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Are premium current accounts worth it?

Paul Lewis / 16 May 2022

Current accounts are free, but many of us pay monthly fees for premium ones. But are they worth it?

Illustration of figures loading coins into a machine
Illustration © Neil Stevens

Why pay for something that is free? That is what I always ask whenever anyone says they are paying for a premium current account. With a free current account, our money is stored and safe. There is no charge for that and we can take our cash out free at 40,000 machines and 11,400 post offices. We can pay someone else or a small business almost instantly online. Even cheques have had a makeover and are quicker and easier than ever now that they can be paid in as digital images. We pay nothing for all these services. In most other countries, banks charge for them.

Banks in the UK would like to charge us but they cannot for two reasons. If one began to charge for all current accounts, most customers would simply move to another that did not charge, using the easy and free Current Account Switch Service – and perhaps get a £100 gift from the new bank. But if they all agreed to do it at the same time they would be breaking competition law and face, at best, massive fines. So they are stuck with free banking.

They try to get round this by offering premium current accounts with extra goodies and freebies – which of course you pay for. In exchange, you get a variety of ‘free’ insurance products for things such as mobile phones and other devices, travel cover, and car breakdown services. Other goodies that used to be included, such as cheaper overdrafts, have all but disappeared. But some still offer cashback or free tickets, which are seldom worth the monthly fee you will pay.

If you are tempted by a packaged account, ask yourself two questions: Do I need these insurance policies? And, if the answer is yes, could I get them more cheaply elsewhere?

‘The price for a packaged account is around £15 or £20 a month – or £180-£240 a year’

The first question is crucial. You only need mobile phone insurance if you have a mobile phone. Even if you do, what does the insurance cover? Dropping it in the bath? Spilling your tea over it? Leaving it behind in a café? Does it give you new for old, or just a refurbished model? Remember too that equipment such as laptops, cameras, mobile phones, tablets or watches may already be covered on your home insurance. Firms won’t stop you insuring things twice – but if something happens, you can only claim once!

Saga Home Insurance provides cover that goes beyond what you might expect. For more information and to get a quote click here.

If you do not have a car you do not need breakdown cover. Something I gently pointed to a friend who lived in London and did not need or have a car. At least one bank offers home insurance in its package. We all probably need that, but by going with insurance that comes packaged up, you cannot be sure it covers what you want – or whether it covers things you don’t need.

The price for a packaged account is around £15 or £20 a month – or £180-£240 a year. Banks always quote the monthly cost as it seems so much less. Some cost more, but you do not necessarily get more for the extra fee.

Travel insurance that comes as part of a paid-for account may be good value in two circumstances. If you have a family and you travel abroad a lot – twice a year or more – then the monthly fee for worldwide family travel insurance can be cheaper than buying it separately online. But make sure the insurance covers what you need, such as visiting the USA or going skiing.

In the past, some travel insurance with packaged accounts included people of any age, but now even the best stops at 79. It may be good value, but it may not be. A lot of insurance packages have been revised recently and you should always check if they cover coronavirus. Generally, especially if you are single or a couple and don’t travel much (for example, to Europe for just two weeks a year), you may well find that you can do better buying travel insurance separately. The monthly fee will keep coming out of your account until you cancel it. Over the past two years of Covid restrictions, I am sure a lot of people have been paying for insurance through their current account that they have never used.

Booked your holiday? Protect it from the moment you buy Saga's Travel Insurance.

Sometimes a premium account will change its conditions. Barclays Blue Rewards scheme, for example, gave customers who paid an extra £4 a month up to £7 a month cashback if they did certain transactions on their account and £5 per month if they had a mortgage. But in April, Barclays raised the fee from £4 a month to £5 and cut the cashback from £7 to just £5 and the mortgage reward to just £3. It is a useful lesson that all these packaged deals can be changed at any time. The bank must give you notice but it is up to you to read that and cancel if the account no longer suits you.

In the past there was widespread mis-selling of these accounts and thousands of customers are now claiming compensation.

So, if you pay for a packaged account or have done in the past, you should consider if it has been mis-sold to you. Did the bank fail to check if the insurance was suitable for you? Were you told you had to open one as a condition of a loan or mortgage? Were you upgraded to one without your consent or even knowledge? Were you offered a cheaper overdraft which you did not need? Or were you told you had to have one without the free accounts being pointed out to you? All these are reasons to claim compensation of hundreds or even thousands of pounds. You can claim it at or using the guide at

Never make the claim through a commercial company as it will charge you 30% or more of any compensation.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.