Tesco Bank Closing All Current Accounts

Tesco Bank has announced that it is to close all of its current accounts that customers hold with the bank because they are no longer being used.

The bank has estimated that only around 12% of the current accounts open with the bank are being used as the primary bank account by its customers. The remaining 88% of accounts either have limited activity or are being used as a savings pot.

The decision has been taken after the bank reported its accounts for the last year in April where it stated it has suffered a £175 million loss, compared to the prior 12 months where it had been in profit by £193 million.

What next for Tesco Bank customers?

Customers who do hold a Tesco Bank current account now have a few options open to them. They will receive a letter within the next fortnight to let them know of the closure of their account and to explain their options to them.

Anyone who needs extra help can speak to the bank’s customer service department. The chief executive of Tesco Bank, Gerry Mallon, has said that the bank will support customers to find a suitable alternative.

One option, mostly suited to those who use another account as their primary current one, is to switch their Tesco Bank current account to a savings account. Or, customers can use the Current Account Switching Service to automatically move their bank and all direct debits to a new account with a different bank.

There are 213,000 current accounts affected by this decision. With 12% of those being identified as a primary bank account, this means that over 25,000 people will need to find a new main current account to use for their everyday banking.

The bank has asked that customers make sure their accounts are on a zero balance by 30^th November, the date that the accounts will all be closed. The bank had already stopped taking applications for new current accounts in December 2019.

More customer accounts closing

The news that Tesco Bank is closing current accounts comes after M&S Bank made a similar decision to close all current accounts by the end of August. It also closed branches earlier in July, meaning that existing customers could only deal with the bank by telephone or online.

Supermarkets were seen as being a potential challenger to the main high street banks, offering customers a number of benefits tied into their regular spending. However, they have not proven as successful as the supermarkets had hoped.

Instead, the main competition for the traditional big banks has been the digital challenger banks such as Monzo and Starling. These and other similar offerings have led the way in app-based banking, taking the lead in the younger customers who want to control their finances from their phones.

Large banks are employing tech firms to help them ensure they continue their dominance, which may lead to closures of other smaller banks in future.