Abbey ups packaged account stakes
Abbey has launched into the packaged current accounts market with two deals aimed at families and frequent travellers.
The bank has never before offered packaged – or fee-based - current accounts but now joins several of its competitors in offering tailored deals targeted at specific types of customers.
Its new travel reward bank account costs £15 a month (£180 a year) and includes worldwide multi-trip travel insurance worth £150, holiday discounts and hotel offers worth up to £500 and annual airport lounge access worth £137.
The family reward bank account also costs £15 a month and includes holiday discounts and family hotel/leisure offers, gadget insurance, mobile phone insurance and legal advice services. Abbey estimates its total benefits are worth £844.99.
Steve Shore, director of Abbey, says: "Added value accounts can be great value - but only when customers actually use the benefits. It's no use having a high headline amount if a customer only uses a fraction of that. Our accounts have been designed so that the benefits are relevant to the needs and lifestyles of our customers and they can maximise the value they get from their account."
Packaged accounts often come under criticism for offering generic benefits that customers may not need or may already have – for example, mobile phone insurance.
But Kevin Mountford, head of current accounts at moneysupermarket.com, says the two new accounts from Abbey appear to be well-targeted towards families and globe-trotters.
"Consumers with the time and inclination may well be able to source the individual elements cheaper elsewhere - for example Flexicover worldwide annual travel insurance for a family is £41:50 rather than the £150 value suggested by Abbey),” he adds. “However, for those that don't want to shop around both of Abbey's new policies look worth the £180 annual price tag - always providing you actually use a good number of the features."
The launch comes a few days into a legal challenge by Britain's biggest banks against a ruling that some experts say could spell the end of free banking.
Back in April the Office of Fair Trading was given the legal right to decide whether overdraft charges on current accounts are fair or not. The move should pave the way for lower unauthorised overdraft penalties and will enable thousands of people hit by unfair charges to get their money back.
However, there's a cloud to every silver lining and in this case its the fact that free banking is now at risk.
Read more in our article: Should we really challenge bank charges?
A current account that charges a monthly fee in return for a “package” of additional services, such as travel insurance, credit card protection, mobile phone insurance, identity theft insurance, car breakdown cover or a “concierge service” that will book airline and theatre tickets or restaurant tables. However, many consumer experts say the features are overpriced and that more competitive deals exist elsewhere in the market and that very few packaged account holders actually take advantage of the features.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.