Earn 1 Clubcard point per £1 spent in Tesco when you get a Tesco Bank debit card

Tesco Bank’s current account together with a debit card launched in 2014 and up until earlier this year there has never been a big offer for signing up.

M&S Bank and First Direct for example have long standing offers of £100+ bonuses for new customers. The current M&S offer is actually £170 if you keep your account for two years. Apart from a couple of very tightly targetted trials, nothing similar has happened at Tesco.

There is still no ‘big bang’ sign-up deal. Instead Tesco Bank has been focusing on the day-to-day benefits of the account.

If you are a heavy Tesco shopper, it is worth taking a look at this account.

Tesco current account

Here is the Tesco Bank website promoting the current account.

As of a year or so ago, 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.

How do you earn Clubcard points with the Tesco current account?

You will earn Clubcard points on all of your debit card transactions:

1 point per £1 spent in Tesco

1 point per £8 spent elsewhere

If you are spending £100 per week in Tesco, which appears to include Tesco Fuel, you would earn 5,200 Clubcard points per year if you put all of this spending onto your debit card. That is on top of the base Clubcard points you would receive irrespective of how you pay. This is a pretty attractive deal.

Even the ‘1 point per £8 spent elsewhere’ is also attractive. This would be a great card to use at places which charge for using a credit card but where a debit card is accepted for free.

There is some small print. You cannot pay your mortgage, pay off a credit card bill or pay money into a savings account on your debit card and earn points. It DOES work with payments to the Inland Revenue but that is not something that most people can benefit from.

As with the Tesco Clubcard MasterCard, 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.

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, triple the rate of a decent instant access savings account.

Even better, Tesco lets you open TWO current accounts per person. A couple could open four between them and save £12,000 at 3% interest for 2 years.

You do have to pay in at least £750 per month and pay at least three direct debits each statement month with your account to qualiy for the 3% interest.

And these benefits are guaranteed

Tesco Bank is guaranteeing to retain both the 3% interest rate on £3000 balances and 1 Clubcard point per £1 spent in Tesco until at least 1 April 2019.

If you switch your banking, you are not at risk of the two most attractive benefits being taken away. That said, you can keep your existing account open. Tesco does not insist you close it.

Conclusion

The Tesco Bank current account was not competitive when it first launched. Dropping the monthly fee for low earners and introducing the new Tesco earning rate have improved it. If we’re honest, it has also benefited from competitors reducing the benefits on their products.

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 three years ago – would be more valuable unless interest rates elsewhere improve.

For some people, especially heavy Tesco shoppers, this new package may well stack up. If you’re sick of your current account provider it may be time to switch. Even if you like your current bank, because Tesco lets you keep your existing account open you may still want to take a look at this.

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Comments

  1. Worth noting that to benefit from the 3% interest, you need to pay in £750 per month and have 3 monthly direct debits – per account!

  2. I only use my Tesco Bank debit card where Amex is not accepted, but noticed that I have been receiving 1 Clubcard point for contactless, non Tesco Stores, transactions of under £8.00 since the beginning of November. Transaction amounts are £7.30, £5.15, £4.60 and £6.00. An online purchase of £22.50 got me 3 points instead of the normal 2, but a chip and pin purchase of £40.00 got me the usual 5 points. I can’t see anything on the Tesco Bank website to say they are now giving points for transactions under £8.

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