Tesco Bank has proved a popular provider for many Britons who are looking to put their money in a safe place. The bank, which is a familiar name due to its supermarket partner, has long proved an accessible option for savers. However, a new announcement has sent shockwaves through those who are saving with the provider. Tesco Bank will be making changes to current account agreements, which will take place in just months.
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From September 22, 2020, the interest rate for the current account will be reduced to zero percent.
In an email drafted to current account customers, Tesco Bank confirmed the changes were to take place.
The email read: “During March 2020, the Bank of England decreased base rates from 0.75 percent to their lowest ever level of 0.10 percent.
“Given this significant change to the base rate, we’ve reviewed our current account interest rate and made the decision to reduce this to zero percent.
“This means from 22 September 2020, you won’t earn interest. You’ll still earn your current rate of one percent AER on eligible balances up to £3,000 until then.”
Tesco Bank customers went online to express their disappointment at the decision made.
One said: “Is Tesco Bank trying to manage their customers out the exit door?”
Another wrote: “I thought there were some good things planned for my Tesco Bank current account.
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“This isn’t good, Tesco Bank. Looks like I’ll be transferring most of my money with you out in September.”
And a third wrote: “Nothing surprising. But how annoying. I’d just set up all my direct debits to qualify for this.”
Tesco Bank reiterated its reasons for lowering the rate to Express.co.uk.
The bank said: “During March 2020, the Bank of England decreased the base rate from 0.75 percent to its lowest ever level of 0.10 percent.
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“Given this significant change, we’ve reviewed our personal current account interest rate of one percent, and made the decision to reduce this to zero percent.”
Tesco Bank has said its goal is to help Tesco shoppers manage their money “a little better everyday”.
The bank has more than five million customers, and was established in 1997.
Savings accounts across the country have been hit by the financial impact of the COVID-19 crisis.
However, as Tesco Bank itself stated, it was the unprecedented lowering of the Bank of England base rate which had a significant effect.
The base rate was decreased to its lowest level in the central bank’s 325-year-history in a shock move which has continued to have severe implications for interest rates more widely.
Almost all familiar providers have lowered their interest rates accordingly.
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