Bank of Scotland raises charges 20% - and cuts benefits

BANK of Scotland customers face a 20 per cent hike in fees for a current account from which several benefits are being removed.

The bank is writing to customers informing them that the monthly fee on the Ultimate Reward Current Account will jump from 12.50 to 15 from 1 September. The 20 per cent rise means account holders will be paying 180 a year in fees, an increase of 30 a year. It is also slashing the benefits on the packaged account, despite the price rise. Travel accident cover and purchase protection cover are among the benefits being cut. Home emergency cover, AA breakdown cover and the fee-free 300 overdraft are retained.

The bank, owned by taxpayer-backed Lloyds Banking Group, said customers who pay 1,000 into their account each month will still get the monthly 5 reward, so their monthly fee will effectively rise to 10. However, its normal fee-free reward account also pays 5 a month if at least 1,000 is paid in.

A spokesman for Bank of Scotland said: "This is the first increase in price for over three years. By increasing the monthly fee by 2.50, we are able to continue providing a great value package of benefits.

"Our research shows clearly that customers value the travel insurance benefits and the AA roadside assistance the most but have little interest in travel accident cover and purchase protection so in order to respond to customer needs we have removed these benefits."

Other packaged products include the 10-a-month Santander reward account and the First Direct 1st account, which also charges 10 unless 1,500 is paid in each month or maintained as an average balance.

David Black, head of banking at Defaqto, said: "The average monthly fee for a packaged current is currently 15.05 and the actual monthly charges for them range from 5 to 40. The three most common high-value incentives on offer by packaged accounts are travel insurance, motor breakdown assistance and mobile phone insurance."