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The Tesco current account now launched – and generally underwhelming

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This post is mainly for the benefit of our 2,400 email subscribers.  Readers of the site will know that the ins and outs of the account were discussed heavily in the Comments section of the ‘what will it offer?’ post yesterday.

Here is the Tesco website promoting the new current account.

Tesco current account debit card

All of the rumoured features I listed yesterday were confirmed:

This is what we know:

The account will be free if you pay in £750 per month ….

…. and will cost £5 per month if you don’t.

You will earn 3% interest on balances up to £3,000 and nothing above that

You will earn Clubcard points on all of your debit card transactions:

1 point per £4 spent in Tesco

1 point per £8 spent elsewhere

There is ‘small print’ attached to the ‘1 Clubcard point per £8 spent on the debit card’.  All payments to ‘banks and financial institutions’ are exempt.  This means that you cannot pay your mortgage, pay off a credit card bill or pay money into a savings account.  It MIGHT work with payments to the Inland Revenue but that is not something that most people can benefit from.

It is also worth noting that debit card spending is rounded down to the nearest multiple of £8.  A £7.99 lunch payment will earn you exactly zero Clubcard points.  This is a major deterrent unless you are using the card for large transactions.

There is no sign-up bonus.  This puts the account at an immediate disadvantage to the Marks & Spencer account which currently offers £100.  The M&S account does not pay any credit interest – but the sign-up bonus is also tax free.  The maximum amount of interest you can earn on the Tesco account is £90 per year (3% on £3000) and that will be taxed.

I would strongly expect a sign-up bonus to appear in the medium term.  If you switch now in order to earn a few points from the debit card, you are risking missing out on 5,000 – 10,000 points as a sign-up deal later.

Foreign exchange use of the debit card incurs a 2.75% fee.  This is market level, I admit, but Tesco could have made this free in order to score some marketing points.

All in all, I don’t see anything here to convince me to switch – unless it turns out that Inland Revenue payments do count for earning Clubcard points via the debit card!

Love Clubcard, don’t collect Avios?  You should be reading our sister site, Shopper Points (, which covers the latest Clubcard and Nectar offers without any distracting frequent flyer talk!  Why not check it out now?

Comments (39)

  • Cheshire Pete says:

    I used to have a Tesco Platinum Credit Card. Used it for years as my main spend card. Then I had to do a Section 75 claim and this is where Tesco fell down badly. 9 months later after going through the ombudsman I won my claim. I’d obviously stopped using my card until the outcome and then happily cut it in half and sent it back to them.

    I told them in my parting shot they shouldn’t have a license to provide any financial services as they are so poor at dealing with issues. Really abysmal, and my advise would still be don’t them anywhere near dealing with any of your finances.

    Ironically I then signed up for my BAPP and never looked back.

    Good luck to anyone allowing them to run your current account…..

    • G Page says:

      My sympathy, Cheshire Pete. Good for you sticking out the s.75 claim procedure. Tesco are an appalling finance service, particularly to their existing customers.

      My online application for this account was infuriating. Recognising my name it would not let me proceed online, directing me to an 0845 number, stating that as they already hold my details the application process would be faster. On phoning, they still went through the whole application process. When I asked for a second account (you can hold two of these), they tried to take me through the whole damn process again. After a total of 45 minutes, I complained and got “compensation” – either Tesco vouchers or a cheque (heaven forbid they should compensate me by faster payment to my designated account). Cheques are a pain but I wasn’t touching their vouchers.

      The financial services licence clearly doesn’t touch on customer care and experience or if it does, perhaps Tesco believes it doesn’t apply to them. Off to check out the M&S a/c…

    • oliuk says:

      Sorry to hear about your troubles, but this made me start thinking about S.75 claims…
      (info here, for anyone like me who isn’t very familiar:

      From a little reading it seems that it does not apply to charge cards (which would include amex gold, plat etc.)
      I was always under the impression that those cards afforded me the same protections as a credit card, but evidently not!
      What do other holders of gold, plat etc cards do to get around this? Insist on splitting payment for goods and sticking a little bit on a CC? Basically impossible online…

      Ive probably missed the obvious here, but could someone please enlighten me?

      • Rob says:

        Amex voluntarily matches S75 for charge cards afaik

      • G Page says:

        Where possible, always use a credit card to pay for at least part of your item/service spend because that is where you get the protection (for worldwide purchases bought with a UK credit card, I’m fairly certain). You do NOT get that protection from a debit card. If you are wanting to buy via an online retailer, try to speak with them on the phone or contact them by email and see if they will accept just £5 on your credit card and the rest via cheque or internet banking. You do NOT have to put the whole cost on the credit card to lock in the s.75 protection. I know, as I was successful as I have had two successful s.75 claims. One was worth over £1000 and I only put £5 of the total cost on my credit card.

