In days gone by, bank accounts in the UK tended to be both free and featureless. You'd get a next-to-nothing interest rate on any positive balances you had and you could expect high charges if you ever dared stray into the red.
The options on offer nowadays tend to be much more varied and flexible. Current account interest rates are now far more competitive with those of savings accounts, for example. And more and more of us are becoming accustomed to the idea that a bank account might be something worth paying for - in return for some very concrete benefits. The free banking service we've grown used to in Britain is actually quite rare from the global perspective. Nearly all other developed countries charge a monthly or quarterly fee for banking services. Many also charge for the use of cash machines.
Of course, banks have to earn back their operating expenses somehow. In Britain, a large part of that comes from the penalty fees you pay when you exceed your overdraft limit. Critics point out that this forces those at the lower end of the economic spectrum, those struggling with financial difficulties, to pay for the banking services enjoyed by the rest of us.
Penalty charges have become very contentious in Britain lately, so it's not clear whether they will continue to exist for much longer. Ultimately, we may see the penalty-fee based banking business model fall by the wayside and Britain move to the regular fee-paying system which is common in other countries. Some British banks have already been pioneering premium (or packaged) current accounts. So far eight million of us have signed up to them, paying on average fees of about ?10 per month. Typically they come with a range of ancillary benefits designed to sweeten the pill for those used to free banking. In some cases, the benefits are quite substantial and, if you find an account which is a good lifestyle fit for you, you may end up thinking that the arrangement is a bargain.
For example, some premium accounts offer free insurance of various sorts along with the basic banking service. This could be travel insurance, mobile phone insurance or vehicle break down cover. If you've ever lost a mobile phone, or these insurances services are something you would normally need, you could find that a premium account is well worth the investment.
As well as the insurance services, premium current account benefits sometimes include discounts at restaurants and retail establishments, cheaper overdrafts, free currency exchange, the services of a personal bank manager, as well as facilities for managing your current account online.
In cases where the extra benefits are things you would normally pay for, a premium current account may make compelling economic sense for you. You do need to shop around carefully however, reading all the fine print to make sure that the quality of the services provided matches your needs.
Interest in premium current accounts has continued to grow in Britain and we may ultimately see them become the norm here like elsewhere in the world.
