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TSB launches new bank account that automatically tops itself up with savings to stop you going into the red

TSB has launched a new bank account that will automatically top-up with savings to stop you going into your overdraft.

Customers can split cash saved into two pots under the new Spend and Save current account, with money in the savings pot being used to top-up the main account if it dips below a certain threshold.

Account holders can set the minimum balance limit – the lowest threshold is £1 – and TSB will automatically take money from your linked savings pot if you sink below this.

It will take the limit you set from your savings pot, so in the example above it would take £1.

TSB is the first current account to offer this “auto balancer” service, according to comparison sites Moneyfacts and MoneyComms, which will help stop you from going in the red if you’re hit with an unexpected bill.

The account comes four months after major high street banks hiked arranged and unarranged overdraft fees to up to 49.9%.

The rate rise was in response to a ban on unarranged overdraft fees introduced by the watchdog, although banks can still charge interest.

TSB charges customers 39.9% if they go into their arranged or unarranged overdraft.

Of course, the new top up service only works if you have enough money in your Savings Pot in the first place, otherwise the extra funds won’t be transferred and you may still sink into your overdraft.

You can set-up as many as five pots at a time and use them for different purposes, such as a rainy day fund or a holiday fund – and there’s no charge or penalty for accessing these funds.

Savings pots each pay interest of 0.05% but this is nothing compared to transferring cash into an easy-access savings account. NS&I’s top paying account, for example, pays 1.16% in comparison.

Existing TSB customers can already open an account, while new customers will have to wait a few more weeks before it’s available to them.

TSB is also following in the steps of Monzo and Starling by offering a “save the pennies” feature too to help you build up a small nest egg for a rainy day.

When you use your debit card to spend, TSB will automatically round it up it to the nearest £1 and put the difference into a Savings Pot or a separate TSB savings account.

For example, if you bought something that cost £5.59, it would tuck 41p into savings.

While it does’t sound like much, it can add up in the long run. But if you don’t want this functionality, you can simply opt out.

Customers can also earn £5 cashback every month when they make at least 30 payments using their debit card but this is only for the first six months of opening an account.

While this sounds like a great perk, it’s not worth overspending to be eligible for the cashback.

Customers can actually earn more cashback with Barclays Blue Rewards account, which pays £7 a month, although it costs £4 a month to open an account.

TSB’s new account is free to open and there’s no monthly fee.

You can also get the same amount of cashback with a free current account from The Co-Operative Bank, which offers shoppers £5 cashback when they set up four monthly direct debits.

“In these unsettled and uncertain times, it is really positive to see a new current account which will encourage savings behaviour, especially when the low interest rate environment may have left some disincentivised to put money aside for future emergencies,” Eleanor Williams from told The Sun.

“As with any financial commitment, those customers considering any new current account should carefully check the full terms and conditions, and take into account any associated costs, fees and rates to ensure that they select the best option for their circumstances.

“Reviewing the account after six months when the cashback offer ends would also be wise.”

TSB also boasts that Spend and Save customers can opt to set up text alerts to let them know what their balance is and to warn them if they’re in danger of going overdrawn.

While it’s useful to receive updates on your account, banks are actually required by regulation to text you when you’re close to going into your overdraft.

Pella Frost, head of personal current accounts at the bank said: “Spend and Save has been designed to help our customers have more control of their money. 

“We know that now, more than ever, our customers want us to make it easier for them to manage their money, so the variety of features available should help them feel more money confident.”  

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