        As to how long it takes to complete a s.75 claim, be a polite terrier. The retailer/credit card providers will always rebuff your claim to see if you cave. If you have a good claim then stick with it, keep asking to speak to someone higher in management and don’t lose your temper.

  • James67 says:

    Is any future bonus not more likely to be a tesco voucher as opposed to cc points? I know tesco finamce products to date have offered cc points but sure a staightforward tesco voucher would be more in their interests?

    • Maximus says:

      Jeez- don’t go giving them ideas!

      • James67 says:

        There home insurance has been offering a voucher as opposed to points so please don’t blame me if it comes to pass!

        • squills says:

          The various insurance incentives have been alternating between in-store vouchers & points for some time. The current £40 promo for home ins ends 12/08 so there might be points incentives coming up.

          I think there are still a couple of months to run on the latest life ins points deal if you want to take the last tranche of points, so the timing could be good.

          • SingingDwarf says:

            I received notification of a CC draw when you buy car insurance via a postal mailing the other day.

            In summary, all purchases entitle you to a key fob to be checked in store. Fob is worth a minimum of 50 CC pts and a maximum of 20k pts (12, 000 prizes). Other prizes are available in between.

            All pts will be transferred to a future statement.

          • squills says:

            Tesco car insurance were absolutely unbeatable on my Car 2 car ins yesterday – it’s a second car in my name so my no claims bonus doesn’t count in theory (the 1st car gets that) but with the clubcard number input they can see your risk profile from Car 1, so it looks like they gave me the equiv discounted price to 9 years no claims anyway. Well under the nearest competitor (I checked plenty) and much better cover offered.

            Fob bonus points would be nice but the cash saving was a big bird in the hand 😉

  • Adam says:

    Do 3V Visa cards still work for inland revenue payments?

  • thesaver79 says:

    Off Topic. It seems that new games are available for pre-order in store. £5 and 500 CC points. So they say on Flyertalk. Has anyone been to a Tesco store that sells games yet?

    • chris says:

      this would more than likely be true, and most likely on COD advanced warfare since tescos direct offer 500 points for the game,

      tho just cos direct do does not mean in game do with they £5 receipts tho looks like they might

    • CV says:

      The pre order shows up on the Tesco Direct page, there is a big list, it just depends what ones can be found in store. I picked up copies of Destiny (1 per format) in store, that was all they had, and received the bonus points, there was no promo material advising of the offer.

      • thesaver79 says:

        Did you pay £5 for it? Could you share the barcode number with us please? 🙂

        • CV says:

          Yes,its the £5 pre order box, but as i dont get to keep the box i dont have the barcodes – i think by now they will be listed on PTS.

      • Rob says:

        Some stores do have shelf edge stickers (not on the price label) promoting it.

        Full rundown tomorrow. I would have done it today but I am Tesco’d out from the current account coverage, and it runs for another week.

  • thesaver79 says:

    Forgive my ignorance.. 🙂 What’s BTP?

  • JQ says:

    Thinking of buying a car. Can anyone see any downsides to getting this account in order to pay with the debit card? (Remember, if a dealer says they will take Amex with no fee, then you can probably knock 2% off by offering to pay cash)

    • tim says:

      AIUI, for someone selling a car a debit card is as good as cash (unless he wants to dodge his tax). With a credit card the retailer pays a percentage of the cost (which will be significant for a car). For a debit card the retailer pays a fixed fee (40p or thereabouts) for the whole transaction which is insignificant relative to the cost of a car (and removes the security risk of having to carry thousands in cash to a bank)

  • Dannyrado says:

    I too am buying a car (and a van but that’s months away) both deals are already done, at the absolute minimum price. So the way I see it, this new account is quite timely, if I pay both with a tesco debit card, I’m getting a little (literally) extra out of the deal.

    • squills says:

      Like that dude said to me the other day, make sure you pay at least £100 on a credit card to get the extra protection. The car I’m picking up tomorrow: they took £500 deposit on credit card with no extra fee.

  • Tim says:

    This sounds more like a scheme for Tesco to raise cheap finance – they pay 3% AER on balances of up to £3,000 (absolute maximum of £90 p.a.) but charge £5 pcm (£60) if you don’t put in £750 every month. That equates to a borrowing rate to Tesco of well under 3% p.a. in practice, probably less than half that rate. I am sure they could not obtain such a borrowing rate anywhere else.

    • nick says:

      Well, yes. Banks take deposits and offer current accounts as they are very low cost ways to raise funds.

    • Fenny says:

      Well, the Finance part and the rest of the divisions will be completely separate. They’re not buying banana futures with customers’ deposits.

    • Rob says:

      Actually they do. Tesco Group raised a huge amount at 0.2% over base a few years ago. Tesco Bank, which is ringfenced, raised a big loan at 5% all-in two years ago, so this will improve the pricing on that.