Banks in big push as packaged accounts increase

The number of different packaged accounts available has overtaken the number of standard current accounts for the first time as providers continue their push to get people to pay for their banking.

There are currently 64 different packaged accounts on offer, nearly double the 33 that were available in June 2006, according to financial information group Defaqto.

At the same time, there has been a slight decrease in the number of standard current accounts, with these dropping from 64 to 61 during the past four years.

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Unlike standard current accounts, which are free to use as long as the holder does not go into the red, packaged accounts come with a monthly fee, but offer a range of services, such as free travel insurance and breakdown cover.

Banks have been increasingly trying to migrate their customers on to packaged accounts since the issue of unauthorised overdraft charges first arose and, despite winning the test case, they are still keen to encourage people to pay for their banking.

Defaqto said commission-free foreign currency and travellers' cheques were the most common perk offered by the accounts, with 91 per cent listing this as a benefit, followed by free travel insurance at 81 per cent.

Eight out of 10 of the accounts offer preferential rates on savings accounts, while 72 per cent come with free mobile phone insurance and 59 per cent provide breakdown assistance.

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But the fees charged on the accounts have soared by 42 per cent during the past four years, rising from an average of 10.51 in June 2006 to 14.29 now.

David Black, banking specialist at Defaqto, said: "Consumers now have the widest choice of current accounts to select from.

"We've seen a big increase in the number of packaged current accounts available with many banks now offering a range of different account options with the monthly fee charged being based on the level of benefits and incentives offered."