Tesco Bank to close its current accounts: what does it mean for you?

Tesco Bank is closing all of its current accounts. So where does it leave its customers? We share some top tips on switching current accounts.

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Tesco Bank has decided to close all of its 213,000 current accounts. The financial services arm of the supermarket giant said that only 12% were used as a primary account, and that most were only used for savings purposes.

But if you hold a Tesco Bank current account, where does that leave you? We break down what Tesco is doing for its customers and share some tips about switching current accounts.


The end of Tesco Bank current accounts

Tesco Bank had already closed its current accounts to new business in December 2019, but this week it has gone one step further. As of 30 November 2021, personal current accounts with the bank will cease to exist.

It says this is mainly because most had ‘limited activity’.

However, the emergence of app-based digital challenger banks has dented Tesco Bank’s market share. It hasn’t gained the foothold in the financial services landscape that it was hoping for. So it’s unsurprising that Tesco Bank has decided to withdraw from the market.

Next steps

If you are a Tesco Bank current account holder, you should receive a letter informing you of the account closure in the next two weeks. Tesco Bank has said it will support customers to find “a suitable alternative depending on their circumstances”.

Options will include transferring your balance to a Tesco Bank savings account or switching to a new current account provider.

If you choose not to switch, you just need to make sure that any regular incoming or outgoing payments are moved to a different account by 30 November and that your account balance is at zero.


Switching current accounts

Thanks to the Current Account Switching Service, switching current accounts couldn’t be easier.

So if you decide you want to switch from your Tesco Bank current account, it’s a case of focusing on which new account to go for.

As with any financial product, comparing current accounts is a good start. Some things to think about include:

  • Switching incentives: See if there are any switching incentives available. Some current account providers offer you a lump sum of money for switching. Others may offer exclusive discounts or interest on your balance.
  • Overdrafts: Some current account providers offer an interest-free overdraft amount. Or you may just want to compare what the overdraft fees and charges are.
  • Account management: Consider how you want to manage your current account. If an app-based account that can be set up and managed purely through your phone appeals to you, then there are plenty to choose from. Alternatively, you may want to stick with something more traditional and go for a provider that still has a bank branch that you can visit.
  • Monthly fees: While not typical for most current accounts, there are some that charge a monthly fee. These accounts usually offer extra perks like travel insurance or cashback on certain transactions. It is always a worthwhile exercise just to calculate whether you can offset the cost of the fee with the benefits you will receive.
  • Access to deals: Another thing to consider is whether holding a current account with a certain bank means you can access more competitive deals. For example, if you hold a current account with HSBC, you could potentially have access to exclusive savings rates.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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