Earn 7% If You're Over 50

A new current account has launched, aimed at the over fifties which promises to pay a whopping fixed rate of 7% AER. But is it as good as it sounds?

One thing that's bound to get my attention is the launch of an account paying a market leading rate. After all, we work hard for our money, so the least we can do is put it in an account so it can do the same for us!

So, unsurprisingly, the new Alliance & Leicester (A&L) Premier 50 current account piqued my interest. It's offering a headline rate of 7%AER (fixed until 30.1.09) to anyone aged over fifty, on balances up to £2,500. What's more, it also offers a 0% EAR overdraft facility for the first 12 months. And if you're thinking that this sounds pretty similar to its Premier Direct account (paying 6.5%AER), it is and it isn't.

On the plus side, unlike the Premier Direct account you don't need to pay in a set monthly income (the PD account requires at least £500 to be paid in each month). The Premier 50 also offers a number of benefits, including worldwide travel insurance (up until age 79) and health benefits, including access to up to two private out-patient consultations and up to £750 towards out-patient diagnostic testing per year as well as access to 24/7 Health at Hand helpline.

Interestingly, account holders can also use the Post Office, in addition to A&L branches, the phone and internet to carry out transactions on their accounts, which could save a trip or two for many into town.

Sounds pretty good doesn't it? So what's the catch? Well, as you've probably guessed this doesn't all come for free; indeed the Premier 50 account, unlike the Premier Direct is a so-called packaged account, meaning that it's not free - you'll need to pay £10 per month to take one out.

So is it a good deal?

Well, regular readers will know my usual opinion of packaged accounts -- why pay for banking when you can still get it for free? Although banks will argue that their benefits package far outweighs the cost, many people don't use all of the extras, or with a  bit of effort could find that they can get similar cover for far less than £120 per year.

However, while this can be the case for young, relatively healthy adults, things can change dramatically once we start to get older -- and insurers know this. Indeed, most older travellers (in particular those with pre-existing conditions) can find the cost of travel insurance  rises significantly with age, and can certainly be far more expensive than £120 per year.

Another issue that I've found with packaged accounts offering annual travel insurance policies is that they often only insure joint account holders if they're travelling together -- should you need to take a trip alone you'd find you'd have to take out alternative cover. I gave Alliance & Leicester a quick call to ask about this and found that it isn't the case here: joint account holders are still covered if travelling separately. In addition, the insurance will cover a number of pre-existing conditions, but you'd need to have this determined on an individual basis.

Indeed, I grudgingly have to admit that, for a packaged account this isn't a bad one. Joint account holders in particular could get pretty good value -- especially as each holder would be entitled to the two private out-patient medical consultations. What's more, if you know someone with an Alliance & Leicester bank account already, by making use of the "Recommend a Friend" promotion you could both get a free £40.

If you're over fifty and keen to switch current account, I would therefore say to obviously check out the free accounts first. If you're receiving an income of more than £500 a month and are in pretty good health, the A&L Premier Direct account offers a great rate with no monthly charge.

However, it could be well worth also checking out the A&L Premier 50 account. It's hard to make a sweeping generalisation as we all have different needs (and health issues) but if you're a keen traveller (and have found travel insurance policies expensive in the past), would use the health benefits, and tend to keep a high balance in your current account, it could be a good account for you.

Give them a call, tell them your situation and get them to do the hard work and check how useful it could be for you - and most importantly work out whether you would be saving money by paying the £120 per year (if necessary, call for some insurance quotes to see just how much an annual policy would cost). Indeed, as this is the only current account aimed specifically at the over-fifties, we may just find it's the first of many to come.

More: Switch And Save!