Tesco Bank has announced it will close its current account operation from November in a move that wil leave 213,000 customers searching for a new home for their cash.
Just the latest supermarket to pull out of the current account market, Tesco’s banking arm said that of those 213,000 customers, only 12 per cent use their it as a primary account.
That means nearly nine in 10 accounts have limited activity or are being used for other purposes, such as a savings pot. That means around 26,000 customers will be looking for a new primary current account.
Axed: The supermarket giant is exiting the current account market
The options are to switch using the seven-day service or transfer money to a Tesco Bank savings account.
It also says those hit can register for Tesco Clubcard Pay, a new product currently in test with a panel of shoppers and colleagues.
Meanwhile, those who are in an overdraft could be pushed to use one of its credit cards to clear the balance.
The current account was closed to new applicants in December 2019, suggesting the writing was on the wall nearly two years go.
They can be expensive for banks to run, especially if customers aren’t actively using it and being cross-sold other products on the back of it.
Tesco Bank says customers will receive letters in the next two weeks outlining the options.
Earlier this year, M&S Bank made a similar move to cull current accounts as it appears supermarket challengers have failed to attract enough customers.
Customers who choose not to switch to a new current account have been warned they will need to move any regular incoming or outgoing payments to a different account, and to make sure their account has a balance of £0, by Tuesday 30 November 2021.
The bank as a whole has more than 5million customers across a range of banking and insurance products.
It says the closure supports its strategy of focusing on products and services that best meet the needs of its shoppers.
Gerry Mallon, chief executive of Tesco Bank, said: ‘With so few of our current Account customers using it as their primary account we want to support them to find a suitable alternative dependent on their circumstances.
‘We will pay particular attention to supporting any vulnerable customers and those in need of financial assistance.
‘Customers who have been using our Current Account as a savings pot may be better suited to one of our tailored savings products.
‘And shoppers who are looking for a payment option which allows them to continue collecting Clubcard points in and out of Tesco may want to consider Tesco Clubcard Pay or a Tesco Bank credit card.’
Clubcard Pay, it says, is an account which comes with a debit card and is designed to help shoppers pay, save and collect Clubcard points.
It adds that it will allowing shoppers to upload and ringfence their grocery spend from any UK current account into their Clubcard Pay account through the Tesco Bank mobile banking app.
Customers will collect Clubcard points on most of their shopping, both in and out of Tesco.
It comes with a round-up savings account, which lets customers build a savings pot by rounding up their spending to the nearest £1.
Figures from the Current Account Switch Service show more than 7million people have now switched their bank account since 2013.
But if that sounds cause for celebration, it’s just 1million more people than the number who switched energy supplier in 2020 alone.
Indeed, the people who regularly switch bank accounts are a rarity, and are usually the ones happy to spend a few hours buried in paperwork in return for a cash switching bonus or other perks.
But despite that paperwork, switching is easy, with CASS pledging to switch your account and any direct debits over in seven days.
Here are our top accounts – you can read about them in more detail here: Looking for a better bank? This is Money’s pick of the four best current accounts for interest, perks, packages and overdrafts
1. Best account for in-credit interest: Nationwide
2. Best account for cash: HSBC
3. Best account for interest on a large balance: Lloyds
4. Best ‘new kid on the block’: Starling Bank
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