TSB 5pc cashback to to its 5pc account

TSB 5pc cashback to to its 5pc account

Customers will get paid £20 a month to bank with TSB if they use their
contactless debit card and open a new 5pc regular saver but only until
December 2016. The bank estimates the value at £238

TSB current account customers can earn up to £238 a year as part of a package
unveiled today that pays 5pc cash on savings and contactless spending.

Every customer with a “classic plus” account is eligible if they set
up online banking and pay £500 a month into the bank but the generous
payouts will end in December next year.

The deal doubles cash payouts TSB customers currently receive as competition
continues to heat up in the savings market . Since 2013, the challenger
bank has paid 5pc on the first £2,000 saved in a current account, earning
savers £100 a year before tax.

Now (NYSE: DNOW – news) , TSB account holders can earn an extra £81 a year with a 5pc regular saver
account if they deposit the maximum £250 a month.

On top of this, their contactless spending will receive 5pc cashback, capped
at £5 a month, paying an extra £60 over the course of a year.

These earnings will
be taxed until April 2016, when the Government will scrap the tax paid on
the first £1,000 of savings interest.

More details: TSB
Classic Plus*

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Verdict
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TSB’s regular saver fails to beat 6pc regular savers attached to current
accounts with First Direct, M&S Bank and HSBC Advance.

But the TSB account is also less restrictive than higher-paying rivals
savers have access to their funds and if they make a withdrawal they will
not be penalised, unlike other accounts which will cut the interest rate.

•
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In a statement TSB said it offers a “fresh approach” by paying perks
without attaching onerous conditions to its current account, which was
launched two years ago when TSB split from Lloyds.

Rival accounts offering in-credit interest usually require customers to set up
direct debits and pay a higher deposit each month.

Other interest-paying accounts on the market include Santander’s popular 123
current account (3pc on balances up to £20,000) and Nationwide’s FlexDirect
(5pc on balances up to £2,500).

But Santander, for example, requires two direct debits as a condition of
receiving £60-a-year interest payments, while Nationwide imposes a higher
deposit requirement of £1,000 a month.

“We believe there is no other bank account that gives you more and asks
for less,” said Jatin Patel, products director at TSB.

Andrew Hagger of Moneycomms said: “While it’s an improvement on the
existing deal, it’s only available for the next 16 months and won’t be
suitable for everybody.”

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Interest rates: bookmark this page for the latest predictions

Chart: how to earn £1,000 in savings interest

Mr Hagger warned that savers with more than £2,000 to save could be better off
with Santander’s 3pc interest payments.

“But with TSB, you have unlimited instant access to your savings, unlike
other accounts where access to funds is not permitted or severely restricted,”
he added.

Customers get “something for nothing” with the new TSB deal,
according to Charlotte Nelson, of Moneyfacts.co.uk, a savings analyst.

“However, contactless spending is capped at the first £100 so they could
be better off using a cashback offer which doesn’t limit spend,”
she said.

Cashback payouts with a Santander 123 credit card, for example, pays tired
cashback of between 1pc and 3pc on supermarket shopping and travel. The 3pc
paid on petrol and train fares is capped at £300 a month.

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TSB 5pc cashback to to its 5pc account