Tesco Bank has reopened applications for its current account paying 3% on balances up to £3,000 and extra Clubcard points until April 2019.
In February, Tesco temporarily closed the account to new customers after it ‘experienced an unprecedented level of demand’ following the promise of a guaranteed interest rate for the next two years. The account is now open to new applicants once again, but the bank has added two new conditions to qualify for the credit interest.
New rules for new customers
New customers still earn a healthy 3% variable interest on up to £3,000, as well as a loyalty deal of one Clubcard point for every £1 spent on their Tesco debit card.
But this rate is only available if you meet specific requirements:
- Firstly, you’ll need to deposit £750 into your account every month.
- You must also have at least three direct debits paid out of the account per statement month (excluding payments to a Tesco Bank savings account).
Although the rate is variable, Tesco Bank has promised it will not drop below 3% AER during the guarantee period, provided you meet these conditions.
The Tesco debit card is also a Tesco Clubcard, which allows you to double up on loyalty points. You’ll collect normal Clubcard points – at a rate of 1 point for every £4 spent in Tesco and 1 point for every £8 spent outside of Tesco – in addition to 1 point per £1 spent in Tesco with your debit card until 1 April 2019.
The new conditions only apply to new applicants. Nothing has changed for existing customers who still benefit from the current account guarantee.
How does Tesco Bank compare to other high interest bank accounts?
Paying in £750 per month is at the lower end compared to most of the other current accounts in our table below, for example, the Lloyds Club account requires you to pay in £1,500 every month.
Interest is limited to balances of £3,000 with Tesco – the Santander 123 account pays 1.5% on an impressive £20,000, as well as cashback on household bills, so this will be more lucrative if you have a larger sum to put away.
|Current account provider||Interest rate||Switching incentives and other perks||Minimum monthly funding||Customer score|
|Nationwide FlexDirect||5% a||Recommend a friend and share £200||£1,000||75%|
|TSB Plus Account||3% b||5% cashback on first £100 of contactless spending||£500 c||71%|
|Tesco Bank Current Account||3% d||An extra 1 Clubcard point for every £1 spent on your Tesco debit card||£750||66%|
|Bank of Scotland Classic Vantage||3% e||£1,000||63%|
|Lloyds Bank Club||2% f||Choose free annual benefit (6 Vue or Cineworld tickets, mag subscription, or Gourmet Society membership)||£1,500 g||59%|
|Santander 123||1.5% h||Up to 3% cashback on household bills paid by direct debit, including Santander mortgage payments||£500||62%|