How to earn Clubcard points with the Tesco Bank Current Account

Back in June 2014, Tesco Bank launched its current account.  There was a lot of hype about the account at the time but Tesco was, probably correctly, keen to play it down whilst the IT bedded in.

I expected that, after a few months, there would be a major push with a substantial Clubcard point bonus for moving your banking across.  That has not happened.

M&S Bank and First Direct have long standing offers of £100 bonuses for new customers.  It seemed logical to me that Tesco Bank would offer 10,000 Clubcard points at some point.  But, apart from a couple of very tightly targetted trials, nothing has happened.

Is it worth a look regardless though?

Tesco Bank account

Here is the Tesco Bank website promoting the current account.

The one big change since the launch is that you no longer need to pay in £750 per month in order to get free banking.  The £5 monthly fee for dormant or low value accounts has been removed.  No-one needs to pay a monthly fee to have the Tesco Bank current account.

How to earn Clubcard points with the Tesco Bank current account

You do not earn points based on how much money you pay into your account, or based on the interest you earn.  Instead, you earn Clubcard points on all of your debit card transactions:

1 point per £4 spent in Tesco (0.4 Avios per £1)

1 point per £8 spent elsewhere (0.2 Avios per £1)

There is ‘small print’ attached to the ‘1 Clubcard point per £8 spent on the debit card’.  All payments to ‘banks and financial institutions’ are exempt.  This means that you cannot pay your mortgage, pay off a credit card bill or pay money into a savings account.  It seems to work with payments to the Inland Revenue but that is not something that most people can benefit from.

It is also worth noting that debit card spending is rounded down to the nearest multiple of £8.  A £7.99 lunch payment will earn you exactly zero Clubcard points.  This is a major deterrent unless you are using the card for large transactions.

When the Tesco Bank current account launched, these earning rates were seen as poor.  Since then, Tesco has cut the earning rate on its Tesco Clubcard MasterCard to the same level – 1 point per £8 spent.  

If you do not qualify for the Tesco Clubcard MasterCard, you will be no worse off getting the Tesco current account and earning points from using the debit card.

And a subsidised interest rate

Current account holders receive 3% interest on the first £3,000 in the account.

Whilst there is no sign-up bonus, the 3% interest paid on sums of up to £3,000 is – given current interest rates – an incentive to get an account.  You would receive £90 of interest per year, at least double the rate of the best instant access savings account.

Foreign exchange use of the debit card incurs a 2.75% fee.

Conclusion

The Tesco Bank current account has not got any better since it launched, assuming you would have paid in £750 per month to avoid the fee which has now been scrapped.  However, with interest rates refusing to improve and credit card earning rates dropping down, it looks better by comparison.

It is worth mentioning that Tesco Bank has a good reputation for customer service. You can also pay in cheques and make cash withdrawals at 300 larger Tesco stores across the country.

The lack of a moving bonus remains problematical.  It would be a disaster to open an account only for Tesco Bank to offer 10,000 Clubcard points the following week.  I doubt they would offer both a sign-up bonus and 3% on your first £3,000, however, and in the long run the ‘3% on £3,000’ – which has been in place since the account launched two years ago – would be more valuable unless interest rates elsewhere improve.

If you make a lot of payments with a debit card then the Tesco Bank current account may be worth a look.  For me, the only debit card bills I pay are financial and those would not earn me Clubcard points anyway.  If you don’t like or can’t get credit cards then the debit card gives you an Avios earning rate which is now nearer to matching Visa or MasterCard credit card.

A version of this article appeared on our sister site Head for Points last week

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Comments

  1. Genghis says:

    When a similar article ran on HfP recently, Tilly71 mentioned that they had done some research recently about a potential sign up bonus. Perhaps best to hold off for a while.

  2. ign0me says:

    Will I earn point for paying my rent to landlord? Into his bank account?

  3. Tilly71 says:

    Correct, I did complete a survey on behalf of Tesco Bank and they asked about incentives for new customers to the current account, options were £100 or 5000 Clubcard points.

  4. David Douglas says:

    Why is this not available to residents in Northern Ireland ?
    The credit cards are and all the other UK based banks and building societies offer to NI residents ?

  5. Interesting to hear about Tesco’s current account and that financial transactions do not count towards earning clubcard points. Where do we stand with payments to online bookmakers?

    The reason I ask is I have just started doing matched betting which involves turning over a large sum of money each month between my bank account and the bookies. It’s a nightmare having my main current account with all these transactions going through, so I am looking to separate my matched betting transactions with other more normal day to day expenses.

    • Would suspect bookmakers are on the list of things which don’t earn points.

    • Genghis says:

      Good idea having a separate account for matched betting. That’s what I did last year. Start off small and only have a few bets on at once. I made about £1k back end of last year. Just make sure you read all the small print of the promo. I got bored once I’d exhausted the main bookies but it was fun while it lasted.

  6. One thing which was inconclusive was whether you could leverage a few clubcard points on withdrawals by getting cashback when using the debit card to make a purchase. Only very small benefit from this though if it were possible.

    However that option plus a sign up bonus would probably move me from First Direct

  7. Your article states that you earn 1 point per £4 spend in Tesco, whereas the Tesco website for the current account states that you earn 5 points for every £4 spent in Tesco.

    • Andrew* says:

      1 pt per £4 is the ‘card reward’, tesco are summing it with 1 pt per £1 you get as standard with clubcard

  8. WillPS says:

    ” I doubt they would offer both a sign-up bonus and 3% on your first £3,000″

    Why? TSB regularly offer a £100-150 switching bonus on their Plus account, which includes 5% interest on balances up to £2000.

    Nationwide offer a similar account (although the the interest is lowered after 12 months) and they have a long standing £100 switching bonus (when referred) too.