Consumer advice as Tesco Bank makes shock move to shut current accounts

EDINBURGH-based Tesco Bank is to close all of its personal and business current accounts at the end of November after it found that the vast majority of its customers were not using it for their main account.

Customers will soon receive a message asking them to withdraw all their money from the accounts before November 30, and change any standing orders or direct debits.

Tesco Bank customers were advised by consumer groups to switch accounts.

The banking arm of the retailer launched its current account in 2014, at the time offering 3% interest on balances and Clubcard points on spending in a bid to win customers.

But the bank, which has more than 5 million customers holding savings, loans and insurance as well as everyday accounts, closed the current account to new business in December 2019.

Around 213,000 accounts are currently open with the bank; however, it estimates that fewer than one in eight of these are being used by customers as their primary account.

Most of the accounts either see “limited activity”, Tesco Bank said, or are being used as customers’ savings pots.

The move will allow the bank to focus on other products and services that “meet the needs of Tesco shoppers”, it said.

It provides more than five million customers with banking and insurance products and will continue to offer credit cards and loans, among other things.

“The way customers shop and manage their money is constantly evolving and we are committed to developing products and services which align with the needs of Tesco shoppers,” said Tesco Bank chief executive Gerry Mallon.

HeraldScotland:

“With so few of our current account customers using it as their primary account, we want to support them to find a suitable alternative dependent on their circumstances.

“We will pay particular attention to supporting any vulnerable customers and those in need of financial assistance.

“Customers who have been using our current account as a savings pot may be better suited to one of our tailored savings products. And shoppers who are looking for a payment option which allows them to continue collecting Clubcard points in and out of Tesco may want to consider Tesco Clubcard Pay or a Tesco Bank credit card.”

Gareth Shaw, head of money at the consumer organisation Which?, said: “Tesco Bank customers can easily and safely move to a new bank using the Current Account Switching Service. It should take just seven days to switch and your money, standing orders and direct debits will be transferred across automatically.

“When choosing a new current account, consider whether it comes with extra benefits, such as packaged insurance, and what charges you’ll face if you plan on using an overdraft. If you need to use a branch to do your banking, take into account if there is a local one nearby.”

The bank is writing to its current account customers, who will receive a letter within the next two weeks, informing them of the closure of their account on 30 November.

The affected customers will need to move their account to a different provider, or move their balance to a Tesco Bank savings account or different banking product by the end of November.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992