Best things in small packages

Things are getting fiercely competitive in the current account market with high street banks dishing out all manner of offers to lure in custom.

Alliance and Leicester and HSBC are the latest big names to hike their headline in-credit interest rates to 8.5% and 8% respectively, and they’re only part of a wider trend. What’s more these accounts not only offer some fantastic rates but as packaged deals they make available some great bonuses, from worldwide travel insurance to car breakdown services.

All that glitters, however…and these accounts are sadly no exception, charging you a fair whack for the privilege. If you know exactly what’s on offer, though, and ensure you make the most of it, these packaged accounts can easily trump the traditional, 0.1% interest, current account. MoneyExpert.com looks at some of the best deals available.

For the 50+

Alliance and Leicester tops the pile in terms of the interest it offers on in-credit accounts, and its Premier 50 is certainly worth looking at, if of course you meet the age qualification. The AER of 8.5% is a market leader, paid on balances up to £2,500, and the perks include worldwide multi-trip travel insurance, and health benefits for those up to the age of 79.

Unlike other packaged accounts you won’t face a serious usage fee, and for the first 12 months there’s no interest on the overdraft up to a limit of £2,500. Once your 12 months is up you’ll pay 50p a day on agreed overdrafts. What’s worse is that at the end of April next year the in-credit interest rate will be slashed from its 8.5% high, so the sooner you get in there the better.

Open for all

Hot on the heels of Alliance and Leicester offering is the Bank Account Plus from HSBC, with an AER of 8%. The top rate, though, is only on offer for accounts up to £1,000, dropping sharply to 2.5% for anything up to £2,500. Beyond that it’s back to the same old 0.1% story.

As with most packaged accounts HSBC offer decent travel insurance, including winter sports cover, and 24/7 telephone banking, but their overdraft fees are considerably higher than with Alliance and Leicester accounts at 8% for the first 12 months, jumping to 16.1% after that.

A bigger package

If you’re looking for the kitchen sink then The Lloyds TSB Premier current account should be on your list. It offers a number of bonuses that it calculates as totalling a value of £942 a year. Those offers include AA breakdown cover, mobile phone insurance, home emergency cover, and UK airport lounge access.

The rate it offers isn’t sensational at 4.25% but is clearly way ahead of the feeble offers of many other high street banks. The only draw back is the £15 monthly usage fee, but if you make the most of all the perks then £180 you’ve paid by the end of the year will have been well worth it.

Something completely different

With many of the packaged accounts offering fairly staple bonuses of travel insurance and identity protection First Direct has come up with a different approach. With its 1st account it’s offering £100 when you switch, and then another £100 if you decide after six months that you don’t like it and want to switch again!

Sadly you get none of the interest rate perks available with the other packaged accounts, and you’ll have to ensure that a monthly payment of £1500 is made, but £100 for nothing is certainly an attractive offer.

What to do

Clearly there are some excellent packaged accounts available, but you need to make sure they’re suited to your needs. Clearly an account offering an AA breakdown service is useless for a non-driver. If you can use all the deals on offer, and have a decent sum in the account to make the most of the in-credit interest rate then some of the above are definitely worth considering.

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