TSB to axe interest on Classic Plus current account
The TSB Classic Plus current account is only available to existing customers after it was closed to new applicants this morning.
It currently offers 1.5% AER but from 2 December 2020, it will axe credit interest altogether.
The move comes just months after TSB halved the interest rate on the account from 3% as of 2 May 2020, meaning customers could earn a maximum of £22.38 a year on a balance of £1,500.
And it’s a big fall from the previous 5% AER offering as a gesture of goodwill to customers in the wake of the bank’s major IT meltdown of 2018.
TSB couldn’t share how many customers will be affected, but added that across its product portfolio, it has 5.2 million customers.
Do you still need to pay in £500 a month?
In order for customers to be eligible for in-credit interest, they were required to meet certain criteria, including:
- Paying in £500 a month
- Registering for internet banking, paperless statements and correspondence
- Logging in regularly
However, as the interest will be completely removed, TSB confirmed that in order for customers to be eligible for the interest until then, they will need to meet the original conditions for the account.
It added that existing Classic Plus customers will be able to use their account as normal beyond December if they wish.
In an email to customers, TSB wrote: “With the recent reduction in interest rates and the current economic climate, we hope you understand the reasons why it has been necessary to take this decision.”
A TSB spokesperson said: “We regularly review our products to ensure they are fit for purpose and are in line with market conditions. Given the continued low interest rate environment, we have made the decision to reduce the interest on our Classic Plus account.
“We have recently launched our new Spend and Save current account, which addresses the needs of our customers – to help with their everyday banking needs and provide them with simple tools to help manage their money.”
The decision follows a similar move by Tesco Bank. In July, it announced that the 1% rate offered on current account savings up to £3,000 would be scrapped from 22 September, affecting 240,000 customers.
TSB’s Spend and Save current account
Earlier this month, TSB launched its Spend and Save current account featuring savings pots, automatic spending round-ups, and text alerts to help customers with their day-to-day finances.
Customers could also earn £5 cashback for the first six months by making 30 payments or more on their debit card each calendar month.