Tesco Bank is shutting its line of current account services at the end of November after it found out that the majority of customers are not utilizing it as the main account.
Tesco’s current account service started in 2014, providing 3% interest on balances in a move to gain a lot of customers. The bank closed the current account service in 2019 to offer new products, making only 213,000 accounts available to users. However, the bank noticed that just 12% of those accounts opened were used as customers’ primary accounts. "Most accounts have limited activity or are being used for other purposes, such as a savings pot," it said.
Customers will receive a message to withdraw their account balances before November 30
The bank will send messages to the customers to withdraw their balances from their current accounts before November 30 or change any standing orders and direct debits.
The affected customers were advised to move their accounts to a different provider. They can also transfer their balances to Tesco Bank’s savings account or Tesco Clubcard Pay products. They can apply for a credit card or any other banking product by the end of November if they wish to stay with the bank.
The closure of the current account “supports Tesco Bank’s strategy of focusing on products and services that best meet the needs of Tesco shoppers”.
The majority of customers are not utilizing the account as their main account
Gerry Mallon, CEO at Tesco Bank said, “With only a few of our current account customers using it as their primary account, we want to support them by finding a suitable alternative dependent on their circumstances. We will support any vulnerable customers and those in need of financial assistance”.
He added that the way customers shop and manage their money is constantly evolving and so they develop products and services which align with the needs of Tesco shoppers.
“Customers who have been using our current account as a savings pot may be better suited to one of our tailored savings products. Shoppers who are looking for a payment option that allows them to continue collecting Clubcard points in and out of Tesco may want to consider Tesco Clubcard Pay or a Tesco Bank credit card,” he said.
The move to close the current account follows a similar announcement that was made by M&S Bank which is also planning to close its current account and monthly savings product this month.
As Tesco Bank plans to close its current account services, UK’s other challenger banks are expanding the offerings.