances will mean that your partner’s credit rating can affect yours, and vice versa).
- Make sure the insurance policies you’re offered cover everything that you need. If the policies aren’t going to pay out when it’s necessary that they’re not worth it, so you should always check them when you sign up for an account. You should also make sure that you aren’t caught out with heavy charges to upgrade your account – so try and choose a suitable account to begin with, or save yourself money by insuring separately.
- There has been an incline of mis-sold fee-charging bank accounts, but you can still reclaim if you were mis-sold. It’s worth knowing that many people have had a packaged bank account without being able to use the benefits or sometimes without knowing that they were paying for the account, because they were mis-sold the account. But you can still receive compensation for this, by either contacting your bank and making a complaint, or by reaching out to a claim service to help you investigate.
Make sure a packaged bank account is right for you
Before you make any serious decisions you should truly think about whether a packaged bank account is right for you, as the extras may not be compatible with your needs, or you may feel that you have been mis-sold these additions. If you’re not feeling 100% on your decision to open a packaged bank account it isn’t too late to change your mind, and if you believe that you could have been mis-sold your account then you should ensure you seek compensation for any losses you might have suffered. If you need help figuring out if you were mis-sold then you can contact one of our agents here at Consumer Rights, who will be able to help you to investigate your circumstances.