Tesco Bank to scrap current account interest
Tesco Bank customers will no longer earn interest on their current accounts from September.
Customers are currently paid 1% interest on balances of up to £3,000, meaning you can earn up to £30/year. Tesco Bank originally paid 3% interest on current account balances, but slashed its rate last year.
And from 22 September 2020, customers won't get any interest on their current account balances. You'll continue to earn 1% interest until that point – though it's possible to get higher rates elsewhere.
Tesco Bank says it's scrapping the interest due to historically low interest rates, with the Bank of England cutting the base rate to its lowest-ever level of 0.1% back in March.
Which current accounts will still pay me interest?
Sadly, the offerings from interest-paying current accounts aren't as attractive as they used to be due to historically low interest rates, with accounts cutting rates almost across the board.
But it's still possible to earn interest on your current account – here are a couple of top picks:
- 2% interest on up to £1,500 for a year with Nationwide. The Nationwide FlexDirect account's 2% AER rate is fixed for a year when you open the account, as long as you pay in £1,000+/month.
It drops to 0.25% on up to £1,500 after the first year, so look elsewhere then to see if it can be beaten.
- 1.5% interest on up to £1,500 with TSB. The TSB Classic Plus* account pays an ongoing 1.5% AER, as long as you pay in £500+/mth and register for online banking and statements.
We've full info and top picks, including accounts paying interest on balances of up to £5,000, in our Best Bank Accounts guide.
What does Tesco Bank say?
A Tesco Bank spokesperson said: "During March 2020, the Bank of England decreased the base rate from 0.75% to its lowest-ever level of 0.10%.
"Given this significant change to the base rate, we've reviewed our personal current account interest rate of 1% and made the decision to reduce this to 0%."
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