Tesco Bank suspends applications for its Avios-earning current account

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Since 2014, when Tesco launched its current account, it has been possible to earn Avios or Virgin Flying Club miles with your day-to-day DEBIT card banking.

Until this week.

Tesco has suspended new applications for its current account. Take a look on its website here.

It isn’t clear if this is permanent or not.

The website simply says:

“Sorry, we’re not accepting new current account applications at the moment, but please pop back in the new year for an update on this.

If you’re an existing customer you can continue to use your account as normal.”

Tesco has done this before, but for different reasons. Earlier suspensions were due to the account being overrun with applications due to an exceptionally generous interest rate. Given how far that rate has been cut in recent years, this certainly is not the case now.

Tesco let you earn Avios with your current Account DEBIT card

If you had this account, you were earning Clubcard points on all of your debit card transactions:

1 point per £1 spent in Tesco (2.4 Avios per £1 / 2.5 Virgin miles per £1)

1 point per £8 spent elsewhere (0.3 Avios per £1 / 0.31 Virgin miles per £1)

The ‘1 point per £1’ spent in Tesco was a very generous benefit. If you were spending £100 per week in Tesco, which includes Tesco Fuel, you would earn 12,480 Avios or 13,000 Virgin Flying Club miles per year if you put all of this spending onto your debit card. That was on top of the base Clubcard points you would receive irrespective of how you pay. This was a pretty attractive deal.

Even the ‘1 point per £8 spent elsewhere’ was attractive. Whilst you would be better off in most circumstances using a loyalty credit card instead, it was not always possible to avoid using a debit card.

There was ‘small print’ attached to the ‘1 Clubcard point per £8 spent on the debit card’. All payments to ‘banks and financial institutions’ were exempt. This means that you could not pay your mortgage, pay off a credit card bill or pay money into a savings account.

It DID work with payments to the Inland Revenue. With Curve now imposing fees on HMRC payments and Capital On Tap switching to a credit card from a debit card, it was one of the few ways of profiting from tax payments.

Is Tesco Bank still in the game or not?

I get a feeling that Tesco is trying to wind down Tesco Bank without making a big song and dance over it. As Tesco owns its bank outright, winding it down would release a lot of capital.

In September 2019, Lloyds Bank bought Tesco’s mortgage portfolio for £3.8bn. Not only does it no longer sell mortgages, it has sold off all the ones it had already generated.

It quietly started cutting the interest rates on its savings accounts. These had been aggressive – I have two myself – because Tesco wanted the funding to support its mortgage lending. Now that it isn’t making any new mortgage lending, it doesn’t have much use for deposits. The top offering is currently 1.2% vs 1.35% at Marcus.

The credit card arm has also had a lobotomy. The Premium card was closed, as were many variants of the standard credit card. It is a long time since there was an incentive to sign up to their credit cards, which are another way of earning Avios and Virgin Flying Club miles, albeit at a very low rate.

I’ll keep an eye out and let you know if the current account reappears, as long as it still earns Clubcard points.

How to earn Avios points from UK credit cards

How to earn Avios from UK credit cards (December 2021)

As a reminder, there are various ways of earning Avios points from UK credit cards. Many cards also have generous sign-up bonuses!

There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways BA Amex American Express card

British Airways American Express

5,000 Avios for signing up, no annual fee and an Economy 2-4-1 voucher for spending ….. Read our full review

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points, such as:

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Run your own business?

We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios:

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company Read our full review

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus:

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

(Want to earn more Avios? Click here to visit our home page for our latest articles on earning and spending your Avios points and click here to see how to earn more Avios this month from offers and promotions.)

Category

British Airways and Avios, Tesco Clubcard, Virgin Atlantic and Flying Club

This article is closed to new posts. Discussion continues in the HfP Forums.

John says:

8 Jan8 January 13:45

TL;DR £5.99 monthly fee to continue earning the cb and forex-free use, also the interest rate becomes 0% i.e. you can pay the min payment until your credit limit is reached (provided you have lots of unused credit limit elsewhere so as to not up your utilisation ratio) and a 1.5% savings account (barely higher than other contenders)
SimonW says:

8 Jan8 January 13:53

O/T – I still cant work this out. I have to pay my final balance this week, for a BA holiday to Dubai next month. To give me best insurance protection, and possible consequential loss cover, shall I pay some of the balance on my Amex Plat and BAPP ? Or does it not matter ?? With current situation obviously need to have the best possible cover i am entitled to…….
- Rob says:
  
  8 Jan8 January 13:59
  
  If you have Plat then using either Amex will give you maximum protection.
  - SimonW says:
    
    8 Jan8 January 14:03
    
    Thanks Rob
  - marcw says:
    
    8 Jan8 January 14:18
    
    Not if the foreign office recommends “Advice against all travel”.
    - Anna says:
      
      8 Jan8 January 14:22
      
      If travel advice changes AFTER you have paid for your holiday, are you still covered if you then cancel?
      - Rob says:
        
        8 Jan8 January 14:30
        
        Yes
    - TGLoyalty says:
      
      8 Jan8 January 17:12
      
      Only if they give that advice BEFORE you book your holiday or if you travel anyway after that advice.
- Lady London says:
  
  8 Jan8 January 18:31
  
  At least ,£1 of each covered expense must be paid on a credit card – not a charge card – to get statutory s.75 protection – this is the thingvthat theoretically covers consequential losses.
  
