You are here: Home - Saving & Banking - News -

Tesco guarantees 3% on up to £3k till 2019 AND you can open two accounts

Written by: Paloma Kubiak
Tesco Bank has “gone against the grain” by announcing current account customers will receive a guaranteed 3% interest on balances up to £3,000 for two years, and you can open two accounts.

From 1 April 2017 until 1 April 2019, Tesco will pay 3% AER/2.96% gross variable credit interest on its current account for balances up to £3,000.

It confirmed this will apply to both new and existing customers and while the rate is variable, it will not drop below 3% AER during the two-year period.

While the guarantee is for its current account, Tesco confirmed there are no minimum direct debit, standing order or monthly pay in requirements. Plus, customers can open two current accounts, doubling the benefits.

Over the course of the year, customers with one Tesco current account could net £88, but Tesco has also upped its offering on Tesco clubcard points which it said could earn customers up to £316 over the next two years.

The Tesco Bank debit card doubles up as a clubcard so when used to spend in store at Tesco, customers will receive one clubcard point per £1 spent, rather than the usual one point per £4. For spends outside of Tesco, customers receive one point per £8.

The news comes just a day after Halifax announced it is set to scale back its current account switching offer (from £100 to £75) from March and following recent research which found that cash perks to tempt current account switchers are disappearing.

How good is this?

Andrew Hagger, independent personal finance expert at Moneycomms, said this positive move will be welcomed by customers seeking a decent return on their current account credit balances.

“It’s been a dismal few months, with many of the previous best buy in-credit and reward deals being slashed. Many customers were probably anticipating a similar rate reduction from Tesco Bank but refreshingly it’s gone against the grain and given consumers some much needed reassurance and certainty.

“Credit interest at 3% guaranteed for two years with instant access is an attractive deal in a depressed savings market where you currently have to lock your cash away for a minimum of five years just to earn a best buy 2.05% rate.”

He added that official current account switching numbers have remained “sluggish” as consumers often don’t know whether it’s worth moving banks if rates are going to be cut within a short while of them moving. “This two year guarantee could be enough to sway a good number of those currently sitting on the fence,” he said.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
holiday lettings
Bored of buy-to-let? How the holiday let business could earn you money

Buy-to-let landlords have been hit with a range of tax measures, which taken together could seriously dent their profits. Could...