Tesco Bank will close all customers’ current accounts on 30 November 2021, meaning around 213,000 people will be forced to find a new bank account.
The provider closed its current accounts to new customers back in December 2019, but this move will close the accounts of all existing current account customers. It will continue to offer savings accounts, credit cards and Clubcard Pay services.
Tesco Bank is in the process of writing to all affected customers with details on what they should do next.
Here, Which? explains what will happen to those with Tesco Bank current accounts and how to go about finding a new home for your money.
What will happen to my Tesco Bank account?
In the short term, your Tesco Bank current account can be used as usual as it won’t be closed until 30 November 2021.
However, by this date you must make sure your account balance is at £0 – if you have an overdraft, you’ll either have to pay it off or find another current account you can switch it to.
You must also have moved any regular incoming or outgoing payments, such as direct debits and standing orders, to an alternative current account.
It’s also worth noting that customer service desks in Tesco stores will stop offering cash deposits and withdrawals from 15 October 2021. If this is how you like to manage your current account, you should make sure you switch elsewhere before this date.
What options do current account holders have?
If you have a Tesco Bank current account, there are a few things you can do:
Switch to a new current account
If you use the Current Account Switch Service (CASS), you can move over to your new current account in seven working days.
You can see which banks participate with CASS on its website – the majority of banks are signed up.
Once you’ve applied for your new account, you’ll need to tell your new bank that you want to switch using the CASS (you’ll usually have to fill out a form to do this) and let them know what date you want to switch by.
Your new bank or building society is then responsible for moving your incoming and outgoing payments along with your bank balance over to your new account.
If you’re in your overdraft, your new bank may consider taking it on.
- Find out more: how to switch your bank account
Move to a Tesco Bank savings account
If you want Tesco Bank to remain as your provider, you could move your balance to one of its savings accounts.
It has several instant-access and fixed-term options to choose from, but none of them offer market-leading rates.
The instant-access accounts will allow you to make as many deposits and withdrawals as you like, but you can’t make payments or set up direct debits, so you’ll still need some kind of current account replacement.
- Find out more: how to find the best savings account
If you don’t take any action, your current account will still be closed on 30 November 2021.
If you have money left in your account on 30 November, Tesco Bank says that it will post a cheque with your remaining balance to your home address.
If you’re overdrawn on the closing date, you will still have to pay off what you owe to bring your account balance to £0 – you won’t be able to use your account for anything else.
Doing nothing really isn’t the best option here, as it could cause you some problems. You won’t be able to make any debit or credit transactions after 30 November and any direct debits or standing orders you have registered to your Tesco Bank account simply won’t be paid after this date.
If these are set up for things such as bills, missing a payment could be marked on your credit history, which will negatively affect your credit score. If you switch to a new bank account first, this won’t be an issue.
- Find out more: credit reports – all you need to know
What if you can’t pay off your overdraft?
If you’re worried about paying off your overdraft by 30 November, Tesco Bank says you should get in touch as soon as possible to help arrange an affordable payment plan.
Alternatively, as mentioned above, you may be able to transfer your overdraft to a new bank.
Why is Tesco Bank closing its current accounts?
While around 213,000 people have an open Tesco Bank current account, it estimates that only one in eight of these accounts is used as a primary bank account.
This means that relatively few people use their Tesco Bank account to receive their salary or pay direct debits. Instead, most accounts are used to hold people’s savings, or just have very limited activity.
Tesco Bank says that by closing its current accounts, it can focus on products and services that meet the needs of Tesco shoppers.
That’s why it suggests that anyone who uses their Tesco Bank current account for their savings may be better suited to a Tesco Bank savings accounts, and those who mainly use the account to collect Clubcard points can use Tesco Clubcard Pay or a Tesco Bank credit card instead.
What to look for in a new current account
Of all financial products, a current account is usually the one you use the most frequently, so it’s important to make sure it suits you. If you’re not sure which one to go for, here are a few things to consider:
- Can I manage it in the way I want to? There’s a number of popular online and app-only banks with slick apps, but if you know you’ll want to visit a branch, then a more traditional high street brand is likely to be a better fit.
- What’s its customer service record like? If you encounter any problems with your account, it’s good to know how its existing customers rate it. Our guide to the best and worst banks reveals our analysis of how real customers rate dozens of banks and building societies.
- Does it have any special features? Lots of popular accounts offer more than just a place to hold your cash. High-interest current accounts pay an AER on your balance, cashback accounts give back a small percentage of your spending, while packaged bank accounts include extras such as travel insurance, car breakdown cover and mobile phone insurance.
- How much does it cost? Some current accounts come with a monthly fee – usually because they offer some kind of perk or extra service. If this is the case, tot up how much this would cost you over a year and whether the accounts offer enough of a benefit to warrant the expense.
- Will it protect me against fraud? Many banks have signed up to a voluntary code to protect customers against bank transfer (APP) scams, which can make it easier to claim your money back if you’re the victim of fraud.