Tesco Savings Loophole Save £1,000, get £20 in Tesco Reward points

UPDATE: This loophole ended on 7 January 2010, but returns from time to time. When that happens, we will update the guide, and let you know in the free weekly email. For now, this is just here for archived information purposes. NB. From 6 December 2010, Tesco points are only worth c.3p when redeemed online (not 4p as mentioned in the guide).

While Tesco's 0.75% savings rate's far from troubling the best buy tables, put a grand in and you get twenty quid's worth of reward vouchers! And there's a loophole that makes it worthwhile to save there very briefly and bag up to £60 worth of freebies on top. This is a full Q&A guide to maximise the benefit.

• What's the deal?
• How good is the savings account?
• When will the points arrive?
• What if I've done this before?
• How safe is this?
• Related Articles/Discuss

What’s the deal?

Sign up to a Tesco Instant Access Savings account, before 7 January 2010 and if you're a new customer and you deposit at least £1,000 you'll be awarded a minimum of 500 points on its Clubcard rewards scheme. The points you get depend on how much you have sitting in the account on 28 February 2010.

Quadruple the value of the points

Redeem 500 points on Tesco shopping and each point is worth a penny, making it worth £5 overall. Yet instead redeem them on things in Tesco's Clubcard Rewards brochure, like weekends away, days-out, RAC membership & magazine subscriptions and the value is automatically quadrupled.

This means the actual value of the freebies you can obtain by doing this is between £5 and £60, depending on how much you have in the account; for full details on how both of these work, read the Tesco Loyalty Point Boosting guide.

Is it worth putting in £1,000?

Even though there are three tiers of points-earning, how good the deal is depends on if you have the have the available funds.

Putting £1,000 or more in...

An old incarnation of this offer allowed you to put just £1 in to get 250 points, this was a cracking deal. Now the minimum deposit is £1,000, the return on the deal is slightly hit by the interest rate, but if you're careful it could still be highly profitable. Its effectiveness relies on you acting quick to withdraw cash once you've earned the bonus.

The interest rate on offer in the Instant Access Savings account does rise slightly to 1% if you save £10,000 or more in it, and 1.25% if you're balance hits a whopping £50,000. However, all these rates are easily beatable by the top instant access rates (read Top Savings guide).

So to take full advantage of this deal, put the specified amount required to get your desired amount of points on 28 February, then take it out the next day and switch to an account that pays much more competitive interest.

To do this simply electronically move the money into Tesco a week before to be safe; as you must have cleared funds there on that specific day. Then, if you want to, move the cash back to a top savings account just a few days later.

Of course for larger amounts you need to factor in the lost interest in the days the money takes to transfer.

When will the points arrive?

The points should be awarded in your May 2010 Tesco Clubcard points statement and can be used after that.

It's totally up to you whether to use them in store or via the more lucrative Clubcard Rewards Brochure, where you simply send Tesco the vouchers with the application form to redeem deals.

What if I've done this before?

The offer is open to new Tesco Savings customers only and is not available to customers who have opened a Tesco Savings account in the last 12 months.

Tesco has run very similar offers to this on a few previous occasions. However, in past incarnations, the points were available by opening one of two accounts; this one, Instant Access Savings, or the Internet Saver.

How safe is this?

There are two ways to answer this...

• In normal times

  You’re simply putting money in a no-notice savings account, which means you can withdraw at any time if you need to and close the account whenever you want.

• In these Credit Crunched times

  These days, we need to consider the savings safety of every single bank.
  
  Tesco Personal Finance is a standalone bank and therefore is fully protected like any UK bank by the Financial Services Compensation Scheme (FSCS), meaning in the unlikely event it went bust you're guaranteed to get back up to £85,000 per person per financial institution.

  However of course if that did happen it would be unlikely your Clubcard points would be covered. For full information, read the Are My Savings Safe? guide.