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The account closed to new business in 2019 but will now close to existing customers too, who must cut their balance to zero by Tuesday, November 30.
Tesco Bank CEO Gerry Mallon said it acted because just one in eight used it as a primary account, doing most of their daily banking with rivals.
It will write to customers outlining their options in the next two weeks. “Shoppers looking for a payment option to continue collecting Clubcard points may try Tesco Clubcard Pay or a Tesco Bank credit card,” Mallon said.
Those who want a new current account can do so within seven working days using the free Current Account Switching Service, and automatically take all their direct debits and standing orders.
There is a wide choice available from major high street banks and increasingly popular appbased providers such as Starling.
Some even offer an upfront cash reward for switching, but only to new customers.
Switchers to the Halifax Ultimate Reward Current Account can claim £100. So can new customers of First Direct’s award-winning 1st Account.
Virgin Money is offering £150 to new customers who switch to its M Plus Account, but you must spend this on Virgin Experience Days, which include things such as flying lessons and spas.
Typically, you have to move your everyday banking, including a couple of direct debits, and pay in a regular monthly sum of £1,000 or more to qualify.
Which? head of money Gareth Shaw said examine whether your chosen account comes with extra benefits, such as packaged insurance and overdraft charges: “If you need a branch, check there is one nearby.”
Andrew Hagger, personal finance expert at Moneycomms, said Tesco’s exit is disappointing as the current account market needs more competition: “A few years ago many accounts paid interest on balances, but that benefit is pretty much gone.”
He rates First Direct for those who need an overdraft. “The first £250 is interest-free, worth having if you dip into the red from time to time.” It also offers the best service including a 24-hour UK call centre, Hagger added.
He recommends Halifax Ultimate Reward for those after a packaged account with extra benefits. “The deal closes on August 3 so you must act fast.”
Customers pay £17 a month in return for AA breakdown cover, mobile phone insurance, travel insurance, home emergency cover and card cancellation cover.They also get £5 back each month if they pay in at least £1,500, and meet other criteria.
Nationwide FlexDirect is a rarity as it pays in-credit interest of 2 per cent on balances up to £1,500, Hagger said. “This is only for 12 months so is hardly worth the effort.”
Hagger says Starling offers the best app-based current account.
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