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Herald View

TESCO Bank's flightpath has been impressive since it jettisoned its faltering co-pilot RBS six years ago.

Savings and credit card business is booming, new products have emerged including mortgages, and the bank has helped shore up gaps that might otherwise have appeared in Scotland's financial sector.

The long-promised current account turns it into a credible bank, but ironically at a time when public ire at the big banks has subsided, and when new competitors such as TSB are buzzing around. The bank's dynamic chief executive Benny Higgins cites its culture and criticises the "rapacious charges" of the big banks, but Tesco is not alone in promising transparent costs and no "zombie accounts". Not all would-be switchers may see the behemoth that is Tesco as their natural ethical alternative. Early figures from the new switching service show a relatively small uplift in people prepared to abandon their bank, despite the attractions of challenger banks such as Santander, First Direct and M&S Bank - the latter two owned by HSBC. The account offers a clever package of value features and will compete strongly.

Downsides are that credit interest is lower than TSB's and the pay-in threshold higher, loyalty rewards are considerably less generous than for credit card or store spending. Moneysupermarket.com, which views the account as "not dissimilar" to its rivals, is disappointed at the lack of an interest-free overdraft buffer and says the 18.9 per cent interest rate for dipping into the red is not particularly family-friendly, given the account's main target is likely to be shoppers on tight budgets.

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