Tesco Bank has blamed "unprecedented demand" for its decision to temporarily stop accepting new applications for its current account, just days after MoneySavingExpert.com highlighted its generous 3% interest rate.
In last week's MSE email, we featured Tesco Bank's offer of a 3% rate protected for two years on easy access savings of up to £3,000.
What made the deal sweeter, though, was that you could open two accounts, allowing you to earn 3% on up to £6,000, plus couples could open two each, meaning they could get the rate on up to £12,000.
With the launch of the eye-catching offer appearing against a backdrop of rock-bottom rates at other banks, about 60,000 eager MoneySavers rushed to sign up to the account from Tuesday to Friday last week. This led to Tesco Bank issuing a "pause" on new applications.
It remains to be seen when the offer will reappear and whether or not the perks will be watered down. However, the bank has confirmed that anyone who has already had an application accepted won't be affected by the temporary block.
If you missed out on the Tesco Bank deal, check out our Top Savings Accounts guide to see what else is on offer.
What was Tesco Bank offering?
Savers can be forgiven for stampeding to sign up to an offer that promised 3% savings interest with easy access guaranteed for two years – that's treble the rate you can get in normal savings.
The deal was for new and existing customers, and you didn't have to switch to the current account (you could just open it, say "no" to its switching service, put your money in and use it to store your savings). That's because unusually it didn't require a minimum monthly pay-in or for you to set up direct debits.
Here's how it works:
- It only pays 3% on up to £3,000 per account, but you were allowed two accounts per person (so £6,000 savings in total). Couples could open two each for the full £12,000. However, if you had an old Tesco Clubcard Plus account, you could only have one each.
- Unlike other accounts where the interest rate isn't protected, Tesco Bank gave a guarantee that the rate wouldn't fall below 3% (though could rise) for two years from April.
- If you use the debit card you get Clubcard points. It's one point per £1 on debit card spending at Tesco from April (currently one point per £4), on top of normal Clubcard points, and one point per £8 spent elsewhere.
When will I be able to apply for the account again?
It's not yet clear when Tesco Bank will lift its temporary suspension on applications – we've asked the bank and will update this story when we know more.
We've also asked whether or not the offer will remain the same once the block is lifted. Again, we'll update this story when we hear back.
What is clear is that you won't be impacted if you managed to get your application over the line before the suspension came into force during the weekend.
What does Tesco Bank say?
A Tesco Bank spokesperson says: "Last week we launched our new guarantee for Tesco Bank current account customers. It gives our customers certainty on the level of interest their accounts will earn, as well as even more Clubcard points when they shop at Tesco.
"The feedback from our customers has been brilliant. We are also delighted by the unprecedented demand from new customers applying to take out accounts with us. In order to best serve our existing customers, we have decided to pause accepting new applications for the time being.
"In the coming weeks, we will let customers know when they can apply again for the Tesco Bank current account."
MSE understands that about 60,000 current account applications were made to Tesco Bank in just four days last week – if that level of uptake had continued it's estimated the bank would've received about five million applications in total throughout the course of the year.
What other banks are offering decent rates to savers?
Unfortunately few current accounts live up to Tesco Bank's offer – it's possible to get 3% on £15,000 (£30,000 for couples) elsewhere, but there are no assurances that rate won't be reduced in future.
- 3% on up to £15,000 (£30,000 for couples). Bank of Scotland pays 3% AER variable if you've £3,000 to £5,000. You can have three accounts per person, so six per couple, though you must meet a number of criteria including a minimum £1,000 pay-in a month and direct debits.
- 1.5% on up to £20,000 (£60,000 for couples). For big savers, Santander 123 pays 1.5% AER variable on up to £20,000, but you can have two accounts if the second is joint, so couples can have three between them. To be eligible you must pay in a minimum of £500/month and meet other criteria.
Meanwhile, it's worth bearing in mind that Tesco's offering could be seen as a signal that banks' attitudes to rate cuts on high interest current accounts are changing, so hopefully these will last. Full info, criteria on these and more deals can be found in our Current Account Savings section of our Top Savings Accounts guide.