  Amex charge cards put you only in the protection of Amex which appears very good but defo does not cover consequential losses.
  
  I’d look at splitting out to pay something on both if poss.
1nfrequent says:

8 Jan8 January 13:59

Shame. I’ve had good value from the Tandem card over the last couple of years.

So what’s the thinking on the best free card if you want to avoid FX fees but still get something for your buck? Barclaycard rewards?

1F
- Nick_C says:
  
  8 Jan8 January 16:55
  
  “So what’s the thinking on the best free card if you want to avoid FX fees but still get something for your buck? Barclaycard rewards?”
  
  Pre load Revolut using the MC or Visa of your choice. Exchange GBP to foreign currencies at an exchange rate you are happy with, and lock it in. Convert left over balances back to GBP or to another foreign currency. I used Revolut in four different currencies in the last three months. Brilliant product.
  - 1nfrequent says:
    
    8 Jan8 January 17:06
    
    Smashing – thanks, Nick!
  - Brighton Belle says:
    
    8 Jan8 January 23:16
    
    Ditto here
- melonfarmer says:
  
  8 Jan8 January 17:07
  
  yep, so long Tandem. I am supposedly a co-founder, but don’t get any preferential deal! As with the Monzo Plus situation a while back, they may find that there’s no appetite for their new deal, but the credit agreements (of those who declined the opportunity) will have ended (assuming folks pay off their balance in full each month) so a Monzo-type about face won’t work.
  
  Could be costly for Tandem even though Rob highlighted that their original business model was unsustainable at their card launch. Ho hum, I guess everyone moves onto Revolut, Curve, Monese, Monzo etc. (thanks for the tips to those who posted above).
- Mark says:
  
  8 Jan8 January 17:18
  
  Aqua rewards offers 0.5% with no exchange loading. Very low credit limits though – up to £1,200 according to moneysavingexpert.com. Still it might enough in combination with a Curve card (and my Halifax Clarity for anything such as car rental or hotel deposit blocks).
  - Crafty says:
    
    9 Jan9 January 06:23
    
    It should increase with time, mine has been £3,500 for a few years now which I find to be usually enough for the purpose.
Paul says:

8 Jan8 January 14:04

I have a very old premier card from Tesco that provides 800 rather than 600 miles per £2.50 of converted vouchers. I rarely use the credit card and about once a year get letter to say I must use it or lose it. So a single transaction is done and that secured things for another year
I don’t collect anything like the pints I used to even with one of my kids having a Saturday job with them. Since the gutted the programme I shop around and have found Waitrose offers some really good deals. My wife is forever getting £8 off £40 vouchers which when combined with booze deals is great value
- Anna says:
  
  8 Jan8 January 14:23
  
  Ocado have just emailed me a 3 month free delivery offer, not sure if it’s targeted though!
- Fenny says:
  
  8 Jan8 January 18:22
  
  I shop in Waitrose every day (closest to work + free coffee) and I seem to have stopped getting the £X off £Y spend vouchers. I only get things like 50p off yogurt. But they do have Good deals on things and I get Virgin points on all my instore spend.
Martha says:

8 Jan8 January 14:45

Can you refer plat to nectar?
- Rob says:
  
  8 Jan8 January 14:45
  
  Yes
Lady London says:

8 Jan8 January 14:47

Hum. Another one I’m too late for! Closed to new applicants now as well, unfortunately!
Rich says:

8 Jan8 January 15:13

OT: Made a Rocketmiles booking at a HIX. Absurdly high rate of £200 for the night, made slightly more palatable by 12,000 Heathrow Rewards.

To my surprise, on checking in just now, they recognised my IHG Elite status, and my IHG account shows the stay in there (although at a rate of £59) along with points earning.

Anyone had this before with an IHG / Rocketmiles booking?
- Leigh says:
  
  8 Jan8 January 15:34
  
  Similar experience: my gold status was recognised when staying at Hilton T5 booked via Rocketmiles. My Hilton account also shows the stay. I was pleasantly surprised.
- John says:
  
  8 Jan8 January 16:21
  
  Well rockermiles is paying them £59 and presumably charging you £120 for the avios… Hope you checked the direct booking rate beforehand and it was near £200
  - Rich says:
    
    8 Jan8 January 17:03
    
    Rate was £100 / night with a 2 night minimum that I couldn’t get around for all the tea in China.
    
    Net cost after the Heathrow Rewards is £80, the same price as my backup option (the Ibis), but the HIX is much preferred.
    
    So bizarrely, it made sense to pay the Rocketmiles rate, especially if there’s a conversion bonus from Heathrow Rewards in the future
    - Lady London says:
      
      8 Jan8 January 18:35
      
      I presume by ibis you mean the ibis styles there? The ibis is not well rated and location not amazing.
AlexT says:

8 Jan8 January 15:55

This completely kills the card for me, as I have an MBNA Horizon. Basically they want £72 a year to keep the same benefits we already enjoy for free + a savings account barely better than Marcus (locked on 1.5% till Nov, then revering to 1.35%). The 0% interest is a joke seeing as they only ever gave incredibly low credit limits…