Alliance & Leicester criticizes packaged current accounts

Although Britons are paying up to GBP200 a year in fees for packaged current accounts, new research from Alliance & Leicester has revealed that only two in five (37%) of account holders actually make use of the benefits they pay for.

The Alliance & Leicester current accounts research reveals that although six million people in the UK now hold these type of accounts, with fees averaging GBP130 a year, customers value standard current account benefits such as a good overdraft and credit interest rate over the add-on benefits such as breakdown cover or legal advice. Yet, according to the company, packaged accounts are often weakest in the areas where people expect them to be superior to standard bank accounts. For example most banks' packaged accounts pay as little as 0.1% credit interest and some can charge as much as 28% interest on an overdraft. The main reason respondents cited (38%) for having a packaged account was that their bank had suggested it to them - not because of the benefits on offer. One in ten (11%) think that by paying a premium they could get a better service, and despite these accounts having almost become the norm, 6% of people still choose them because they believe fee-paying accounts are a status symbol. Less than half (49%) of the packaged account holders surveyed said they think their account is good value, but many believe they are trapped in these accounts, with a third mistakenly believing they are tied-in because they have an overdraft. A further one in eight (13%) do not think there are any better deals available. Simon Ripton, current account manager at Alliance & Leicester, commented: It seems packaged accounts' popularity can be attributed to the 'emperor's new clothes' effect. There is a real danger that banking customers are encouraged to take out the latest packaged account offering whether or not it is right for them and whether or not the benefits offered as part of the account will be of any use to them. We urge packaged account customers to question whether the GBP130 most of them pay out each year is really worth it.