Tesco launches its first current account, but how does it compare with the competition?

New Tesco current account review

Tesco has entered the current account market by launching its own current, the first provider to do so since the launch of the Current Account Switching Service last year.

This move comes just four weeks after Marks & Spencer launched its first free-to-use current account, with more so called challenger banks expected to launch products in the coming months.

So what does the new Tesco current account offer customers?

• a monthly fee of £5, this is waived if a deposit of £750 is made every month
• 24/7 online banking
• account access using a mobile app
• contactless payment
• use your debit card to collect Clubcard points when shopping in store at 1 point for every £4 spent
• use your debit card to collect Clubcard points when shopping outside Tesco at 1 point for every £8 spent (restrictions apply)
• annual interest rate of 3% paid on balances up to £3,000
• cheques can be deposited by post
• no bank branches but able to pay money into account in any one of 300 Tesco stores

How does the Tesco current account compare with other new current accounts?

We have compared Tesco with two new current accounts paying monthly interest

TSB Classic Plus

• 5% annual interest on balances up to £2,000 providing £500 per month is paid into account and sign up for paperless correspondence
• no monthly fee
• can conduct business online, in branch or by phone
• £10 overdraft buffer, no fees charged if you go overdrawn by £10 or less
• manage account online, in branch or by phone
• free mobile banking app

Nationwide FlexDirect

• introductory offer of 5% annual interest (dropping to 1% after 12 months) on balances up to £2,500
• no monthly fee
• fee free overdraft for 12 months
• free mobile banking app
• manage account online or by phone

Conclusion

We are in interesting times in the banking world with new entrants offering improved current accounts over the major high street names. With more choice for the customer it is not always easy to decide where is the best place for your money. It makes sense though to understand the different offerings so that you can make your choice from a position of knowledge.

Further reading

• Roundup of the best savings account rates available now
• Top cash ISA accounts