A&L warns over package accounts

Alliance & Leicester has warned consumers they may be wasting their money by taking out a packaged account.

New research shows that only 37 per cent of those with a packaged account actually make use of the account benefits they offer.

This is despite the fact that people pay up to £200 a year in fees for the extra services.

Overall, six million people in the UK have a packaged account at an average extra cost of £130 a year, suggesting that many might do better to stay with a normal account.

Even for those that take advantage of the account benefits, argues Alliance & Leicester, they are often not as strong as one might expect them to be in comparison to normal bank accounts. For example, some packaged accounts have an overdraft interest rate of as much as 28 per cent.

Banks themselves may be at fault for encouraging the trend. The main reason people surveyed said they had taken out a packaged account was because their bank had suggested it to them (38 per cent).

Simon Ripton, current account manager at Alliance & Leicester, warned: "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 £130 most of them pay out each year is really worth it."