How bonus interest rates work
Find out how bonus interest rates can affect your overall interest rate on your savings accounts.
Published:19 February 2026
What is a bonus rate?
A bonus rate is an extra interest rate added on top of the standard rate of the account for a limited time. They are usually applied in one of two ways:
Introductory bonus rate - an introductory rate offered for an initial period, often for 12 months.
Conditional bonus rate - a rate that’s only paid if certain conditions are met, such as:
- maintaining a minimum balancemaintaining a minimum balance
- the number of withdrawalsthe number of withdrawals
- saving a certain amount each monthsaving a certain amount each month
How Tesco Bank applies bonus rates
Our savings accounts don’t have conditional rates - but both our Internet Saver account and Instant Access Cash ISA include a bonus rate that is applied as an introductory offer for the first 12 months from account opening.
This means for the first 12 months the overall interest rate on these accounts is made up of two parts: the bonus interest rate and the standard variable rate.
What is a standard variable rate?
A standard variable rate is an interest rate that can go up or down. If it changes, your overall interest rate changes too. This rate:
- is applied to our Internet Saver and Instant Access Cash ISA at all timesis applied to our Internet Saver and Instant Access Cash ISA at all times
- becomes your only interest rate once your bonus interest rate endsbecomes your only interest rate once your bonus interest rate ends
- can change, but we’ll always let you know if it doescan change, but we’ll always let you know if it does
The illustration below shows how the bonus interest rate and standard variable rate make up your overall interest rate.
Bonus interest rate
(ends after a fixed 12 month period)
+
Standard variable interest rate
(for the duration of the account)
=
Your overall interest rate
(after 12 months, this only includes the standard variable rate)
Example of a standard variable rate
If you open your account with a bonus rate of 3.5% and the standard variable interest rate at the time is 1.5%. This would give an overall interest rate of 5%.
If after 6 months, our standard variable rate reduced from 1.5% to 0.5%, your overall interest rate would then be 4%.
What does this mean for the overall interest?
With our accounts, interest is calculated daily, so your interest is only affected from when the standard variable interest rate changes. This means in the example above, your total interest over 12 months would include the combined interest rate of 5% for the first 6 months, then 4% for the next 6 months.
How interest is paid
If your account includes a bonus rate, you may see this interest paid at a different time. Currently we pay your bonus interest at the end of the 12 month bonus period (on the anniversary of the account opening). The standard variable interest is paid annually in March.
What happens when the bonus rate ends?
After 12 months your bonus rate of interest will end, and you’ll continue earning the standard variable rate.
At that point you have the option of moving to another account to take advantage of a better interest rate or continuing to save in your account on the standard variable rate.
Discover our range of Savings Accounts
You can compare our range of savings accounts to help you consider which account might be right for you. Eligibility criteria apply.
Check your rate in our Mobile Banking App
You can see your overall interest rate and the date your bonus rate ends in our handy Mobile Banking App. After your bonus period ends, you’ll still see your overall interest rate, but this will now only be made up of the current standard variable rate.
