The bank has also launched a prepaid debit card called Tesco Clubcard Pay.
Tesco Bank current accounts to close
All existing current accounts for personal Tesco Bank customers will close on 30 November 2021. These accounts have already been shut for new customers since 2019, not long after the interest rates were cut from a decent 3%.
There are around 213,000 of the accounts still open, though it’s estimated that only 12% are actually used as a main bank account – that’s around 26,000. Not many. Even so, it’s worth knowing what your options are if you do hold a Tesco Bank current account, even if it’s just sitting there dormant.
This follows a similar move by Marks & Spencer Bank earlier this year.
What will happen to your account
Though the account will work as normal until that date, you won’t be able to deposit or withdraw money from Tesco stores after 15 October 2021.
Then from 30 November 2021 your account will close and you won’t be able to use it at all.
So before this date you need to make sure you withdraw any cash sitting in the account, and move regular payments elsewhere.
If you are overdrawn you need to bring the balance up to zero. If that’s not something you think you can do (here are some options to help) then you can contact Tesco about a repayment plan.
Probably the best action you can take is to switch to another bank. The most cash-effective option is one with a switching bonus. These come and go, but you can currently get free cash from Halifax and a voucher from Virgin Money – you can see the best deals right now here.
However, if Tesco Bank is your main account you might want to instead switch to an account that is better suited to your needs, such as one which has a branch near you.
Using the Current Account Switching Service means the transfer of your money and payments in and out will be done in seven working days (you can set a later date if you wish) and protected by a guarantee in case something goes wrong.
Of course you can just open up a separate account and move things over yourself, or see if the bank accepts a partial switch. This would give you the best of both worlds – a new bank account for everyday banking and a dad account for you to switch for a bonus.
I’m not surprised to see these accounts close. It’s been more than 18 months since a new customer could get one, so Tesco has just been serving a smaller and smaller group of existing customers. It can’t be making them much (if any) money.
I actually ditched my three Tesco Bank accounts back in the summer of 2019 when the interest rate dropped but used each of them to switch to another bank for a nice little bonus.
I imagine a lot of you did the same, but maybe didn’t close the old account down. Well you’ve now got four months to switch the account(s) and get a freebie in return. That’s quite a while too, so if you can’t take advantage of the offers available now, you can wait to see what switching bonuses come along.
What is Tesco Clubcard Pay
Tesco has recently launched an alternative debit card and account known as Tesco Clubcard Pay. It’s not a current account and you can’t have things like standing orders.
It’s really just a prepaid card that has a few extra features. The main one is that you’ll earn extra Clubcard points. For the first 100 days you’ll get double points on most Tesco purchases, including fuel (though not Esso petrol stations). After this it drops back to the standard one point per pound spent.
Elsewhere you’ll get a Clubcard point for every £8 spent. With a Clubcard point worth 1p, using this card to pay will earn you the equivalent of 0.125% cashback. That’s half of what you can get elsewhere with a non-American Express credit card, and an eighth of the top Amex Nectar card which will earn 1%.
At the moment the card is still in a testing phase, so it’s limited how many applicants will be accepted. But I’d personally stay well clear right now unless you want to earn cashback but your credit report is stopping you from getting a better cashback credit card (there’s no credit check or this account).
A full launch is expected in the Autumn, so I’ll take a more detailed look then at any changes and tell you more.