Research from a leading newspaper has discovered that consumers who pay for so-called ‘packaged
bank accounts’ are being offered savings rates well below the Bank of England base rate of 0.5 per
cent.
The Financial Times found that whilst banks often include ‘preferential savings rates’ as their
incentive to switch to a packaged bank account, the rates on offer can actually be extremely poor.
Many banks charge for packaged current accounts
Over recent years, banks have increasingly tried to encourage customers to switch to packaged bank
accounts which offer a range of benefits including insurance and preferential savings rates. The
newspaper highlights NatWest, Yorkshire Bank, the Co-Operative Bank and HSBC as banks who offer
and charge for such accounts.
However, the savings rates on offer frequently fall below the Bank of England base rate of 0.5 per
cent.
The FT highlights that HSBC Advance customers pay £12.95 a month for a packaged current account
deal with a ‘preferential rate’ of interest on savings of just 0.1 per cent as well as RBS who offers its
wealthier clients a private banking service that provides returns as low as 0.2 per cent.
Banks defended the low rates, pointing to the current record low Base rate and the high cost of
providing banking services.
However, the FT reports that ‘savers who do not pay for current accounts can access savings
rates of 3 per cent or more with providers such as Nationwide, Coventry Building Society, ING and
Santander.’
Packaged current accounts under investigation
The Financial Times reports that over 25 per cent of consumers are thought to have been sold
a ‘bundled’ current account which includes loan offers, travel insurance, discounts on other products
and preferential savings accounts. Fees on such accounts can range from £5 to over £20 per month.
However, these accounts are currently under investigation by the Financial Services Authority (FSA),
the City regulator. The newspaper reports that ‘the FSA has suggested that customers are often
better off purchasing services offered within these accounts separately, or not at all.’
