Tesco Bank locks in current account interest rate at 3 per cent for next two years

Edinburgh-based Tesco Bank’s current account customers are to receive a guaranteed 3 per cent credit interest on balances up to £3,000 from 1st April 2017 until 1st April 2019.

Benny Higgins, chief executive at the challenger bank which employs 4000 at its headquarters in the Scottish capital, said the move was an effort to offer customer some certainty in an increasingly uncertain world stalked by Brexit and political events around the globe.

Mr Higgins said: “We recognise that we live in a time of uncertainty, where our customers are working hard to get as much value as possible from their money, and so we are taking a step that demonstrates we put our customers first.

“Too often banks focus on new deals for new customers, with little consideration for rewarding existing customers. At Tesco, our focus is providing great value products for all of our customers.

Tesco said current account customers will also receive more Clubcard points for every £1 spent with the retail giant, helping customers to earn benefits worth up to an estimated £158 per year with no monthly fee.

Mr Higgins added: “With our unique guarantee, we are offering Tesco customers peace of mind that they will make a return on their hard earned money, as well as rewarding them for their loyalty by giving them a bigger thank you when shopping in Tesco.

By making this guarantee, existing Tesco Bank current account customers who regularly shop at Tesco for their food, fuel and family essentials could earn benefits up to the value of £316 over the next two years.

Andrew Hagger, independent personal finance expert at Moneycomms, said: “This positive move will be welcomed by customers seeking a decent return on their current account credit balances as it’s been a dismal few months, with many of the previous best buy in-credit and reward deals being slashed.

“Many customers were probably anticipating a similar rate reduction from Tesco Bank but refreshingly it’s gone against the grain and given consumers some much needed reassurance and certainty.

“Credit interest at 3 per cent guaranteed for two years with instant access is an attractive deal in a depressed savings market where you currently have to lock your cash away for a minimum of 5 years just to earn a best buy 2.05 per cent rate.

“Official current account switching numbers have remained sluggish as consumers often don’t know whether it’s worth moving banks if rates are going to be cut within a short while of them moving - so this two year guarantee could be enough to sway a good number of those currently sitting on the fence.”