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It’s replaced by a “Spend & Save” account.

Pretty much every major high street bank has made big changes to it’s rewards in 2020, and now it’s the turn of TSB.

From December 2nd the interest rate will drop from 1.5% (on balances up to £1,500) to zero. ZERO. Following on from the NS&I cut which will take place in late November it’s a huge blow to savers.

Existing Classic Plus customers will be able to keep their accounts, but it’s now been closed to new applicants. It’s been replaced by a TSB Spend & Save account.

Here’s more on the new account, and what to do if you currently have a TSB Classic Plus.

TSB’s Spend and Save account

Right, let’s take a look at the replacement for the Classic Plus. The name gives away the intent – Spend and Save. To get the benefits you need to use it as your main account.

The spend aspect rewards you with £5 cashback each month – though only for the first six months. The save element brings in some of the auto-savings and top-up features we’ve seen at banks like Monzo and Starling.

Here’s more:

Features

Savings pots

Those with Monzo will be familiar with this idea. You essentially separate your money into sub-accounts and name them for different goals or expenses. So you could have one for holidays, one for Christmas, one for emergencies and so on.

If your main account balance gets too low (you set the level), money can automatically be moved out of the pots to avoid you going overdrawn or missing payments. You need to activate this “Auto Balancer” feature.

Save the Pennies

This roundup feature takes each debit card transaction and tops it up to the nearest pound. That extra doesn’t go to the merchant though. Instead it’s moved to one of your savings pots.

Introductory cashback

For the first six months you can earn £5 cashback a month, so a total of £30. However to get this you need to make 30 debit card payments a month.

You can get this offer when you open the account up, or if you switch an existing TSB account over – but NOT a Classic account.

Is it any good?

Frankly no. Though the budgeting features are good, you’re better off going to Monzo or Starling as you’ll get more features.

And the cashback is ridiculous. Asking someone to make 30 transaction a month right now – at a time when we’ve been asked once again to go out less – just isn’t practical. And since it’s not ongoing, it’s hardly worth opening a new account just for six months.

So all-in-all not an account you want to bother with.

What to do with your Classic Plus accounts

Your next move depends a little on why you’ve got the account. Is it, like me, just for savings? Or is it your main current account?

With both it makes sense to switch away. Here are a few options:

If it’s mainly for savings

It’s another frustration for savers this week. I’m particularly peeved as Becky and I have six Classic Plus accounts between us (back when you could have two personal accounts and two joint accounts each). So we, and many others will now be looking to move that cash.

You can wait until the rate drops in December and keep earning that 1.5% until that date. Do this and there’s the risk that other rates will fall and you’ll miss out.

If you haven’t had one already, the best account is the Nationwide FlexDirect offering 2% for one year on £1,500. It’s only for new customers, but one workaround is to open an additional joint account. And since it’s a current account you can move your money in and out, even though the rate is guaranteed for 12 months.

Alternatively, and if you’re able to fix, then it might make sense to open another a savings account now rather than in December. At the time of writing a one-year 1.3% fix was available with Tandem – but that could be gone any day!. And I’d say it’s unlikely you’ll see an account with a higher rate any time soon.

If you need easy access it might also make sense to move now to a new account, even though they come with variable rates as there’s the chance they could be pulled from the market. Virgin Money’s current account offers 2.02% on up to £1,000. However, there’s no guarantee the rate there or elsewhere won’t drop – just as we saw with NS&I.

Here’s my regularly updated guide to the best easy-access cash savings and regular savings accounts

If it’s mainly for banking

If savings aren’t an issue (or once you’ve moved them) then you’ve got quite a few options, and while there are bank switch bonuses available I’d say you should look to nab some of those while you can.

At the time of writing you can choose between £100 from Lloyds or RBS, £125 from HSBC, and possibly £50 from Metro. You could even get hold of more than one – perhaps even all four.

But when you’re thinking of which bank is best for you in the long run as your main account there are other things to think of.

In my latest podcast episode I’ve looked at the most ethical accounts, and Nationwide, Co-op, Starling and Monzo all come out well. The winner though is Triodos – but that does come with a £3 a month fee.

As mentioned above new Nationwide customers can earn interest for the first year, while Monzo and Starling are also great for budgeting.

I’ve listed all the different switching bonuses, rewards and features from high street banks here.

What to do if you have a Marks & Spencer Bank current or savings account.

In August, all existing current accounts at M&S Bank will close, and the linked monthly savings account will also shut. The accounts are already closed to new customers.

All 29 in-store branches will also close at the start of July, though the bank will carry on providing credit cards, loans, insurance and other savings accounts.

The retailer says it’s “evolving” to reflect the way customers use their bank, with the branch closures a reflection of the move to online banking.

So if you’re an M&S Bank customer, what do you need to do?

Your current account

If you do nothing, the account will be frozen in August and you’ll have to contact the bank in order to access any money left in there. So it’s important you either withdraw your money and close the account or switch your account. I favour the latter.

Switching your M&S Bank account

It’s really easy to to do this via the Current Account Switch Service (CASS), and comes with a guarantee that all payments in and out will be moved to your new account. Plus, if you switch you’ll also be able to nab a freebie from a different bank keen to get your business.

If you’re overdrawn there’s no guarantee a new bank will also offer you an overdraft, so it might be worth looking at options to clear that if it’s a worry.

Switching takes seven working days, so there’s no rush to move. You’ve got time to wait and see what switching offers come along, but there are some you can get if you want to switch right away.

HSBC Advance Account: Free £125

You’ll only be able to switch to this account for the bonus if you opened your M&S Bank account prior to 1st January 2018.

If you are eligible you’ll need to transfer over two direct debits or two standing orders. The latter are really easy to set up. You’ll get the payment within 20 days of the switch completing.

First Direct: Free £100

As with the HSBC switch, you’ll need to have opened the M&S account before 1st Jan 2018. You need to pay in £1,000 within three months, and the money will be paid within 28 days of this happening.

This is a good option if you want to keep the £250 0% overdraft buffer, and First Direct is the only other bank to offer it.

Virgin Money: Free wine & charity donation

This account from Virgin Money will give you 12 bottles of Virgin Wine and a £50 charity donation via Virgin Giving.

You need to transfer or set up two direct debits and put £1,000 into the linked easy-access saver and keep both active until you’ve got your free wine.

More on these and other bank rewards and offers in my ultimate bank account guide.

Closing your M&S Bank account

You can do this by contacting M&S Bank, though you’ll need to have a zero balance first. If you don’t do this it’ll automatically be closed in August.

You will still be able to see the balance online or via the app after this date – but to access any cash left in there you’ll need to contact the bank.

Statements

You won’t be able to access old statements once the account is closed, so it’s worth downloading these.

Your monthly saver

On hearing the news I’m sure a lot of customers will be frustrated about this linked regular saver closing – it will have been the reason for lots of people to open the account in the first place.

Though the most recently opened monthly savers were only paying 1%, many will still be part way through a year set at 2.75%.

The good news is you’ll get the interest for the full year, no matter how long left you have to save. The bank will assume you’ve paid in the maximum £250 a month and add interest accordingly.

If you want to get the best rate for your savings once you withdraw it from the monthly saver, or find a new regular saver, here’s my updated list of the top paying accounts.