Today’s economic climate has become more competitive than ever. Especially with the state of the economy in constant flux, it’s more important than ever for people to pay attention to their finances. More and more businesses are seeking additional ways to increase their sales and widen their customer base. The banking sector is no exception to this growing trend and as such has tried to capitalize and make additional money through the accounts of their consumers. Banks have expanded over recent years into many different types of insurances, including packaged bank accounts.
Types of Packaged Bank Accounts
These types of packaged bank accounts are beneficial to consumers because they provide a number of features that help protect an individual in a time of need. In exchange for a monthly fee to the bank, subscribers are given:
- Mobile phone insurance
- Travel insurance
- Medical coverage
- Auto breakdown coverage
A standard bank account allows customers to conduct incoming and outgoing financial transactions through their own personal account. Packaged accounts have monthly charges, which generally are around £25 per month. Once the customer is fully aware of the costs and the benefits therein, it no doubt becomes a good deal for the customer.
The Upside To Packaged Bank Accounts
Although there is a lot of negative information about packaged bank accounts in the press these days, these accounts also can be very beneficial to individuals who are in a particular situation. Packaged accounts can be a good option for many people, saving them time and money. They can work well as long as people know what the benefits are, whether they can use them, and what they have to pay for them.
In January 2010, the financial services regulator estimated that there were 10 million packaged bank accounts open in the UK. This means that approximately one in five adults has an account. Packaged bank accounts can be sold as a new account or they can be sold to existing customers as an upgrade from a free account or from a different type of packaged bank account.
Packaged bank accounts can be good value even if someone doesn’t need or can’t use all the features. But that doesn’t mean they’re right for everyone. As such, it’s really critical that you do a thorough analysis on the packaged bank accounts before sign up so that you can make sure you’re making a smart choice. The features of packaged bank accounts fall into two categories: insurance policies and non-insurance benefits.
Troubles With Accounts
Like anything else, nothing is perfect and packaged bank accounts definitely come along with their share of issues. The biggest problem that many people have is that they are actually unaware that they have a packaged bank account. One of the main issues with these types of accounts is that these accounts consistently are hidden or tacked onto other plans by banks. Others say they knew they had the benefits, but did not realize that they were paying for them.
Another issue with packaged bank accounts is that even if you have an account you can be denied coverage. There are many who try to claim under an insurance policy included in their account, and find that they aren’t covered, perhaps because of an age limit or exclusion for a “pre-existing” medical condition. In this instance, in particular, it’s a complete waste to sign up for these accounts unless all the services you need are available. In short, you really just need to do your homework before signing up for any type of account!
Packaged Account Features
Lots of banks offer packaged accounts, which include extra perks in return for a monthly or annual fee from the cardholder. These accounts are increasingly becoming more popular in the UK as people are looking for efficient, inexpensive ways to be covered. Charges vary between £2 and £25 a month, depending on the level of service that is decided upon. There are a good number of benefits for packaged accounts as well, with the most common extras including:
- Family travel insurance
- Rescue assistance
- Mobile phone coverage
- Medical coverage
Usually, providers offer the service at a lower cost than you would be charged if you bought it yourself. However, if you were to benefit from travel insurance, for example, the level of coverage is likely to be at the most basic level. If you want a more tailored product, you’re probably best off buying cover yourself.
Key Benefits Of Packaged Accounts
Packaged accounts often come with enhanced features such as a fee-free overdraft buffer or in-credit interest. Some providers will throw in access to preferential rates on savings accounts, mortgages and loans, too.
It really pays to enroll in packaged accounts if you are a frequent traveler and the benefits can also come in handy even in the retail realm. Banks sometimes include free airport lounge deals, access to your credit report through one of the three major credit agencies, or even extended warranties on purchases made using your debit card.
While as part of the packaged accounts membership gives you access to a number of different perks, you are indirectly paying for these perks as part of the monthly fee. Remember, even though perks are branded as ‘free’, they’re not. You should make sure you’re getting the best value for your money and price out how much it would cost out of pocket for the perks and amenities if you were not part of the monthly fee.
Will It Work For You?
Just as in life, not everyone or everything is created equal. What works for one person might not necessarily work for someone else. In the instance of packaged accounts, the type of account that’s right for you will depend on your individual needs. Before you even sign the contract, you need to evaluate what you’re hoping to get out of the membership. The answer will really depend on the value of the added extras. But before you even start to look at any accounts it is a good idea to sit down and work out your priorities, this even should include what you are able to afford on a monthly basis.
