Packaged bank account or buying insurance separately

A packaged bank account is an ordinary current account with insurance and other benefits bolted on, in return for a monthly or annual fee. The benefits typically include travel insurance, car breakdown cover and mobile phone cover¹. The account itself works like any other: your salary goes in, your Direct Debits go out, and you keep the same sort code and account number if you later drop the benefits.

The question of whether it is worth it comes down to arithmetic and fit. The fee is charged whether or not you ever claim, and the cover attached to these accounts often carries conditions that a standalone policy would not: age limits, exclusions for pre-existing medical conditions, short maximum trip lengths, and gaps where winter sports, cruises and gadget cover are missing². If you use one benefit heavily and it fits, the fee can compare well with buying that cover alone. If you use none of it, you are paying for something you do not use.

There is also a complaints route. The Financial Ombudsman Service opened 136 packaged bank account complaints in the first quarter of 2026/27 and upheld 18% of them³. Complaints can succeed many years after an account was opened: one case reached the ombudsman 20 years after the account was first opened⁴.

What a packaged bank account includes

A packaged bank account comes with extra benefits, such as insurance and roadside assistance, but also charges fees⁷. The benefits vary by provider, but the common ones are travel insurance, car breakdown cover and mobile phone cover¹. Several packaged bank accounts include breakdown cover⁸. Some also add banking perks, such as reduced overdraft and loan rates⁹.

The insurance element is usually arranged by the bank with an insurer, and it is the bank that decides what is included and what changes. In one ombudsman case, the two main benefits on the account were travel insurance and roadside assistance¹⁰. In another, the upgraded account included travel insurance, mobile phone insurance and roadside assistance, as well as banking benefits like reduced overdraft and loan rates⁹.

It helps to think of the account as two products in one: a current account, which is regulated banking, and an insurance package, which is a general insurance product. The banking side is covered by the Financial Ombudsman Service, which looks at current accounts, savings accounts, direct debits, money transfers, electronic payment platforms, cheques and banker's drafts¹¹. The insurance side is also within the ombudsman's remit, but the rules that apply to how the policy is sold and explained are different.

One important detail: the disclosure rule that normally requires insurers to set out the significant exclusions of a policy does not apply to policies bought in connection with other goods or services provided as part of a packaged bank account¹². That makes it more important to read the policy documents yourself rather than assume the cover is comprehensive.

Monthly fees and how they have risen

Packaged accounts may charge a fee, or require a minimum monthly deposit to qualify for the benefits¹³. The fee is the price of the package, and it has been rising. NatWest increased the monthly fee on Reward Black from £31 to £36 and on Platinum from £20 to £22 in June 2024⁵. Nationwide raised the FlexPlus fee from £13 to £18 a month in December 2024, taking the annual cost from £156 to £216⁵.

Those are individual providers' own changes, and they show the direction of travel rather than a market average. What matters for a household budget is the annual figure. In one ombudsman case, the customer had been paying hundreds of pounds every year in packaged bank account fees⁹. That is the scale to weigh against the cost of buying the cover separately.

Fees are not the only cost. Some accounts require a minimum monthly deposit, which ties up money you might otherwise use elsewhere¹³. And a packaged account is not the only kind of account with a fee: some digital accounts charge up to £14.95 per month, though a free version also exists¹⁴.

Packaged account or separate policies: comparing the cost

The comparison is between one annual fee and the cost of the individual policies you would actually buy. On the separate side, the most expensive breakdown policies cost well over £100 a year¹⁵. Travel insurance prices vary with age, health and trip type, and a policy that covers a pre-existing condition will cost more than one that does not.

The packaged side is a single annual figure. Nationwide's FlexPlus fee rose to £18 a month, which is £216 a year⁵. NatWest's Reward Black rose to £36 a month, which is £432 a year⁵. Against those figures, a household that would otherwise buy breakdown cover at over £100 a year plus a travel policy plus mobile cover may find the package competitive; a household that would buy only one of those, or none, may not.

There is a third option that is often overlooked: self-insurance, which means setting money aside to cover a loss yourself rather than buying a policy¹⁵. That suits some risks and not others, and it is not a substitute for cover you are required to have or cover for losses you could not absorb.

Checking you can claim on the cover

The cover is only worth the fee if it pays out when you need it. Packaged account travel policies often come with strict rules such as age limits, exclusions for pre-existing medical conditions or short maximum trip lengths, and winter sports, cruises and gadget cover are often missing². Before relying on the policy, read the eligibility conditions and the exclusions.

Pre-existing medical conditions are the most common trap. Insurers usually will not cover pre-existing medical conditions unless they have been declared and added to the policy¹⁶. In most policies, conditions you had before insuring the trip are not covered unless they have been declared¹⁷. That includes changes that may not feel like a new condition: travel insurers have been reported to require customers to declare weight loss injections¹⁷.

