Tesco Bank suspends applications for its Avios-earning current account

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Since 2014, when Tesco launched its current account, it has been possible to earn Avios or Virgin Flying Club miles with your day-to-day DEBIT card banking.

Until this week.

Tesco has suspended new applications for its current accountTake a look on its website here.

It isn’t clear if this is permanent or not.  The website simply says:

“Sorry, we’re not accepting new current account applications at the moment, but please pop back in the new year for an update on this.

If you’re an existing customer you can continue to use your account as normal.”

Tesco has done this before, but for different reasons.  Earlier suspensions were due to the account being overrun with applications due to an exceptionally generous interest rate.  Given how far that rate has been cut in recent years, this certainly is not the case now!

Tesco Bank current account

Tesco let you earn Avios with your current Account DEBIT card

If you had this account, you were earning Clubcard points on all of your debit card transactions:

1 point per £1 spent in Tesco (2.4 Avios per £1 / 2.5 Virgin miles per £1)

1 point per £8 spent elsewhere (0.3 Avios per £1 / 0.31 Virgin miles per £1)

The ‘1 point per £1’ spent in Tesco was a very generous benefit.  If you were spending £100 per week in Tesco, which includes Tesco Fuel, you would earn 12,480 Avios or 13,000 Virgin Flying Club miles per year if you put all of this spending onto your debit card.  That was on top of the base Clubcard points you would receive irrespective of how you pay.  This was a pretty attractive deal.

Even the ‘1 point per £8 spent elsewhere’ was attractive.   Whilst you would be better off in most circumstances using a loyalty credit card instead, it was not always possible to avoid using a debit card.

There was ‘small print’ attached to the ‘1 Clubcard point per £8 spent on the debit card’.  All payments to ‘banks and financial institutions’ were exempt.  This means that you could not pay your mortgage, pay off a credit card bill or pay money into a savings account.

It DID work with payments to the Inland Revenue.  With Curve now imposing fees on HMRC payments and Capital On Tap switching to a credit card from a debit card, it was one of the few ways of profiting from tax payments.

Is Tesco Bank still in the game or not?

I get a feeling that Tesco is trying to wind down Tesco Bank without making a big song and dance over it.  As Tesco owns its bank outright, winding it down would release a lot of capital.

In September 2019, Lloyds Bank bought Tesco’s mortgage portfolio for £3.8bn.  Not only does it no longer sell mortgages, it has sold off all the ones it had already generated.

It quietly started cutting the interest rates on its savings accounts.  These had been aggressive – I have two myself – because Tesco wanted the funding to support its mortgage lending.  Now that it isn’t making any new mortgage lending, it doesn’t have much use for deposits.  The top offering is currently 1.2% vs 1.35% at Marcus.

The credit card arm has also had a lobotomy.  The Premium card was closed, as were many variants of the standard credit card.  It is a long time since there was an incentive to sign up to their credit cards, which are another way of earning Avios and Virgin Flying Club miles, albeit at a very low rate.

I’ll keep an eye out and let you know if the current account reappears, as long as it still earns Clubcard points!

PS.  If you missed it, you should take a look at our recent article on the top 10 reasons for you to get the Tesco Clubcard Mastercard credit card.

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

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Comments

  1. OT – First Waitrose offer of the year has just popped up on LBG. 10% on every purchase of £50 or more, max reward £30.

    This should combine with the £10 off £60 vouchers I’ve just received and one or more of the following (targetted) Waitrose Instore rewards:-

    Airtime- 2%
    Virgin- 5%
    NextJump- 5%

    • The Urbanite says:

      Seems Airtime Rewards have “special” reward rates for people who put a lot of spend through certain retailers!

  2. Shoestring says:

    Dramatic moment British Airways flight performed U-turn near Iraqi airspace after Iranian missile strike – as commercial airlines reroute flights amid fears ‘they could be mistakenly shot down’
    https://www.dailymail.co.uk/news/article-7864249/Airlines-ordered-reroute-flights-away-Iran-Iraqi-airspace-missile-strikes.html

  3. Virgin Atlantic now a Flying Blue partner

    https://www.flyingblue.nl/en/partners/airline/airline-virgin-atlantic-airways/presentation?country=NL

    “Last updated january 15 2020” maybe it’s a hint when the whole deal starts.

  4. OT – just had an email from Hilton, buy up to 80k points, get 80k free – again!

  5. Anthony says:

    O/T

    Does anyone use Green Network Energy for their gas/electric and would like to refer me for £60 each?

    • Shoestring says:

      check you’re making the right decision? https://energycompare.citizensadvice.org.uk

      Citizens’ Advice energy comparison tool was highly rated by members here as it is completely impartial and includes virtually all providers

      • Anthony says:

        Thanks Shoestring

        They’re not the cheapest but the referral bonus is a lot higher then others, I will refer a couple of friends once I’m signed so will make up for it that way.

    • If following Shoestring’s link you decide not to use them, Pure Planet is a similarly green provider. My referral link for that if you’re interested is https://purepla.net/rfm/RuRBgdQ and we’d both get £50 if you use it (hope that’s OK to post here Rob as it was in response to a specific request).

    • Hi Anthony, I’m five days late but if your still needing a referral for Greennetwork energy, I use them.

  6. MonkeyBoy says:

    Robbl shoring up its liabilit for a post Brexit bank crash. More customers => greater liability it may not be able to cover their accounts.

  7. Really wish we’d get another VS transfer bonus from Tesco – have quite a stash ready to cash out and no Uber option anymore!

    • Secret Squirrel says:

      Pet insurance:
      Make sure you have your pet/s details to hand when cancelling policies.
      I canx mine today and was asked my cats name, luckily I have a cat that was on the policy but I’m sure many don’t! 🤓

  8. It’s just a normal credit card – it will work with Curve exactly like any other one.

    If you mean the new one, no-one has access to it yet (that I’m aware of), but I see no good reason to pay £6 a month for it.

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