Back in February, we revealed that Tesco had been forced to stop further applications for its current account after customers, keen to take advantage of the 3% interest rate, swamped the retail giant.
Now, just two months after closing down the service due to the ‘unprecedented level of demand’, the supermarket chain has announced it will be accepting new applications for the Tesco current account.
That’s great news for those looking to make their money work for them, as the current account will continue to offer that generous 3% interest rate on balances up to £3,000.
Savers beware: There’s a catch
Keen not to repeat February’s humiliating climbdown, Tesco have severely tightened up the eligibility rules for those wishing to get that generous 3% interest rate; a rate that’s guaranteed until April 2019.
Although the rigorous new rules won’t apply to existing current account holders, who will also still continue to earn a further one Clubcard point for every £1 spent on their Tesco Bank debit card, Tesco Bank has created a list of restrictions for new customers, in order to limit take-up of the offer.
David McCreadie, Tesco Bank’s managing director, was bullish in announcing the re-opening of the current account, complete with that all-important 3% rate that caught the attention of savers across the country.
‘I am pleased to reopen applications for our unique current account guarantee designed to provide peace of mind to our existing customers by offering a guaranteed credit interest rate, allowing them to make a return on their hard-earned money.’
‘Given the unprecedented response to the initial offer we made in February, there are a number of conditions new customers must meet to qualify for the credit interest benefit of this current account offer.’
So, what are those conditions McCreadie hints at? Anyone wishing to sign up with the superstore’s banking arm will now be forced to commit a minimum monthly deposit of £750.
In addition to that, by taking out a current account with them, you must also set-up a minimum of three active direct debits to be paid out from the account each month.
Essentially, Tesco wants assurances that the current account will be treated as any other current account, rather than an unmoving savings account for canny customers.
For Tesco, it’s easy to see why they’ve brought in these restrictions: That headline 3% interest rate is irresistible, so they want their own guarantees from savers that the account will be used on a regularly basis (that steady flow of your money means the company ensures that it gets out what they put in, as it were).
For savers, on the other hand, these restrictions may seem unnecessary – or even off-putting – for what amounts to a basic current account.
When originally revealed, Tesco’s offer was hailed as one of the most substantial interest rates on the market. And at a time when an increasing number of high street banks are slashing rates, here was a well-known and trusted bank guaranteeing a decent interest rate for a full two years.
It seemed too good to be true. That was the view taken by savers, at least, who flocked to open new accounts after word of the bank’s apparent generosity spread online.
It’ll be interesting to see if these new prerequisite qualifications limit this round of applications or encourages further unprecedented demand.
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