MSE News: Tesco Bank won't pass on rate rises unless savers take action – how to boost your rate

MSE_Petar

Tesco Bank has upped the interest rate on its easy-access cash ISA, but existing customers can only benefit by opening a new account and transferring over their savings. Here's the situation and some tips for those affected.

Read the full story:
'Tesco Bank will not pass on base rate rises unless savers take action – here's how to boost your rate'

If you haven’t already, join the forum to reply.

eskbanker

Why is MSE picking out Tesco in particular?

Recent threads on here have highlighted other banks with the same policy, e.g. Sainsburys and Virgin Money:

https://forums.moneysavingexpert.com/discussion/6379847/sainsbury-s-bank-not-automatically-applying-interest-rate-rises

There have also been a number of threads where posters ask for info about which banks pass on base rate rises, so perhaps it would be worth an MSE staffer doing some research into the market and publishing a more balanced piece? 

t1redmonkey

I thought this was a weird one to make an MSE article on as well, sure it's not great but lots of other banks do it too unfortunately, it's not a Tesco only thing.

Bridlington1

It's rather useful when dealing with limited access accounts in the current interest rate environment though, e.g. Nationwide 1Y triple access saver. If they are bringing out a new issue every time the BOE base rate rises, you suddenly end up being able to make 3 withdrawals every 6 weeks as opposed to 3 per year as long as you keep opening the new issues as soon as they come out.

I agree however that it is rather a pain for easy access accounts, but at the moment I'm moving my money around quite regularly to wherever has a higher interest rate anyway so it makes little difference either way.

mebu60

eskbanker said:

Why is MSE picking out Tesco in particular?

There have also been a number of threads where posters ask for info about which banks pass on base rate rises, so perhaps it would be worth an MSE staffer doing some research into the market and publishing a more balanced piece? 

Agree totally with eskbanker.

The article even goes on to say: "A similar situation has unfolded with Tesco Bank's Internet Saver account too, which recently saw a rise only of its bonus rate. We've asked Tesco Bank if Internet Saver customers can follow a similar process to get the new rate and we'll update this when we know more."

Unfolded? It has forever been thus. Open the new internet saver, transfer funds into it, leave old one dormant. At convenient time ring Tesco to close old account and have interest transferred to latest account too. 

MSE_Petar

Hi everyone,

Thanks for the feedback.

We focused on Tesco Bank for this story because we'd had users writing to us directly complaining about it, and it's currently one of the top payers for easy-access cash ISAs.

But you're right that this issue isn't limited to Tesco Bank, so we're looking into what other providers are doing and are hoping to do a broader piece in the future.

In the meantime, we hope the story is helpful for those Tesco Bank customers who want to benefit from the higher rates but may not be aware of the action they need to take.

Thanks again,
MSE Petar

Rollinghome

Must be tough having to write a piece for an MSE forum, Peter.  They're a canny lot here, and not much gets past them.

Now, if you were writing for the Daily Mail money section, you could knock off any old tosh and no one would be the wiser.

Malchester

Surely get things right first time, and be fair to all providers then there will be no need for re-writes!!!

SacredStephan

I have opened several Tesco Cash ISAs since May.

When opening the ISA online there's no option to tell them that you want to transfer in from an existing Tesco Cash ISA, only from another provider.

After the account is open they sent transfer forms through the post with no warning that these forms should not be used for an internal ISA transfer.

When I sent the forms back they ignored them.

The call centre staff are helpful but why can't I initiate the transfer between two ISAs by logging in to my account?

Of course, if they raised the rates on existing accounts I wouldn't need to do any of this.

mebu60

SacredStephan said:

I have opened several Tesco Cash ISAs since May.

When opening the ISA online there's no option to tell them that you want to transfer in from an existing Tesco Cash ISA, only from another provider.

After the account is open they sent transfer forms through the post with no warning that these forms should not be used for an internal ISA transfer.

When I sent the forms back they ignored them.

The call centre staff are helpful but why can't I initiate the transfer between two ISAs by logging in to my account?

Of course, if they raised the rates on existing accounts I wouldn't need to do any of this.

Agree totally re final para.

From memory when I went to open a subsequent Tesco Cash ISA and answered the question re transferring in there was a message that said if it was an internal transfer you needed to call. Subsequently I have just called, the initial person takes all the details then arranges for the transfer team to do their bit (that's been my experience). It is a tedious process, I think they are being over-cautious in ensuring that the ISA rules are adhered to so that you do not lose the tax efficiency inadvertently. 

Someone mentioned the other day that they once transferred their Cash ISA accidently to a non-ISA account thereby losing the tax advantages that could not be reinstated. (Technically they can be but it requires onerous interaction with HMRC. If the provider makes the error they are obliged to sort but if you do it yourself, tough).