Tesco this week continued its apparent quest for world domination with the long-awaited launch of its first proper bank account.
A "digital" bank If you're the sort of person who still values being able to go into a bank branch, the Tesco account probably isn't for you. Tesco says that "fundamentally, this is a digital business", with the emphasis on online and mobile banking, backed up by
Those who sign up will be able to pay money into their account at more than 300 Tesco stores, but there won't be full-blown branches in these stores. Instead, you'll have to use the customer service desk, which presumably might mean having to queue up behind people trying to get refunds and return items.
You can't open an account in store - you have to apply online or over the phone.
A free account? It is only free if you pay in at least pounds 750 a month. For those who don't - which could include many low earners - there's a pounds 5 monthly fee.
In-credit interest Some current accounts pay nothing, others as much as 5%.
TSB's Classic Plus and Nationwide's FlexDirect pay 5% on balances up to pounds 2,000 and pounds 2,500 respectively, though the Nationwide rate is an introductory offer, fixed for 12 months, after which it drops to 1%.
Alternatively, there's the Halifax Reward current account where, provided you pay in pounds 750 or more per month and meet the conditions, the bank will credit your account with pounds 5 each month (net of tax - the gross amount is pounds 6.25).
Arguably the stand-out option for the well-off is Santander's 123 account. That's because it pays 3% on balances from pounds 3,000 all the way up to pounds 20,000. Over a year, the 123 account will pay interest of pounds 592 gross on a pounds 20,000 balance, whereas the most you could earn with Tesco is around pounds 90 a year - but not many people will have 20 grand in their account, of course.
Santander's rates for smaller balances are 1% on pounds 1,000-plus, and 2% on pounds 2,000-pounds 3,000. The 123 account's big downside is the pounds 2 monthly fee.
Ongoing rewards You won't get rich with the Tesco account. The debit card doubles as a Clubcard, and customers will be able to earn points wherever they use it. They will receive one Clubcard point for every pounds 4 of debit card spend at the retailer, and one point for every pounds 8 spent elsewhere, though there are some exclusions.
In fact, even someone who spent a huge pounds 2,000 a month on their Tesco debit card would only earn pounds 40 in Clubcard points per year, assuming a 30/70 split of Tesco/non-Tesco spending. Some may wonder whether it's worth the effort.
Overdrafts Some banks give you a small "buffer" overdraft of perhaps pounds 10 for free, but others are more generous - for example,
Tesco says its costs compare well with others - someone who goes overdrawn (authorised) by pounds 221 for three days a month, would pay 34p a month, it says. That compares to Santander, whose 123 account imposes an authorised overdraft usage fee of pounds 1 a day.
Another plus of the Tesco account is the extended "grace period" to help customers avoid unauthorised overdraft charges. Customers automatically get a text and email to tell them to pay in funds, and won't be charged provided they pay enough before
Golden hellos It's perhaps surprising that Tesco has decided not to go down the "golden hello" route, when others will pay you to switch. The
On holiday The Tesco debit card charges a foreign exchange fee of 2.75% on overseas purchases and cash withdrawals, plus an additional 1% for withdrawing money from an overseas ATM.
Polishing up the brand: Tesco has launched a no-frills current account
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