Free travel insurance and breakdown with your current account
We look at a free account and a packaged account that offer benefits.
Today I'm looking at two accounts with benefits, one of which is free, the other comes at a fair price, and both have just recently improved their benefits.
Breakdown, travel and mobile-phone insurance for a monthly fee
The Co-operative's slogan is “Good for everyone”. Co-op Bank's Privilege Premier Current Account certainly does have something for everyone, but the important thing with packaged accounts is to ensure you're not paying for everyone else's extras, and rather for the type and level of benefits that you could use.
With this Co-op bank account, you get European RAC breakdown cover for both account holders if it's a joint account, and for any vehicles you drive.
The travel insurance is comprehensive, being worldwide, annual, family travel insurance including golf, baggage, winter sports, personal possessions, ash clouds, and industrial action by airline staff. The mobile-phone insurance also appears to be premium, and it's for up to four handsets.
You get free legal advice on a variety of matters. Policies like that are often attached to home or other insurances, and don't cost much. Incidentally, your home insurance may also offer some basic mobile-phone cover.
The current account includes extra features on re-mortgaging, overdrafts, savings accounts and home insurance. I call them features because I'm uncertain whether they deserve to be called benefits. Overall, I value them far lower than any of the other benefits, and presumably lower than Co-op Bank does, because they all tie you into the bank to get more products. You're much more likely to be better off if you shop around.
You can also choose one extra benefit between these three: identity-theft insurance (which is so cheap you often get it free with other products, like credit cards), gadget cover and airport lounge benefits.
Overall, this is a good set of benefits, especially for those of you who travel a lot. My rough estimate is the benefits together are worth something between £500 and £700, which is reasonably close to the Co-operative Bank's estimate of £800+. We should give Co-op credit for this, because most banks, in my opinion, vastly overstate the worth of their packaged accounts, which is partly why I rarely recommend them.
To get this Co-op current account and its benefits you pay £13 a month, which is £156 per year. You lose maybe £15 to £100 in interest if you're normally in credit, which you might earn on a free, best-buy, interest-paying current account, so the total cost is around £200.
Co-op also offers a cheaper packaged account for £9pm (£108pa) which doesn't include breakdown cover. Don't forget – since it seems many do – to cancel your packaged account when your need for the benefits diminishes.
A free account with benefits
You might not need to pay for so many extravagant travel and breakdown benefits. You could eliminate some of them and buy budget versions if they're more appropriate for your needs, circumstances and resources.
Mobile-phone insurance, for example, is a luxury that should come way down the list for many people when compared to life insurance and income-protection insurance (not to be confused with the dreaded payment-protection insurance), or even to building an emergency savings pot.
Anyone up to the age of 73 looking for a cheaper option could start with Nationwide's free Flex Account. As of Wednesday 21st September, this now includes free European travel insurance for all account holders, including new customers, and even for many older travellers who might have to pay £150 or more for their insurance. If you're nearly 74, you should get a move on with switching, as you'll get a year's worth of cover for free, taking you almost to your 75th birthday.
Other benefits – a couple of which may be better classified as features – include:
- Nationwide's debit card is one of the cheapest and most convenient ways to pay your way when you're travelling, but compare it to other methods in The new cheapest way to get foreign currency.
- A personal loan costing as little as 6.3%. This is actually the best rate currently available, but you can get the same with Alliance & Leicester or, if you're not a Nationwide bank customer, you can still get the same loan for just 0.1 percentage point extra, at 6.4%, and M&S Money offers that too. Nationwide is one of the few banks to offer “soft quotes” as standard, which means it will tell you if you'll be accepted and at what interest rate without affecting your credit rating.
- Access to an exclusive savings account that pays 1.75% above the Bank of England base rate, so currently a total of 2.25% interest, on balances above £1,000 until the end of 2012. This interest rate is quite far beneath the best savings accounts.
- Money off Nationwide's home insurance and access to an exclusive mortgage, but you should expect to do better by shopping around for these products.
If these benefits and features suit you, the account could be worth the loss of interest you'd earn in other accounts, and it could easily be well-worth it for older travellers.
More: Santander reduces complaints by a third | Three top current accounts
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I do have a premier bank account. The selling point for me is the travel insurance. My husband is in his 70s, we both have pre-existing medical conditions which are covered by our insurance. The breakdown cover is with the RAC. With both these benefits alone our costs are covered as I receive staff discount on the monthly payment, despite being a pensioner. If it weren't for the discount I'd be thinking twice about the account, but for me it's an added perk for having worked for a bank for many years.
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In working for a Bank, as a benefit I get a low range packaged account which gives me a few benefits and they include travel insurance for my family and mobile phone insurance. I use the first a couple of times a year and the second is a 'nice to have' instead of a need to have. I looked at the excess on the policy just yesterday and it's £50, which is worth more than my non-smart brick like phone. Funny this, but to me a mobile phone is used for calling friends when I'm out and about and not for using a computer...I have a computer for that! I digress...my point is, that packaged accounts are for the benefit of the financial organisation and very few people use all facilities, so just go look at Which? for a Best Buy and get that instead. Choose what YOU need and not what they thing you can have, as it just makes their list longer and suggests bigger savings, however the major saving is that you are not going to use it, so the Bank doesn't have to pay out for it in the end from the fee you pay each month. My better half didn't even want to use the 'free' car recovery service part of the account, as it's not with a major player (a smaller company, whom it was felt was sub-contracted and would take too long to come out, should they be required!!) so we bought RAC cover instead with our Tesco Clubcard vouchers for a miniscule amount, compared to the advertised cost. I look at it this way, I buy what I need and I don't waste precious money on what I don't require. When I buy, I don't buy to last a few weeks/months etc... I buy for longevity, even if it may cost more for one brand than another, as I work on the mantra, 'buy cheap, pay twice'. I'm replacing a Neff dishwasher that's lasted 20 years and I'm not getting a cheap brand, but spending about 1.5 times as much to get a brand that will last another 20. That'll do me. When it comes to the nationwide account, I believe you have to pay in £1,000 minimum each month to get their 'free' stuff and the savings account has too many restrictions to be worth it. I just closed mine and because the withdrawal was the only one since I opened the account, I thought I'd get the full interest, but I didn't. They screwed me for that, by stating that when you close the account, you don't get interest for the last sum withdrawn. Rule of thumb folks, make the withdrawal and leave a penny there, then close the account the following month. I've learned my lesson and I'm taking all my business away from Nationwide, as I dislike their attitude now. They're become as bad as the rest, instead of being the previous beacon that they once were. So much for 'working for our customers as we have no shareholders'. Working for themselves more like.... OK......off my soapbox again. Have a good weekend one and all!
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Points to note: Nationwide........... you must deposit over 750 a month and maintain this level of input throughout the year. You must transfer S/O and D/D to your account from another bank using the NW transfer service. The ins does not cover skiing, weddings, hazardous sports you need to pay a supplement for this.
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08 October 2011