Tesco Savings Loophole: Top savings account with upto $60 of clubcard deals

Tesco's savings rate of 6.5% AER pushes it into the best buy tables, better still put over $1,000 in and you get up to $80 worth of freebies on top (even if you don't keep the money in for long). This is a full Q&A guide to maximise the benefit.

MSE Update. This offer is now closed but the article remains for information.

Please note the dates have changed slightly due to high demand for the account. You'll be eligible for the points if you applied by 12 November and your cash is in the account by 31 December (extended from

What’s the deal?

Sign up to a Tesco Savings Account account before 12 November 08 and if you're a new customer you'll be awarded at least five hundred points on its Clubcard rewards scheme. The points you get depend on how much you have sitting in the account on 31 December (this has been extended from 30 November due to high demand for the account).

Points based on the balance on 30 Nov.

 

Quadruple the value of the points

Redeem 500 points on Tesco shopping and each point is worth a penny, making it worth $5 overall. Yet instead redeem them on things in Tesco's Clubcard Deals brochure, like weekends away, days-out, RAC membership & magazine subscriptions and the value is automatically quadrupled (see the Loyalty Points article for more info).

This means the actual value of the freebies you can obtain by doing this is between $20 and $80, depending on how much you have in the account.

How good is the savings accounts?

This isn't the first time Tesco has run a Clubcard points savings promotion. Yet in the past the accounts it offered were poor, which meant the only way to take advantage was by simply dipping your money in for the relevant day. Yet this year it's much better. There are two accounts on offer...

   * Internet Saver 6% AER.

      Tesco's Internet Saver pays 6% on any amount above $1 with no notice needed to withdraw your cash. However, 1.5% of this rate is a bonus lasting the first year only, so the rate will plummet after that. Yet in the meantime this is only a fraction below the market leading rate.

      Therefore there's nothing wrong with getting this account for up to a year, then ditching and switching elsewhere.

   * Instant Access Savings 3.75 - 4.5% AER

      The phone or local Tesco operated non-web Instant Access Savings account pays 3.75% to 4.5% depending on how much money you keep in it. This is nowhere near as competitive so you'll earn more by plumping for the Internet Saver.

It's worth noting both these accounts are variable rate, which means Tesco can alter them. Neither have dropped since the 1.5% interest rate cut at the start of November, and it's quite likely they will follow that to some extent (as will the rest of the market).

How does this compare with other accounts?

The full list of top savings accounts as well as savings options and priorities are in the Top Savings Account guide. The top accounts there pay a smidgeon more than Tesco's Internet Saver, and are clean (ie have no bonus that drops). Yet if you're going to use the points, this is unbeatable.

To be really nerdy, you could only put in an amount that triggers a pay out and leave the rest in the highest paying normal account. E.g if you have $4,000 - then put $3,000 in Tesco to trigger the 1000 clubcard points benefit available with that amount of money, and the rest in the normal top account.

Can I put my money in, take it out, and put it in again?

Yes, there's nothing stopping you dunking the cash in until 31 December (or putting it in a few days before) then taking it out the next day.

To do this simply electronically move the money into Tesco a week before to be safe; as you must have cleared funds there on that specific day. Then, if you want to, move the cash back to a top savings account just a few days later.

When will the points arrive?

The points should be awarded in your February 09 Tesco points statement and can be used after that.

You have full choice to decide whether to use them in store or via the more lucrative Clubcard Deals Brochure, where you simply send Tesco the vouchers with the application form to redeem deals.

How safe is this?

There are two ways to answer this...

   * In normal times

      You’re simply putting money in a no-notice savings account, which means you can withdraw at any time if you need to and close the account whenever you want.

   * In these Credit Crunched times

      These days, we need to consider the savings safety of every single bank. Tesco Personal Finance is a joint venture between the Royal Bank of Scotland and Tesco. Yet in terms of savings safety it is a standalone bank and therefore is fully protected like any US bank by the Financial Services Compensation Scheme (FSCS), meaning in the unlikely event it went bust you're guaranteed to get back up to $50,000 per person per financial institution.

      However of course if that did happen it would be unlikely your Clubcard points would be covered. For full information, read the Are My Savings Safe? guide.

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