TSB Classic Plus customers can now earn up to £60 cashback a year on spending, on top of the 5% interest they can already earn on balances of up to £2,000. But is the deal any good? MoneySavingExpert.com evaluates.

Under TSB's new offer, which launched today, customers can earn 5% cashback on the first £100 of contactless debit card purchases they make each month up until 31 December 2016.

That's the equivalent of £60/year tax-free if you spend the full £100 each month. If you're thinking about switching, see our Best Bank Accounts guide for an analysis of all the top accounts on the market.

You don't need to do anything to activate the offer, and TSB confirms the minimum £500/month pay-in required to earn in-credit interest on balances of up to £2,000, isn't needed to earn the additional cashback. To get the deal, you just need to:

  • Have a Classic Plus account.
  • Have a TSB contactless debit card and make contactless payments using it. TSB says it issues contactless debit cards as standard.
  • Be registered for internet banking.

You can't track the cashback you earn as you go along, but TSB says you'll be paid it on any transaction where retailers accept contactless "tap and go" payments. The cashback will then automatically be paid into your account the following month.

Only yesterday the contactless payment limit in the UK increased to £30/transaction from £20 following the rising number of people using it (see the Contactless cards payment limit rises MSE news story).

But how good is the offer?

The deal is a boon for existing TSB customers who can get the £60/year cashback on top of the 5% interest they can already earn on balances of up to £2,000, when they deposit a minimum of £500/month.

In total, this means you can earn up to £138/year after basic rate tax, although remember the contactless cashback offer ends in less than 18 months.

However, these days there are many current account deals to choose from and you can earn more elsewhere. The two key incentives tend to be either a switching bonus or in-credit interest.

You need to work out which deal is best for you. Our table below shows how TSB's new reward scheme for in-credit current account holders compares with our best buys (see our Best Bank Accounts guide for the top deals if you regularly dip into an overdraft or go into an unauthorised overdraft):

Best bank accounts compared

Current account Switching bonus In-credit interest (AER) or reward Min monthly income/pay-in amount Min standing orders/direct debits Max rewards/year (i)
Barclays Bank* None Up to £12/month or £144/year reward £800 Two direct debits Up to £144/year (ii)
Clydesdale Bank* £150 2% up to £3,000 £1,000 At least two £48
First Direct* £150 None £1,000 None, but need to switch None
Halifax* £100 £5/month (after tax) £750 Two direct debits £60
HSBC* £100 None £1,750 None, but need to switch None
Club Lloyds* None 4% up to £5k (iii) £1,500 Two direct debits £157
M&S* £100 gift card & £10 dine in voucher None N/A Two direct debits None
Nationwide* None 5% up to £2,500 for 12 months (iv) £1,000 None £98 (1st year only)
Santander* (v) None 3% on £3k-£20k (vi). Plus up to 3% cashback on certain bills £500 Two direct debits £450 (after fee)
The Co-operative* £100 (extra £25 to charity) None £800 At least two None
TSB* None 5% up to £2,000. Plus 5% contactless cashback on £100 spend each month £500 None £138 (vii)
(i) Approx gross interest you'd earn in a year after basic rate tax if you were to hold the max balance. (ii) Barclays doesn't tax the rewards, but customers should check if they need to declare anything as income tax (iii) 1% under £2,000, 2% on £2k-£3,999.99, 4% on £4k-£5k (iv) 1% after year one (v) Santander's 123 account has a £2/month fee. (vi) 1% on £1k-£1,999.99, 2% on £2k-£2,999.99. (vii) £78 from interest plus £60 (tax free) from cashback.

How good is TSB's customer service?

In MoneySavingExpert.com's latest biannual banking poll where we ask readers to rate their bank's customer service, TSB came sixth out of thirteen providers with 58% rating its service "great", 34% rating it "OK" and 8% rating it "poor".

In comparison, First Direct, which came top, received a 92% "great" rating with only 1% rating it as "poor", while Barclays, which came last, received a 38% "great" rating with a 20% "poor" rating.

Additional reporting by Rosie Bannister.