MSE News

Tesco Bank cutting current account interest from 3% to 1%

Rosie Bannister | Senior Money Analyst

Updated 5 March 2019 | Created 27 February 2019

Tesco Bank is slashing the interest rate on its popular current account from 3% to 1%.

The change will come into effect on 14 June 2019 for existing customers, who all should have received a letter informing them of the change. The rate was cut to 1% for new customers on Friday 1 March.

The Tesco Bank current account pays interest on up to £3,000, and after the cut, the max you can earn will drop from £88.80/year to £30/year.

For the best savings rates, including 1.5% easy access and a Nationwide current account offering 5% interest for a year, see Top Savings.

What the Tesco Bank account offers

The Tesco Bank account, which was one of our top picks for current account savings, will no longer be as competitive when the interest rate drops. Here are its key features:

It currently pays existing customers 3% AER variable interest on up to £3,000 per account, but this will drop to 1% on 14 June.

To get any interest, you need to pay in £750 and pay out at least three direct debits each statement month. If you have two Tesco Bank current accounts, it's possible to cycle the £750 minimum monthly pay-in between the two.
You get an extra Clubcard point per £1 on debit card spending at Tesco, and one point per £8 spent elsewhere. This isn't changing so will still apply after 14 June.

Consider ditching and switching in June

When Tesco's current account interest rate drops to 1%, it's worth checking whether it's worth switching account, as you'll likely be able to earn more elsewhere.

Of course, rates could change between now and 14 June, but to give you an idea, you can currently earn 1.5% with the easy-access Marcus account, or up to 5% on £2,500 for a year with a Nationwide current account.

Remember to check our Top Savings Accounts guide for the top picks nearer the time.

What does Tesco Bank say?

A Tesco Bank spokesperson said: "In April 2017, we made a two-year commitment to guarantee the interest rate customers receive to provide certainty as rates were reducing in the market. As the end of that commitment approaches, we have written to customers informing them their interest rate will change on 14 June."

MSE weekly email

FREE weekly MoneySaving email

For all the latest deals, guides and loopholes simply sign up today – it's spam-free!

Show less

FAQs Privacy Past Emails Unsubscribe

MSE Forum

Join the MSE Forum discussion

Tesco Bank to cut current account interest from 3% to 1%

How this site works

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.
We don't as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it's rarely made public until it's too late (see the Section 75 guide for protection tips).
Do note, while we always aim to give you accurate product info at the point of publication, unfortunately price and terms of products and deals can always be changed by the provider afterwards, so double check first.
We often link to other websites, but we can't be responsible for their content.
Always remember anyone can post on the MSE forums, so it can be very different from our opinion.

MoneySavingExpert.com is part of the Moneysupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally binding MSE Editorial Code.

Please read the Full Terms & Conditions, Privacy Policy, Cookie Policy, How this site is financed and MSE's Editorial Code.