As Santander announces a drastic increase in the monthly fee for its 123 current account, Tesco Bank has decided to drop its own fee.
Following Santander’s announcement that it is more than doubling the fees on its popular 123 Account, Tesco Bank has hit back by ditching the monthly fees on its own current account.
Up until now, unless you paid £750 a month into the Tesco Bank Current Account you would have to pay a £5 monthly fee. However, from Thursday 17th September there is no minimum funding requirement - the fee is being scrapped entirely. With the account also offering a competitive 3% interest on balances up to £3,000 (and the chance to accrue extra Clubcard points) this change will make it even more attractive.
“We’ve been delighted with the response from customers since we launched our first current account last year,” says David McCreadle, managing director of banking at Tesco Bank. “By removing the monthly fee, we believe we are offering customers one of the best value current accounts in the market.”
Santander's shocking fee change
The news comes on the back of Santander’s announcement that from January the fees on its 123 Account will rise from £2 a month to £5.
The bank blamed "external market factors" for the drastic fee increase, which means it will now set you back a whopping £60 a year.
You can still earn cashback on certain direct debits and earn up to 3% interest on your balance though. Read Shocking new monthly charge for Santander's top 123 Current Account.
Getting more from your bank account
While Tesco's bank account pays a very healthy rate of interest, you can beat it.
The Nationwide FlexDirect Account pays 5% on balances up to £2,500 for the first 12 months, while TSB's Classic Plus Account pays 5% on balances up to £2,000, with no time limit. It now pays cashback on certain debit card spending too. Find out more in TSB adds 5% cashback to market-leading current account.
Or you can get 4% on balances between £4,000 and £5,000 from Lloyds Bank, while Bank of Scotland's Classic Current Account with Vantage pays 3% on balances between £3,000 and £5,000.
However, the best bet of all may be the Halifax Reward Current Account. This pays you a £5 reward for every month you pay in £750, so long as you stay in credit and switch over a couple of direct debits. What's more, at the moment Halifax is also offering a £125 switching reward. So over a year you could earn a whopping £185.
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Shocking new monthly charge for Santander's top 123 Current Account