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