Put Tesco bank account on the shopping list
AFTER more deliberating and digesting than Loyd Grossman ever did as host of MasterChef, Tesco Bank will this week finally unveil its current account offering.
Given how long it has been in gestation (about the same as an elephant at 22 months) and the considerable investment Tesco has made in ensuring the account gets off to a glitch-free debut, it should prove popular for customers dissatisfied with the ‘Big Four’ (Barclays, HSBC, Lloyds and Royal Bank of Scotland).
Tesco Bank is chugging along quite nicely, which must cheer the supermarket’s boss Philip Clarke as his stores lose up to a million shoppers a week. The bank already has more than seven million customers and, according to James Daley at website Fairer Finance, it scores highly among them for its travel, home and car insurance offerings – less so for personal loans and credit cards.
The finer details of Tesco Bank’s current account will be revealed tomorrow – strangely, its executives are keen to keep all under wraps until then.
But I would hazard a guess that the account will be free to use (or at least one version will be) and that plenty of Clubcard points will be on offer to those who switch their banking to Tesco – in much the same way as Marks & Spencer is offering £100 of shopping vouchers to those who switch to its free current account.
With Tesco Bank committed to providing UK based customer service and 300 new recruits already installed to handle the anticipated flurry of new business, it has as good an opportunity as any of the new challenger banks (such as Handelsbanken and Metro) to break up the Big Four’s dominance of the market.
Given new rules now make it much easier, and less stressful, to switch current accounts, my message to disillusioned customers of the Big Four is simple: the time for cogitating, deliberating and digesting is over. Switch. hedge fund managers, hardly a comforting thought for customers who joined because of the Co-op’s ‘ethical’ approach, it seems the team under the new direction of Niall Booker (ex HSBC) is determined to steady the ship.
Its offer of £100 to anyone switching current accounts to the bank still stands (plus a £25 donation to charity) and despite all the mud slung at it (some from my own fair hands) it still gets good marks for the quality of its current accounts. Fairer Finance ranks it 8th out of 18 for good value while the bank’s internet arm Smile is placed 6th.
The bank is also quietly courting savers. Its new Select Access Saver (Issue 5) account is hardly head-turning with a rate of 1.65 per cent gross but of its kind – a restricted easy access account – there are few similar products that match it. Savers get the 1.65 per cent provided they make no more than four withdrawals per year. More withdrawals result in the rate collapsing to 0.1 per cent, not a pleasant experience.
Anna Bowes, discerning director of the website Savings Champion, describes this Co-op offering as a ‘competitive rate for those who won’t need frequent access to their money.’
Of course, prudent savers would be wise to heed her advice to ensure that if they do make a deposit into Issue 5, their total savings with the bank (including deposits with its other savings brands, Britannia and Smile) do not exceed the £85,000 safety net provided by the Financial Services Compensation Scheme.
I would hazard a guess that it will be free, with Clubcard points on offer for switching