Tesco Bank has announced that it will close all of its customers’ checking accounts from the end of November and that it will write to them within the next fortnight to let them know what to do.
The retailer’s banking arm launched its checking account in 2014, at the time offering 3% interest on balances and Clubcard points on spending with the aim of winning customers.
But the bank, which has more than 5 million customers with savings, credit and insurance accounts as well as current accounts, closed the current account to new business in December 2019.
About 213,000 accounts remain open, but he estimates that only 12% of those accounts are used as a primary checking account, while the majority have limited activity or are used for other purposes, such as savings.
The lender writes to its current account customers, who will receive a letter within two weeks informing them of the closure of their account on November 30.
Affected customers will need to transfer their account to another provider or transfer their balance to a Tesco Bank savings account or other banking product by the end of November.
In addition to traditional banking products, Tesco Bank also offers a clubcard pay account, which comes with a debit card and allows shoppers to pay, save and collect points in the supermarket’s clubcard loyalty program.
Tesco Bank chief executive Gerry Mallon said the lender wanted to offer products that match the needs of Tesco buyers.
“With so few of our current account customers using it as their primary account, we want to help them find a suitable alternative based on their situation. We will pay particular attention to supporting all vulnerable clients and those in need of financial assistance, ”he said.
The move follows a similar announcement from M&S Bank, which plans to close its checking account and monthly savings product in August.
Meanwhile, one of the UK’s other challenger banks is expanding its offering.
Starling Bank, which offers banking services through a mobile phone app, has completed its first acquisition, mortgage lender Fleet Mortgages, which caters to rental landlords.
The £ 50million cash and stock purchase is part of Starling’s strategy to expand its lending.