From 2nd December 2020 the interest rate drops from 1.5% to 0%.
For a good few years, the TSB Classic Plus current account has been one of my top picks for your savings. Though the days of 5% are in the distant past, it still offered 1.5% on totals up to £1,500 – far better than most other options in 2020.
But a few months ago the account was closed to new customers, and now the interest rate for existing account holders has been axed completely.
This makes it a useless bank account. It’s probably one of if not the worst accounts to have when compared to the alternatives.
So what should you do? I’ll take you though my picks for your savings and for your banking.
Where to move your savings
If you had the full amount in your account, you’ll have £1,500 that no earns zero interest. But you could have more.
It was possible to have both a personal and joint Classic Plus, doubling your savings. And depending on when you opened your account you might have been eligible for two of each account. Between me and Becky, we’ve six accounts!
So here are a few options for you, no matter the size of the deposits. If you are eligible for all three you can put £7,500 in them per person.
If you’ve not had Nationwide’s FlexDirect current account you can get a 2% fix for 12 months on savings up to £1,500. Again, you can have a joint account in addition to a personal account. You don’t need to switch to get this rate, you can just open up a new account.
Virgin Money’s current account offers 2.02% on £1,000, though it is a variable rate and could change. Again, there’s no need to switch, though more in a moment on benefits if you do.
Beyond this you could look at the new Chip +1 account offering 1.25% on up to £5,000 – though you need a VIP code to access this. For new Chip customers, you can use BCLEVER21. Existing customers will need to refer a new customer. Here’s more in my review.
Click this link for my regularly updated list of the best savings accounts.
Where to move your banking
There’s hardly any point keeping the account once you’ve moved your savings out. And TSB’s replacement account – The Spend & Save – isn’t that special.
So it makes sense to switch. You’ve a few options here, and it depends largely on whether the Classic Plus is your main bank account or an extra one you used just for savings.
Keep reading or watch my recent round-up of the best UK bank accounts.
If it’s your main account
Let’s start with options if it’s your main account. I’d say there are a few important factors that take priority. Click the bold bank names below for my full reviews.
First, ease of use for online and app banking. I’d go with Monzo or Starling here, the top digital “challenger” banks. You don’t have branch access though, so bear that in mind.
Personally I’d rank how ethical the bank is just as high. Nationwide does very well here, though I have issues with the app. Alternatively consider Starling, Monzo or Co-op.
Beyond these options, I’d look at accounts offering regular rewards. Club Lloyds and Halifax Rewards are both decent for a freebie each month, while Santander 123 Lite will give cashback on your bills. The former two often offer switching bonuses (more on this is a second), so it might be best leaving these for later.
You can switch over from TSB to automatically move over your direct debits, standing orders and future payments into your account. More on how switching works here.
If it’s a spare account
Right, if you aren’t even using the Classic Plus from today then it’s perfect for switching. And then switching again. And again, until you’ve run out of switching offers.
At the time of writing there aren’t many options. Which makes it easier to choose a bank! Hopefully more offers will return in the new year, likely with cash incentives of £100 or more.
But for now, your choices are one of these two.
The biggest bonus is with Virgin Money. You can get £180 worth of wine (though I value it closer to £100). You’ll need to have two direct debits in your TSB before you switch, and when you open the Virgin account, you’ll need to put £1,000 in the linked saver (paying 0.5%). Once you’ve got the wine you can cancel the direct debits and move the wine. You’ll also get that 2.02% rate on £1,000 kept in the account, as mentioned above.
Your alternative for free cash is Metro. You’ll need to be referred by an existing customer, then once the account is open pay in £500 a month for two months and use your debit card 10 times in the same period. Do this and both you and your friend will get £50 each.
Whichever you go for you should be well placed to switch again for new offers in early February 2021.
For more on all these incentives and account benefits, don’t forget to check out my list of what all the different banks are currently offering.
If TSB is old are existing account holders likely to get a ‘windfall’ payment ?
Hi David, what do you mean by windfall via TSB?
Andy
Perhaps worth also switching to first direct
After 6 months they will give you a £100 leaving present for not staying with them I believe ?