Since the faster-switching rules came into force in September 2013, banks have been boosting their current account offerings to tempt new customers. This means there are now a whole host of deals, offering anything from free cash for signing up to 5% interest on positive balances. In many cases, these free accounts may pay out more than perks on a packaged account are worth, especially after taking into consideration the monthly or annual fee.
Packaged Bank Accounts Compensation
The main reason why people would think about opening a packaged bank account is primarily due to the fact that they come complete with attractive benefits which provide protection and security; the majority of these benefits are positive and helpful to those who enroll in the accounts. Benefits of packaged bank accounts include:
- Mobile phone insurance
- Gadget and breakdown coverage
- Overdraft extension when a crisis arises
Although there are many benefits to packaged bank accounts, there are still quite a few issues with these types of accounts which is causing thousands of people to try to receive compensation. Insurance products for packaged bank accounts are typically pitched to customers via banks that promote packaged accounts in which clients pay a monthly sum to receive a range of insurance cover along with their bank accounts. The biggest issue here is that many people who enroll in packaged bank accounts do not necessarily need all of the services rendered and in some instances are paying for service that may never come to fruition.
Rise In Compensation Claims
The payouts for those who have been troubled with packaged bank accounts has been quite good so it really pays to try for compensation if you feel like you were sold this account unlawfully. Compensation has amounted to thousands of pounds per claimant, following warnings that many consumers have been paying for perks they would never be able to use.
An estimated 11 million people pay as much as £300 a year for current accounts that come with added benefits, which typically include a raft of car, home, travel and other insurance policies.
Concern has grown that as many as one in five of these customers may have been mis-sold the account. People are starting to catch on as well and this is having a drastic effect on the number of claims that are pouring in. The Ombudsman, which settles claims disputes between banks and customers, saw an 80% rise in complaints registered between April and June. The overall figure of 736 complaints for the period compares with 1,629 logged in the whole of the previous financial year.
Blame It On The Banks
Major financial institutions are almost entirely to blame for the mis-selling of packaged bank accounts and therefore the responsibility should be laid squarely at their door. Many customers have now chosen to place their faith in legal professionals in order to receive as much money back in compensation possible. While you can go through the process on your own and get money likely get a good payday, using a legal professional will help your payday increase significantly. Law professionals are some of the best experts when it comes to getting you what you need. There are a number of leading authorities when it comes to handling difficult and problematic disputes relating to packaged bank account mis-selling. If you are looking to successfully obtain redress and seek satisfactory compensation then you shouldn’t hesitate to reach out to a legal professional and some good compensation will follow!
Packaged Bank Accounts Reclaim
The emergence of packaged bank accounts has really started to become a huge money maker for banks, but these accounts are racked with unnecessary fees that are generating an increasing number of complaints from customers. One of the biggest reasons why these packaged bank accounts are starting to get on the nerves of customers is because of the monthly fees that are charged for some unnecessary benefits such as:
- Travel Insurance
- Mobile Phone
- Credit Card Protection
While some of these benefits may be necessary for certain individuals, the chances that a person requires all of the services is highly unlikely which makes the fees that are charged even more absurd and unjust. Luckily there are ways in which packaged bank accounts can be reclaimed.
Reclaiming Your Accounts
There are many ways in which people are able to reclaim packaged bank accounts. One such way to reclaim your money is through going through a legal service, but you can also work on getting the money back on your own. According to The Guardian, as of late the number of complaints to the Financial Ombudsman Service about packaged accounts is running at up to 400 a week. The increasing number of complaints about packaged bank accounts is becoming a consistent issue that is worrying for consumers because it means that banks are knowingly taking advantage of consumers. However, the number of complaints should also be viewed as a good thing since it means that people are finally standing up for their rights.
Top Reasons For Reclaims
There are a number of different reasons why an individual would want to reclaim their packaged bank accounts, but a big reason for many has to do with being sold a product that they did not really need in the first place. Many of the complaining customers have stated that they did want a premium account, but were forced into purchasing one by their bank. Others also have stated that the accounts do not even work as they should. Some people have tried to pursue a claim on the insurance, but were told that they were ineligible to do so. So basically, people are paying monthly fees for packaged bank accounts but are unable to even use them when the time arises. This is simply not right on any level and definitely qualifies as a major reason to retrieve a refund.
The volume of dissatisfied customers has prompted the ombudsman to create a new complaint category just for packaged accounts, so that the number of complaints does not impact on the rest of the complaint handling in banking and credit. As such, it goes to show that the UK’s financial services department is aware that the number of claims is certainly an issue. As such, in order to avoid dealing with the hassle of a claim in the first place, it is recommended that customers carefully study the fine print before deciding to go with the bundle of benefits provided by your bank. Be careful because there’s no guarantee that the goal posts won’t be moved after the agreement has been signed.