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With benefits guide
What is a with-benefits account?
A with-benefits’ account is a current account that offers a raft of extras but also charges a monthly fee for use. For the right account holder, extras such as free break-down cover, travel insurance, phone insurance, home emergency cover and discounts more than offset the monthly fee.
Because with-benefits accounts are laden with extras, they are often referred to as packaged or added-value accounts.
Who do they suit?
With benefits current accounts are good for those who tend to buy the extras anyway and so will save money despite the fee. Some accounts have fairly high minimum monthly payments, so these are best suited to those earning a high salary who can meet this requirement.
They can also be useful as a joint account, as then you can both benefit from the perks while still paying just one fee.
Although most of us expect our current account banking to be free, these deals are slowly catching on as the perks improve and people recognise the savings they can make. If you are considering a packaged account, be sure you will use the perks included.
The range added benefits vary depending on the account and the monthly fee you opt to pay, so it’s important to take time to search the market and find the most suitable packaged account for your needs and circumstances. Common extras include travel insurance, breakdown cover and mobile phone insurance.
Many banks and building societies also offer preferential rates on other products such as savings and mortgages, to their packaged account customers.
The fact there is a monthly fee will be a turn-off for many people.
Some of the perks that come with a with-benefits account need to be signed up for – you might need to register your phone for the mobile insurance, or provide information for your travel policy. Make sure you get around to registering, otherwise you’re wasting money.
Typically, as well as the monthly fee, there will be a minimum amount you will need to pay into the account each month in order to qualify. This can mean that some people’s wages aren’t enough to let them qualify for these kinds of account.
If you aren’t going to use the extras that come with a with-benefits account then it’s probably not worth paying the monthly fee to have one. Instead, consider how you use your current account. If you’re frequently overdrawn, go for a deal that gives you a generous interest-free overdraft. If you’re usually in credit, then a high-interest current account could be a better option.
High earners with more complicated banking needs may not find a packaged account is right for them and may prefer a premier account, which gives them access to a relationship manager.
There are even reward accounts that pay you an amount each month, so a fee-paying account is not always the best option.