Bank interest is ‘miserly’, says MoneyExpert

MoneyExpert research has revealed that banks are charging an average of £140 a year for packaged accounts as more people sign up for current accounts with monthly fees. In contrast, the average interest rate on the accounts is an average of 1.5 per cent and may even fall as low as 1 per cent.

There are 33 packaged accounts on the market, with the lowest monthly fees at £2 and the highest at £25. Packaged accounts make up one third of the current account market, and are offered by 14 of the 30 account providers. Only ten accounts pay credit interest above 1.5 per cent.

MoneyExpert suggests that fee free accounts can offer just as good a deal and suggests that consumers weigh up the decision carefully. Chief executive Sean Gardner commented: ‘It is easy to see the attraction for banks – they receive a monthly income from an account which otherwise might not make them any money in fees or charges. And for customers it can be a good idea. Clearly there wouldn’t be nearly 11 million of us with fee-paying accounts unless we thought we were getting something in return from the monthly fee.’

He added: ‘With monthly fees as much as £25 adding up to an annual fee of £300 customers have to make sure they use the special offers and deals. Anyone considering taking out a packaged account needs to think carefully about what the special deals are, how much they would cost to buy on their own, how often you would use them and whether that is worth the monthly fee.’