If your health changes after you take out the policy, tell the insurer. The Financial Ombudsman Service handles complaints about travel insurance, including where a change in health affects cover¹⁸. Where a customer can no longer get cover from a new insurer after a significant change in health, the ombudsman has said it might be fair for the current insurer to pay the difference in premium charged by the new insurer, up to the value of what a holiday cancellation claim would have been at the time of the change¹⁹.

Breakdown cover has its own conditions, including what counts as a fault and how claims affect any no-claims bonus on related motor policies²⁰. Mobile phone cover typically excludes loss, theft without a report, and damage from misuse. The practical step is to read the policy summary and the full terms before you rely on the cover, and to check the excess you would pay on a claim.

What your bank must tell you before and during the account

Most banks sell packaged bank accounts on a non-advised basis, but they must still provide clear, fair and unambiguous information¹. That means the bank is not recommending the account to you; it is presenting it, and you decide.

The general rules on information are set out in the FCA's Banking: Conduct of Business rules. A firm must provide or make available appropriate information about a retail banking service in good time, in an appropriate medium, and in easily understandable language and in a clear and comprehensible form, so that the customer can make decisions on an informed basis²¹. The information should cover the firm, comparable services, the terms and conditions and any changes, interest rates, charges and any changes, when funds will be available, cancellation rights, how to complain, basic bank accounts where the customer meets the eligibility criteria, and the timescales for cheque clearing²¹.

Firms must also provide regular statements of account appropriate to the type of service²². For savings accounts, a summary box should be provided in good time before the customer is bound by the terms, unless it has already been provided²¹.

On packaged accounts specifically, banks are meant to send customers annual eligibility statements prompting them to check whether the policies still fit their needs¹. These statements are the moment to check whether your circumstances have changed: a new medical condition, a change in the people covered, or a trip that falls outside the policy terms.

If the insurance benefits change, the bank should tell you. From 1 December 2026 the insurance cover attached to Bank of Scotland packaged bank accounts changes, with a Guide to Changes explaining the new policy cover and terms²³. That is the kind of document to read carefully, because it sets out what you will and will not be covered for after the change.

Downgrading to a fee-free current account

You can move off a packaged account without closing your bank account. The benefits sit on top of the current account, so the bank can move you to its fee-free account and you keep the same sort code and account number. Your Direct Debits, standing orders and salary payments are unaffected.

The fee-free alternative is usually a standard current account or a basic bank account. Basic bank accounts are free to set up and use⁶. They usually have fewer features than a current account, but you can still pay in and take out money, set up Direct Debits and standing orders, and use a debit card²⁴. The main advantage is that you can have an account with no costs and no opportunity for fees to arise²⁵. A basic bank account has no fees²⁶.

Basic accounts are designed for people who may not be able to open a standard current account, for example because of a low credit score¹⁴. If you already hold a standard current account, the bank will usually check whether you are eligible for that first and is likely to offer it if you are²⁷. You might consider a fee-free basic bank account if you cannot get a current account, possibly because your credit rating is low or because you have not got a credit history²⁶.

Switching to a different bank altogether is also free. The Current Account Switch Service is free to use, and you can choose and agree your switch date with the new bank²⁸. If you would rather keep your existing account and move only some payments, a partial switch does that without closing the old account.

Mis-sold packaged accounts and how to complain

A packaged account can be mis-sold in several ways: the benefits were never explained, the customer was told they had to have it, or the account was upgraded without permission. In one case, a customer complained to his bank in December 2019 that staff had upgraded his account without his permission and sought a refund of 15 years of fees⁷. In another, the customer took out the account because someone at the bank said she would find the additional features useful, but no one explained what those features were⁴.

The complaints figures show this is a live issue. The Financial Ombudsman Service opened 136 packaged bank account complaints in the first quarter of 2026/27 and upheld 18% of them³. In the same quarter a year earlier it opened 122²⁹. For context, current account complaints overall ran to a much larger number, with fraud and scams accounting for 18,900 of those cases in 2025/26³⁰.

Complain to your bank first. If you are unhappy with the final response, or eight weeks pass without one, you can take the complaint to the Financial Ombudsman Service. It is free, and it can look at complaints from individual customers, or customers who share a financial product or service, such as a shared bank account or joint mortgage³¹. Which? also offers a free complaints tool for mis-sold packaged bank accounts¹.

The ombudsman can order a refund. In one case it decided a full refund was appropriate, with the bank told to reconstruct the credit card account as if the customer had not paid the £7,500, refunding any interest and charges, and adding interest to any credit balance refunded³². Complaints can succeed long after the event: one reached the ombudsman 20 years after the account was first opened⁴.

If you are worried about a payment or a scam connected to your account, contact Action Fraud to make a report and call your bank immediately so they can protect your account³³. The ombudsman has also dealt with cases involving transfers to unregulated brokers³⁴.

Free, impartial help is available from MoneyHelper and from debt advice charities if the fees have contributed to financial difficulty. If you are struggling with an overdraft or other borrowing, there are dedicated routes to help, including struggling to repay an overdraft and the wider debt guide.