Money Matters: Are Paid For Accounts Actually Worth It?

Posted on Jan 10 2018 - 11:21am by Samantha Clark

In the wake of PPI scandals, we’re asking ourselves what else we’re being miss-sold. The latest under the microscope are the packaged and paid for bank accounts.

When opening a new bank account, we’re presented with a number of different options from basic accounts to the all singing all dancing accounts; it can be a mind field to know where to begin. We trust the advisors to help us make an informed decision but inevitably there is a motivation for them to sell one particular product over another; it is how we ended up with the whole PPI issue in the first place. But of course, PPI isn’t the only product that miss-selling applies to. As such, the all singing all dancing bank accounts – which offer numerous benefits-, are coming under scrutiny.

Where we’re being miss-sold on such accounts, as with PPI, is when we’re seemingly told we have to have it or that paid for accounts are an only option. This absolutely isn’t the case; there are plenty of free bank accounts available that may serve the purpose you need but they will be minus a few of the benefits you’re essentially paying for. If you’re told you need it, or paid for accounts are an only option, it is absolutely a miss-sell and you have a case to reclaim.

Some of the benefits offered under a paid for account:

  • Travel insurance for the family
  • Breakdown cover
  • Phone insurance

However, before you pursue a claim, determine if there is a benefit to you and your family. Because, actually, some paid for accounts do provide a benefit and in actual fact offer you a saving.

Let me explain.

As highlighted, some of the benefits offered under a paid for account include travel insurance, breakdown and phone insurance as a basic package.  Let’s scrutinise some well-known bank products in this area:


Ultimate Reward Current Account, £15 per month. Includes:

  • Worldwide Multi-Trip Insurance for the family
  • Mobile phone insurance
  • AA breakdown including home start
  • Home emergency cover
  • £300 fee free overdraft

Lloyds Bank

Platinum Account, £17 per month. Includes:

  • Worldwide Travel Insurance for the family
  • AA breakdown including home start
  • Mobile phone insurance
  • Planned for overdraft, fee free up to £300

Of course what we’re actually buying with these accounts is assurance; a peace of mind should something go wrong when we’re out and about, with our expensive technology or whilst we’re travelling.

In the case of home emergency, we can call our trusted electrician or plumbing specialist to help in cases of emergency but this can obviously come at a significant and usually unexpected cost.

As for travel insurance this can be purchased as and when required. This could cost between £12 and £20 for a single trip to Spain for a family of 4 for a week with no pre-existing medical conditions; if this is your holiday for the year, paying as you go, is definitely the more cost effective option. However, if you’re intending on taking multiple trips, going further afield and/or have pre-existing medical conditions, you could save some money here with an annual policy.

Mobile phone insurance and AA breakdown, however, are products that are good to have for just in case; you hope you’ll not need it, as with most insurance products, but should the need arise, you’ve peace of mind for the most part, it’ll be taken care of.

Breakdown cover has come down quite dramatically recently, AA & RAC have both realised we’re savvy when it comes to savings and have adjusted their costs accordingly. Cover starts at a very basic level of £59 for a year- this is cover just for one person and solely for roadside assistance. To get the additional peace of mind in nationwide cover and home start, this would cost £109 for one person or £139 for two for a year.

As for phones, with the cost of handsets outright at £250+, phone insurance is particularly ideal. However, in the grand scheme of cost, insurance for this is pretty cheap with or without a paid for account.

So what it really comes down to is how much you travel and whether you have or want the peace of mind with breakdown assistance.

If you’re travelling a significant amount and paying anywhere between £137 and £180 per year for travel insurance in addition to £139 a year for breakdown, you’re going to save money by having one of the paid for bank accounts; with Lloyds costing £204 a year and Halifax costing £180. In fact, the Halifax account offers a significant saving and an additional benefit in the home emergency cover which starts usually around £60; this, the home insurance and fee free overdraft are all essentially free benefits.

Additionally, if you do see the paid for accounts as a benefit, make it into a joint account so both you and your partner/spouse can benefit from the products you’re paying for and all at no additional cost.

What we suggest you do is work out what you’re currently paying for (e.g. if you’re paying for an account and additionally for breakdown, you need to cancel one of these) and at what cost, shop around for the individual products and services to ensure you’re personally getting value for money. When it comes to finances, we all have individual wants and needs and what we’re prepared to pay when it comes to peace of mind. But before you cancel and claim for a miss-sell, actually determine if it is a benefit to you and your family.

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