20 August 2012

M&S enter the already crowded Packaged Bank Account market

M&S are launching a new Premium Current Account. Costing £15 per month or £20 per month with travel insurance we look at the benefits on offer.

M&S are launching a new Premium Current Account. Costing £15 per month or £20 per month with travel insurance, the account is the latest of the so called packaged accounts which make up around 20% of the current account market.

As with all packaged accounts the account offers you a range of benefits which, if purchased individually would cost much more than the monthly charge. But how much these benefits are really worth depends on your circumstance and behaviour. The testing and measurement of this is starting to cause complaints and is an area the FSA are trying to tighten up with new regulations being introduced but these won't take effect until after 31st March 2013.

M&S say their worldwide multi-trip family travel insurance worth is £245. M&S are being a little coy with the detail on this insurance, apart from stating that it is "comprehensive” & their valuation was based on a 54 year old lead passenger. We phoned to check and found the policy does include Winter Sports cover and any number of children as long as they are your family. Running a quick quote through the MoneyMaxim travel insurance hub for multi-trip worldwide cover on a 54 year old couple with 4 children including winter sports and baggage cover gave results from £71.99. Rather less than the stated £245 value but as the true cost to you is £5 per month or £60.00 per year, it could be a good deal if you are likely to take more than one holiday, are into winter sports and are eligible. This is at least part of the package that you don't have to take, possibly with half an eye on the forthcoming FSA regulation changes in this area.

The M&S flyer (July 12) represents the value of the exclusive high rate Monthly Saver account as £96 this being the approximate gross interest if paying in the maximum £250 per month. Their website and my rough hand calculation estimate £90 gross interest is more realistic, however you can easily find easy access savings accounts paying 3% gross without the restrictions of the saver account so it would be difficult to justify the value of this as more than £45. If we compare like with like, Halifax offer 8% with their packaged account and 6% if you have an ordinary free current account. First Direct offer 8% with their free current account. So maybe we should say it's not a £96 benefit, it's really a £30 penalty.

The biggest benefit with the account is the hot drinks vouchers valued at £127 for 48 vouchers, so around £2.65 per voucher. If you are a regular visitor to the M&S Cafe, this could be a worthwhile benefit especially if you can spend them on friends and family but if you don't it is worthless.

£40 in M&S vouchers is fine, you obviously shop there anyway to be interested in their bank account so this simply reduces your bill, and the M&S reward vouchers give you a loyalty bonus of 1% of spend.

Harder to quantify are the four "Treats and delights” vouchers "worth” a total of £45.00. It's rather hard to value something when you don't know what it is and whether you want it in the first place, but they're nice people so it's bound to be something you were going to buy anyway. Isn't it?

We're not saying this account is wrong for you but as with all packaged accounts you do need to check whether the benefits are appropriate to you and you can't get the same or better elsewhere. If they are, great, go for it! If not, you may find yourself paying more than you expected for your £10 birthday present.