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Tesco Personal Finance, a joint venture between the supermarket and Royal Bank of Scotland, now has more than 1.5 million customers and has moved into month-by-month profit. Its stated aim is to offer value for money, convenience, simplicity and quality customer service. From next month there will be an Internet mortgage supermarket, available in conjunction with broker John Charcol through the Net.
At present, through the chain of 650 stores in the UK, Tesco provides information leaflets and a free phone inquiry service. There are also more than 290 Tesco Personal Finance ATMs in stores throughout the country. The company is considering launching a banking service in the Republic of Ireland, where it also has stores. Customers can pay money into Tesco savings accounts through any of the normal routes, and at Tesco checkouts. The company is also looking at ways of letting customers pay cheques into their accounts at the till.
Tesco had begun offering a low-charge, stakeholder-friendly pension through Scottish Widows, but has recently withdrawn the product, as RBS has formed a new alliance with CGU. Existing holders can continue to run the pension through Scottish Widows, or any other pension provider. TPF is planning to launch a new pension product in the next few months with CGU.
One of TPF's big successes is the Tesco Visa Card. Holders earn one Clubcard point for every £2 spent, on all purchases, in addition to the usual points earned for purchases at Tesco. The reason for its big success, however, is that it is currently offering a very low introductory rate, which runs until January next year, of 0.399 per cent per month (4.9 per cent APR) on purchases. There is no introductory rate on cash advances, which is at 17.7 per cent APR. The standard interest rate is of 15.9 per cent on purchases. The introductory rate led to more than 200,000 applications in January this year.
TPF offers an instant access savings account that pays interest on as little as £1, annually or monthly. The rates are tiered (£1-£2,999 is 4.85 per cent, £3,000-£4,999 is 5.05 per cent, £5,000-£14,999 is 5.25 per cent and £15,000+ is 5.75 per cent). As with Sainsbury's Bank, the rates are reasonably competitive, except with the likes of the Egg online account.
Loans are on offer, also at tiered rates (£2,000-£2,999 is 15.4 per cent, £3,000-£4,999 is 13.2 per cent, £5,000-£7,499 is 10.8 per cent, £7,500-£14,999 is 10.2 per cent and £15,000-£25,000 is 8.9 per cent). These compare well with most of the high street lenders, but not with Smile, which charges 8.9 per cent on £7,500 to £9,950 and 8.5 per cent on £10,000+.
Tesco launched the Growth Isa and Income Isa in April last year. Both meet the CAT standard. The Growth Isa tracks the FTSE All Share index. The Income Isa invests in corporate bonds and gilts. There are no charges in the first tax year.
Tesco home insurance is for buildings, contents or both. It claims to save up to £75 on premiums when compared to building societies and other mortgage lenders. It will pay up to £25 if a customer is charged for switching providers. Other types of insurance on offer cover motors, travel and pets. Premiums for the latter start from as little as £7 per month for dogs and £4 for cats.
Tesco Personal Finance: 08457 104010 or www.tesco.co.uk/finance
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