Tesco Bank has started accepting applications again for its popular current account, which comes with a guarantee of at least 3% AER interest on up to £3,000 until April 2019 – but it's added new hoops to jump through to get the interest.
The guarantee means you'll be able to earn an annual maximum of £88.80 in interest for at least two years, though the new rules mean you'll have to pay in £750 and pay out three direct debits each statement month.
You can also earn boosted Clubcard points on debit card spending until April 2019.
Existing customers who already have a current account with the bank aren't affected by the new requirements to get the interest, so won't need to pay in a minimum amount or pay out direct debits on that account. However, if they open another account, they'll have to meet the new terms on that one.
What the Tesco Bank account offers
Tesco Bank closed applications to its account in February after it was swamped with applicants seeking a guaranteed interest rate. The new deal offers the same guarantees, though the increased requirements to earn the interest could prove a barrier to some.
You don't need to switch to get the interest or Clubcard points. Here's how it works:
- It pays 3% AER variable on up to £3,000 per account, and Tesco Bank guarantees the rate won't fall below 3% until 1 April 2019 (though it could rise).
- To get any interest, you need to pay in £750 and pay out at least three direct debits each month – and direct debits to a Tesco Bank savings account don't count. These rules apply to statement months rather than calendar months.
- You're allowed two accounts per person (so £6,000 savings in total). Couples can open two each to earn interest on up to £12,000, though you need to meet the requirements on each account. If you have an old Tesco Clubcard Plus savings account, you can only have one each.
- If you open two Tesco Bank current accounts, it's possible to cycle the £750 minimum monthly pay-in between the two.
- If you use the debit card you get Clubcard points. It's one point per £1 on debit card spending at Tesco until 1 April 2019 (then one point per £4), on top of normal Clubcard points, and one point per £8 spent elsewhere.
Unfortunately, you're not able to open a Tesco Bank current account if you live in Northern Ireland.
If you completed an application for the account before they were paused on 10 Feb, even if you then needed to send in further documents like ID, you'll have had the account opened with the old terms. Anyone applying for the account today onwards will need to meet the new requirements to get the interest.
What does Tesco Bank say?
Managing director David McCreadie said: "I am pleased to reopen applications for our unique current account guarantee designed to provide peace of mind to our existing customers by offering a guaranteed credit interest rate.
"Given the unprecedented response to the initial offer we made in February, there are a number of conditions new customers must meet to qualify for the credit interest benefit of this current account offer."
Other top current accounts offering in-credit interest
There are a few other current accounts offering in-credit interest, though rates have been cut in recent months. The other top options include:
- 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.
- 3% on up to £15,000 (£30,000 for couples) – dropping to 2% from June. Bank of Scotland pays 3% AER variable if you've £3,000 to £5,000, though the rate is dropping to 2% on up to £5,000 from 11 June 2017. 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.
Full info and criteria for these plus more deals can be found in our Best Bank Accounts guide.