Tesco Online Bank Account Beware

cpa541

Just opened a Tesco online bank account because of the good interest rate (1.4% gross). I paid in some money by direct debit (cleared funds) only to find that I cannot access my money for 9 days due to "new account security reasons". Fortunately I do not need the money immediately but it could have been difficult if I was trying to use the money to, say, buy a house. The security delay is mentioned in their terms and conditions but the time is unspecified. Nine days is a long time in the internet banking world.

Fruit_and_Nut_Case

cpa541 wrote: »

...good interest rate...
...1.4% gross...

These two things do not sit well together. Do you have your full set of interest-paying current accounts?

grumbler

cpa541 wrote: »

Just opened a Tesco online bank account because of the good interest rate (1.4% gross). I paid in some money by direct debit

Do you mean online savings account and 1.35%?

cpa541

Fruit_and_Nut_Case wrote: »

These two things do not sit well together. Do you have your full set of interest-paying current accounts?

I know what you mean but can you tell me of another account which bears better interest where I don't need to jump through endless hoops** and have instant access to funds in excess of, say, £5K? (**setting up direct debits, funding the account every month with a certain amount, etc etc etc). I'm under 65 years of age.

cpa541

grumbler wrote: »

Do you mean online savings account and 1.35%?

Yes, you get 1.4% gross (for one year with their bonus). I first saw it on this very MSE site.

YorkshireBoy

Why would you want to pull a 'significant' sum in by DD? Presumably your money would be sat in a current account making nothing whilst you wait for the 3-day simultaneous debit/credit.

By all means pull £1, just to test the operation, but for larger deposits simply send by FP.

Oh, and a brace of BoS Vantage accounts would take care of £6-10K - and more than double your return at 3% AER - with just a couple of monthly cross funding £1K SOs...or is that a "hoop" too far?

butterflymum

cpa541 wrote: »

I know what you mean but can you tell me of another account which bears better interest where I don't need to jump through endless hoops** and have instant access to funds in excess of, say, £5K? (**setting up direct debits, funding the account every month with a certain amount, etc etc etc). I'm under 65 years of age.

Many, both under and over 65, find jumping through such 'hoops' a fairly easy (and not too time consuming) matter and the 'financial exercise' in turn helps maintain their finances in good health. But, each to their own.

Regardless, it was good of you to put up a warning about the delay. Hopefully you have also sent your thoughts to Tesco customer services to give them a better understanding of the effects their terms have on customers and that some feel they could improve the service.

cpa541

YorkshireBoy wrote: »

Why would you want to pull a 'significant' sum in by DD? Presumably your money would be sat in a current account making nothing whilst you wait for the 3-day simultaneous debit/credit.

By all means pull £1, just to test the operation, but for larger deposits simply send by FP.

Oh, and a brace of BoS Vantage accounts would take care of £6-10K - and more than double your return at 3% AER - with just a couple of monthly cross funding £1K SOs...or is that a "hoop" too far?

The direct debit problem is a product of the confusing Tesco's online application system. There appeared to be no option of a bank transfer (which I prefer). It's when I tried to withdraw a "test" £1.00 that I discovered the immediate access problem for new accounts. Thanks for info re BoS but two accounts (a brace) and two DD's is four hoops too many.

YorkshireBoy

I agree a 9 day hold is a long time, but it's not a recent issue with funding savings accounts this way. Many of my old savings account providers were doing it long before FPs were available. Since DDs can be 'returned', they need to ensure your bank won't do this before releasing funds to you.

As regards "no option of a bank transfer", as soon as you have the sort code and account number you're good to go with pushing funds in by FP (as I was recently when I got the 1.35% AER variant).

DCFC79

cpa541 wrote: »

The direct debit problem is a product of the confusing Tesco's online application system. There appeared to be no option of a bank transfer (which I prefer). It's when I tried to withdraw a "test" £1.00 that I discovered the immediate access problem for new accounts. Thanks for info re BoS but two accounts (a brace) and two DD's is four hoops too many.

Takes very little time to set up.

cpa541

YorkshireBoy wrote: »

I agree a 9 day hold is a long time, but it's not a recent issue with funding savings accounts this way. Many of my old savings account providers were doing it long before FPs were available. Since DDs can be 'returned', they need to ensure your bank won't do this before releasing funds to you.

As regards "no option of a bank transfer", as soon as you have the sort code and account number you're good to go with pushing funds in by FP (as I was recently when I got the 1.35% AER variant).

Yes, I understand the security issue with the DD route and the possibility of the "clawback" by my bank. I was therefore surprised when completing the online application that Tesco appeared to be pushing me towards Direct Debits.
If anyone else has opened an account with them I would be interested to hear your comments.