Tesco Bank is urging its current account customers to switch payments and withdraw or transfer any remaining balance before it closes all accounts later this year.
We take a look at everything you need to know about Tesco's decision, including why its current accounts are closing, when you need to move your money, and some of the best alternatives on the market.
Why is Tesco closing its current accounts?
Tesco has estimated only 12% of its 213,000 current accounts are being actively used by customers as their primary account.
It said most accounts had "limited activity" and others were being used for "other purposes, such as a savings pot". The bank reported a £175m loss in April, compared with a £193m profit in the previous 12 months.
Tesco had already closed its current accounts to new customers in December 2019, but the new decision marks the shut-down of all its existing current accounts for good. Despite the low usage rates, around 26,000 customers will be looking for a new primary current account.
Customers will receive a letter in the next 2 weeks to inform them of their accounts closing, the bank said.
When is Tesco closing its current accounts?
Tesco is shutting all of its current accounts on Tuesday 30 November 2021.
The bank has asked customers who choose not to switch to a new current account to move any regular incoming or outgoing payments to a different account, and to make sure their account has a balance of £0 by 30 November.
What do I need to do if I have money in a Tesco current account?
Fortunately, Tesco customers have a number of options to move their money before the accounts cease to exist.
You could transfer your existing funds into a Tesco Bank savings account or switch to a different bank altogether using the Current Account Switch Service (CASS). Those who are in their overdraft could make use of one of Tesco Bank’s credit cards to clear their balance.
The important point is that you must make sure that you have £0 in your Tesco Bank current account by 30 November 2021 so you do not lose your money.
What are the best alternatives to a Tesco Bank current account?
If you are looking for alternatives to a Tesco Bank current account, there are a number of options available at the moment. We have rounded up 3 of the best on the market.
Virgin Money - M Plus Current Account
Virgin Money - M Plus Current Account- 2.02% AER on up to £1,000
- No monthly fees
- Interest paid monthly
- £40 monthly maximum unarranged overdraft charge
- Free cash withdrawal in the UK
- Free cash withdrawal in foreign currency outside the UK
- Free debit card payment in foreign currency outside the UK
- Virgin Experience Day gift card worth £150 when you switch
Starling Bank - Personal Current Account
- 0.05% interest rate
- No monthly fees
- No minimum monthly credit
- 15% arranged overdraft rate
- Cash deposit in Post Office branches
- Cheque deposit via app or post
- Access to digital savings jar, Goals
- Quick online set up with no paperwork
First Direct - 1st Account
- 0% interest rate
- No monthly fees
- No minimum monthly credit
- 0% arranged overdraft rate
- £250 interest-free overdraft
- Access to 1.00% AER Regular Saver Account
- 24/7, 365 banking via online, phone and on mobile
- £100 welcome bonus when you switch
For more of the best current accounts, visit our high interest current account best buy table or check out our list of the best current account switching offers, cashback & incentives.
