Tesco Bank to close its 213,000 current accounts in November – here's what it means for you

The banking arm of the supermarket giant had already closed its current account to newbies in December 2019, but it will now close them for existing customers too. Many took out the account to benefit from in-credit interest, but Tesco Bank stopped paying this in September last year.

Tesco says the closures are part of a strategy of focusing on products and services that "best meet the needs of Tesco shoppers", adding that only 12% of the accounts it's closing are being used as primary bank accounts.

For full help on picking a bank account, including our current top picks, see our Best Bank Accounts guide.

You'll need to switch or close your account by 30 November – although you'll lose some account features from 15 October

If you're a Tesco Bank customer, it says you don't need to do anything immediately – you can continue to use your account and accrue Clubcard points on spending until the end of November. However, you'll no longer be able to deposit or withdraw cash at customer service desks in Tesco stores from 15 October 2021.

Tesco Bank adds that it will contact all current account customers with more info about their options over the next two weeks. Ultimately though, you'll need to do one of two things before the 30 November deadline:

• Switch to a new provider. This is likely to be the easiest option for those using the Tesco account as their main bank account. You can use the Current Account Switch Service to switch to another current account you have or to a new current account. This will ensure all your direct debits, standing orders and incoming payments are moved over to your new account, along with any funds held in your account. Once you switch, your Tesco current account will automatically close.

  The following banks currently offer incentives for switching:

  - Free £140 in cash for new customers, plus linked 1% regular saver. HSBC* gives new customers switching to its Advance account a free £140 (but only via the link above or via MoneySupermarket – we're part of the same group). You also get access to a linked regular saver which pays 1% AER variable on up to £250/mth.

  How to get it: Apply by Thursday 19 August and switch within 30 days (including at least two direct debits or standing orders). You also need to pay in at least £1,750/mth (its way of saying you need a £25,600+/year salary going in). To count as a newbie you can't have had an HSBC bank account, or opened a current account with First Direct, since January 2018.

  - Free £150 experience days for newbies, plus 2% interest on up to £1,000 and top card for spending overseas.Virgin Money* gives a £150 Virgin Experience Days gift card, which you can redeem on activities, such as hot-air balloon rides, driving days and sushi classes. It also pays 2.02% AER variable interest on up to £1,000 and has a top-pick debit card for overseas use.

  How to get it: Apply online, then switch with at least two direct debits, register for its app and keep £1,000 in its linked 0.35% savings account until you get the gift card email (which usually takes less than a fortnight). To count as a newbie you can't currently be a Virgin, Clydesdale or Yorkshire Bank current account customer or have had a Virgin current account switch reward before.

  See our Best Bank Accounts guide for full info and more options, including top accounts if you're overdrawn.

• Close your account. If you use the Tesco account as a secondary account or as a savings pot, you may prefer to close it instead of doing a full switch. To close the account, you'll need to have a zero balance, so if necessary withdraw any funds first. Once your account's empty, you can close it by calling Tesco Bank on 0345 366 8818. 

  When your account's closed any regular payments will be automatically cancelled, so make sure anyone you make payments to or receive them from has your new banking details.

If you're in your overdraft, you can still switch but it depends on whether your new provider will accept your application. If you want to close your account, you'll need to clear any overdraft first. If you're struggling to clear your overdraft or to switch, contact Tesco Bank on 0345 366 6468 – the bank says it can help by arranging a repayment plan that's affordable for you.

If you don't switch or close your account before 30 November, it will automatically close from this date and Tesco Bank will write to you to confirm this. If there's any money in the account at the time a cheque for the balance will be posted to your address.

What to watch out for when your account's closed, including what happens to your Clubcard points 

The Tesco Bank website has full info on how account closures will work, but there are a few key points to watch out for:

• If you DON'T have a separate Clubcard, you'll need to request one to keep earning points. Tesco's current account lets customers collect extra Clubcard points on their shopping – you get two points for every £1 spent online and in store at Tesco, double the amount you'd normally get using a Clubcard on its own. You also get one Clubcard point for every £8 spent elsewhere.

  But once accounts close in November, your existing debit card will stop working. If you don't have a separate Clubcard, Tesco says you can call 0800 591 688 once your account is closed to request one. This will then be posted out to you with your existing points transferred over.

  However, as the replacement will be a standard Clubcard, any new points you collect will be at the normal rate: one per £1 spent at Tesco and none elsewhere. There's more info below on your options to boost this.

• If you have a separate Clubcard, you can keep using it as normal. If you already have a separate Clubcard in addition to your debit card, these are linked, so you can continue using the Clubcard account as normal, including any points you've accrued through the current account.

• Your online statements won't be available after the account's closed. So print off or download any statements you may need. You can, however, request your transaction history going back five years once the account has closed.

• If you have a Tesco Fixed Rate Saver as well as its current account, you need to nominate a new account for interest to be paid into. Savings accounts aren't closing, but IF your savings interest is currently being paid into your Tesco current account, you'll need to let Tesco know the details of a UK bank account in your name to pay your interest into by calling 0345 678 5678 (you can't have the interest paid directly into the savings account itself).

You'll need another account to keep earning extra Clubcard points

If you want to keep earning extra Clubcard points after your current account is closed, you'll need to take out another product with Tesco Bank. There are a couple of options to consider – though unfortunately neither gives Tesco shoppers as many bonus points as the current account:

• Tesco's new Clubcard Pay prepaid card. This isn't a full replacement for its current account – for example, it doesn't support direct debits and you can't switch to it. Instead, it's a more restricted debit card, which you can top up using any UK bank account and then use to shop in store and online.

  It acts as your Clubcard when used in Tesco – meaning you don't need to swipe both. You'll collect two points for every £1 spent in Tesco in the first 100 days after opening your account and then one point per £1 after (the same as with a regular Clubcard). You'll also collect one Clubcard point for every £8 you spend elsewhere – the same as you would with the current account or with a Tesco Bank credit card. For more on how this works, see our full Clubcard Pay analysis.

• Tesco's Purchases credit card. Tesco has a range of credit cards which let you earn Clubcard points on your spending, but its Purchases card is our top pick. It gives an extra Clubcard point for every £4 spent at Tesco (in addition to the usual point per £1). So if, for example, you spent £4 at Tesco you'd get four points via Clubcard Pay (or eight points in the first 100 days) or five points on this Tesco credit card. You also get one point per £8 spent elsewhere. In addition, it offers up to 20 months' 0% interest on spending (but don't use this as an excuse to overspend).

  It's worth noting that, in the long term, you may be able to earn much more using a specialist cashback credit card, provided you only use this for normal spending and pay it off IN FULL each month. For example, the Amex Platinum Cashback Everyday card, which is accepted at Tesco, gives newbies 5% cashback for the first three months, up to a max £100. After that, you get 0.5% back on spending up to £10,000 (up to £5,000 until Wednesday 4 August), and 1% above that. Though bear in mind you need to spend at least £3,000 a year to get ANY cashback.

  See our Credit Card Rewards guide for more info.