Pointless perks

By JUSTIN HARPER FOR MAILONLINE
Updated:

 

WOULD you want your bank account to come with free pet insurance if you didn't have a pet? Thousands of people are paying for pointless perks similar to this on so- called value-added bank accounts.

Not content with offering poor value current accounts, the big banks are punting 'packaged' accounts as their latest moneymaking venture.

Packaged, or value-added accounts, charge a monthly fee and in return you get a range of benefits such as free pet insurance, basic car breakdown cover and cheap mobile phone insurance.

Not only is the suitability of these perks questionable, but the charges on these accounts have gone up. With the exception of HSBC, the other three big High Street banks - Lloyds TSB, Barclays and NatWest - run packaged bank accounts.

Barclays offers Additions, which it describes as 'a unique package of benefits and services that helps customers and their families to manage their finances'.

The cost of additions has gone up from £6 to £7.50 a month, but Barclays argues it has added two free months of pet insurance and Green Flag roadside assistance to the package.

However, insuring your average moggy can cost as little as £4 a month and a mutt £7 a month with Tesco Personal Finance. And Green Flag basic roadside assistance costs only £53 a year, or £4.40 a month.

Additions also offers a free will-writing service - a service it claims would cost you £70 - and no monthly fees on your agreed overdraft (but Barclays charges no monthly fee on its basic bank accounts anyway).

So, for £90 a year for Barclays Additions, you get a range of perks - not all of which may be useful to you - you might not all want, and the ones you do want can be bought cheaper or provided free elsewhere.

Lloyds TSB has three packaged accounts - Select (£5 per month), Gold Service (£8) and Platinum (£12).

Recently, Lloyds TSB increased the Select annual fee from £4 to £5, saying it had added free mobile phone insurance covering theft, accidental damage and breakdown cover as an added perk. But many people can include a mobile phone on their home insurance policy for free anyway or have taken out stand-alone cover when they bought their phone.

A spokesman for Lloyds TSB says: 'If you feel the benefits don't suit your needs, you can always switch to another account.'

It's a similar story at NatWest, which offers the Advantage Gold (£6 a month) and Advantage Premier accounts (£12.50). You get a 1.35% discount off its standard mortgage rate (although this is one of the highest standard rates around at 5.95%), but this does last for five years.

NatWest offers you a 'preferential' loan rate on £1,000 of 19.9% - but you can get a much lower rate with Intelligent Finance (9.9%), Nationwide (7.9%) or Northern Rock (7.6%).

The best 'preferential' loan rate offered on £1,000 by Lloyds TSB is a massive 13.9% on its Platinum account.

HSBC is the only one of the 'Big Four' banks which doesn't offer packaged current accounts.

Carina Kemp, head of current accounts at HSBC, says: 'We do not see packaged banking as providing a solution for customers and they will never be suitable for everyone. We'd rather concentrate on good customer service and developing products and services to suit specific needs.'

Look out for the poor interest rates these accounts pay when you are in credit. Most pay only a paltry 0.1% interest rate, much like the Big Four's standard current accounts.

• SANDRA HOLLAND (pictured above) pays £7.50 per month for her Barclays Additions account and feels she will not benefit from most of its perks. For example, she has been offered two months free pet insurance - but she has no pets.

Mrs Holland, 56, says: 'When I took it out, it was £5 a month and you got £10,000 life insurance cover. 'Then it went up to £6 per month and the insurance policy covered only accidental death.' Sandra lives on a houseboat moored in Great Haywood, Stafford.

She also has no use for the £250 interest-free overdraft because she and her husband, Andrew, had already negotiated a £600 overdraft.

She says: 'I bet 90% of account holders are in a similar state to me - paying for perks they'll never need.'

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