Premium bank accounts - are they worth it?
If you are thinking of opening a premium bank account, you may need to do the maths before deciding whether it’s worth it – are you likely to make good use of the benefits and ‘rewards’ that come with it?
If you are a high-earner – with an income of typically around £75,000 or more a year (depending on the bank) – you receive a bundle of discounts and other rewards for opening an account.
Premium bank accounts
On the face of it, there is little to lose in opening a premium bank account.
The Consumers’ Association’s Which? magazine describes premium bank accounts as occupying something of a middle ground between packaged bank accounts and private banking. Unlike these two, however, many premium bank accounts are offered free of any monthly fee or charge.
Packaged bank accounts have been widely criticised for failing to offer any real benefits – on travel insurance, for example – that are worth the monthly fee; private bank accounts, on the other hand, can be worth using.
So why does a bank offer a package of discounts and benefits for free – what’s in it for the bank? An article in the Financial Times on the 7th of September 2018, explains that the principal reason is the bank’s opportunity to cross-sell other lucrative financial products to customers in upper-income brackets – and who often have substantial investments or mortgage borrowing with the bank concerned.
What are the perks?
The range of perks offered by a premium bank account is limited only by the imagination and creativity of the bank itself – all sorts of benefits, discounts and rewards are offered by those banks offering premium accounts.
The perks range from the expected – such as special mortgage rates, access to enhanced rates on savings accounts, and travel insurance – to the example cited by the Financial Times in which premium bank account holders get free cups of coffee from a London chain.
Others offer everything from free cinema tickets to entry to a VIP lounge at London's O2 centre, or from free admission to Royal Academy exhibitions and English Heritage sites.
Banks also place emphasis on the personalised service you receive as a premium account holder. Depending on the bank – and, of course, your financial standing – this might mean access to a personalised banking team or even your own account manager, by appointment or by telephone.
Banking these days has become fairly anonymous and impersonal, so some people may welcome the opportunity to have their “own” dedicated team.
Premium bank accounts vary in the savings that may be made on loans and mortgages, but most offer slightly more competitive rates on both of these.
You might also be offered – a relatively small – interest-free overdraft facility.
Since your income has already qualified you for a premium account, it might also allow you to withdraw a more substantial sum of cash from a cash machine each day. Whereas the normal limit might be £250 or £300, for example, premium account holders may be allowed to withdraw up to £750 – lending greater convenience to such transactions.
Are they worth it?
If you have to pay no more in charges for the privilege of opening a premium bank account, it is difficult to see any downside. Whether it is worth it, of course, depends on the extent to which you actually use the discounts, rewards and other perks you may be offered.