Tesco has announced plans to launch a current account next autumn that will give customers Clubcard points when they use their debit card. Would you bank with your supermarket in exchange for loyalty incentives?
It feels like you can hardly move for Tesco stores these days and that every closed-down pub or restaurant is reincarnated as yet another Tesco Metro. And now the supermarket plans to increase its reach even further by launching a current account under its Tesco Bank brand.
With 15 million Clubcard holders, including 6.5 million regular users, there are a lot of people who could take advantage of a Tesco points incentive for using their debit card. However, we still don’t know what the exact deal will be, so it’s difficult to judge whether the account is a tempting proposition.
Will a Tesco Bank account be worth it?
In an interview with the Mail on Sunday, Tesco Bank’s boss Benny Higgins said the account would be more transparent than others, but it hasn’t been decided whether you will have to pay a monthly fee for it. This will be the key to whether it truly offers good value, as it doesn’t matter how many Clubcard points you earn if the monthly fee outweighs the rewards you get.
Our research has shown that ‘packaged’ accounts (those with a monthly fee) rarely give you benefits that are worth their cost when you consider how many of them you will actually use. At least with the Tesco Bank current account, it should be easier to work out exactly whether any monthly fee is worth paying if the Clubcard points are turned into money off your shopping.
Marks & Spencer launched its own current account in September with a monthly fee of £15 or £20 with family travel insurance. Benefits include M&S Café hot drink vouchers worth £127, £40 of M&S vouchers, £45 to spend on specific items in M&S and loyalty points when you use your debit card in M&S. That’s all great if you spend most of your time in M&S, but perhaps not such a good deal for everyone else.
A sweep of supermarket banks
It seems to me you could be quids-in by taking out a supermarket current account if you regularly shop there, as you can easily use the rewards you get. But I think it’s unlikely that people who don’t have a local Tesco or M&S store will go out of their way to visit them, just to use their account rewards.
On the other hand, any new model for banking that challenges the status quo should be welcomed, as long as it gives at least some people a better deal. So are supermarkets the future of banking? Are you happy to see these new entrants into the current account market, or should supermarkets stick to what they know?