Current account benefits 'a waste'
Customers who pay monthly fees on their current accounts to receive extra benefits may be wasting their money, a report has claimed.
Packaged accounts offer a range of services, such as worldwide travel insurance and breakdown cover, in exchange for fees ranging from £5 a month to £25 a month.
But consumer group Which? said many people with these accounts would be better off having a free current account and paying for the services they used separately.
Research carried out by the group found that only 12% of people with a packaged account took advantage of all of the benefits it offered, while 10% admitted they did not use any of them and 78% used only some of them.
Around a quarter of all current accounts are packaged accounts, and Which? said banks were trying to increase the number of customers with them as they face losing revenue from unauthorised overdraft charges.
It said banks spent 42% of their advertising budget for current accounts on promoting packaged accounts during 2008, up from 28% in 2007.
A fifth of people questioned by Which? also claimed they had been automatically upgraded to a packaged account by their bank without asking for it.
The group said that while some benefits, such as travel insurance and breakdown cover, could be worthwhile, many others, including mobile phone cover, identity theft protection and commission-free foreign currency, were often unnecessary or could be found cheaper by shopping around.
It said for the travel insurance to be cost effective, people generally needed to take at least two or three trips a year.
But it claimed many people would be able to make a claim on their home insurance if their mobile handset was stolen or lost, while the Banking Code stated that any money fraudulently taken from people's bank accounts must be refunded, as long as they took reasonable care.
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