From Monday Nationwide will offer free European multi-trip travel insurance to its FlexAccount customers. It claims the insurance is worth up to £80 a year, so its current account customers are getting a great deal right?
Well, not really. As with most banks, the clamed value of the bundled insurance is vastly over-inflated. A quick play on a price comparison site shows similar cover can be had for around £35 (for a couple), or £20 if you’re single.
But, it’s free, so surely still a good deal?
Yes, if it wasn’t for the fact that Nationwide is hiking the FlexAccount’s charges. The account has a solid reputation for being amongst the cheapest when spending money overseas. Up until now purchases made overseas have been commission free in Europe (1% outside) with no additional charge when withdrawing money from a cash machine. From 1 November 2010 you’ll incur 2% commission when spending overseas and pay £1 ever time you withdraw cash.
While still cheaper than some, it’s a kick in the teeth to those customers who specifically opened this account so they could spend cost effectively while abroad. The Halifax Clarity Credit Card now looks a much better option for overseas spending – just remember to pay off the bill to avoid paying interest.
Nationwide will also start charging £15 every time you spend while in unauthorised territory (paid items) although it has halved its fee for bounced payments to £15 and capped monthly overdraft fees at £95.
Reading between the lines this account has been too popular with customers who simply use it for overseas spending, meaning Nationwide hasn’t been making as much as it’d like from overdraft fees etc. Nevertheless, inflating the perceived value of the free travel insurance as a smokescreen for introducing higher charges is pretty shabby.
However, it’s not alone when it comes to putting silly notional price tags on the benefits included with a current account – most banks do it.
When reviewing the Lloyds TSB Premier Current Account I valued the true worth of the ‘£1,156 included annual extras’ at just £464. And the value of those that most of us might actually want or need at £184 – not such good value for an account that charges you £300 a year.
And there are plenty of similar examples. So always take the clamed value of any ‘benefits’ attached to a current account with a massive pinch of salt. A quick surf on the web usually reveals the true value of the insurances and other spurious benefits to be significantly less than claimed.