The two firms agreed on a ‘strategic partnership’ which will also see Barclays offer Tesco-branded products with Clubcard benefits.
Here, Which? explains what’s happening to Tesco Bank, and what existing and new customers need to know.
What’s happening to Tesco Bank?
Tesco Bank said its credit cards, loans and savings business will be sold to Barclays in a deal worth £600m.
Under a new partnership, Barclays will also offer Tesco branded products and services, with access to the Tesco Clubcard loyalty scheme, for an initial period of 10 years.
Tesco Bank, which has 5 million customers, said the new partnership will allow it to focus on its core retail business, which includes its grocery stores.
However, Tesco Bank will continue to sell more profitable products including insurance, travel money, and gift cards and continue to operate ATMs.
Find out more:When will this happen and what will it mean for Tesco Bank customers?
The deal still has to be approved by regulators, but is expected to be completed in the second half of 2024.
Tesco Bank said there is no need for existing customers to take any action right now, and it will contact customers in the coming months with more information.
The bank continues to be regulated by the Financial Conduct Authority which means any savings up to £85,000 will be protected by the Financial Services Compensation Scheme.
Tesco Bank credit card customers continue to be protected by Section 75, meaning purchases between £100-£30,000 have additional protection.
It also means if you have any complaints over any of its financial products, you can go to the Financial Ombudsman.
Find out more:Is Tesco Bank a good provider?
It received an excellent customer score of 80%, with customers giving it five stars for its mobile app and clarity of statement, and four stars for its transparency of charges, application process and customer service.
Another perk of Tesco credit cards is the ability to earn Tesco Clubcard points. You get five points for every £4 spent at Tesco, one point for every £4 spent on Tesco fuel (excluding Esso), plus one point for every one litre bought, and one point for every £8 spent elsewhere.
It currently offers eight accounts including instant access, fixed rate and Isas, but none offer market-leading rates.
Find out more:Are supermarket banks still challengers?
Tesco Bank isn’t the first supermarket bank we’ve seen move away from banking services this year.
Last month, Sainsbury's Bank said it was planning a ‘phased withdrawal’ from its banking division to focus on its core food business.
Both banks, launched in 1997, would have been seen as challengers to high-street banks at the time.
But now up against the likes of app-based challengers including Monzo, Chase and Starling, supermarket banks have fallen behind.
Tesco Bank said by working with Barclays, it could bring customers ‘new and innovative propositions’.
Find out moresource https://www.which.co.uk/news/article/tesco-bank-to-be-sold-to-barclays-what-customers-need-to-know-aMUR11N67StQ