Is the Tesco Premium Credit Card worth the £150 fee?

Tesco Bank launched its new credit card, which offers Avios and a range of travel benefits, on Friday.

I slotted a quick summary article onto Head for Points mid-morning, but if you only follow the site via the daily emails then this may be the first you’ve heard of it.

I have now had the weekend to reflect on it, as well as looking at your initial feedback.  Here is my review of the Tesco Premium Credit Card.

You can check out the details here.  The representative APR is 56.5% variable, including the fee, assuming a £1200 credit limit.

Tesco Premium credit card

Frustratingly, Tesco has created a product which could work really well for some people but not for others.  My general impression is that you should give it a miss in its current incarnation but, for you, it may make some sense.

There are actually two questions – is it worth £150 for the first year, and is it worth £150 after that for the subsequent years?

Let’s take a look at the benefits in turn:

Benefit:  1 Clubcard point for every £1 you spend on the card in Tesco or at Tesco Direct – plus a 5,000 point bonus if you spend £5,000 during your card year

Let’s imagine that you DO spend exactly £5,000 per year in Tesco.  This may be possible if you always buy your fuel there or buy a lot of gift cards to benefit from the ‘150 Clubcard points for every £50 of third-party gift cards you buy’ promotion.

On that basis, you would earn 8,750 more Clubcard points per year using the Premium Credit Card than you would with the free Tesco Clubcard credit card which gives 1 point for every £4 you spend in Tesco and has no bonus.

I can recommend this card if you easily spend £5,000 per year in Tesco purely because of these 8,750 Clubcard points.  That would get you 21,000 Avios or 21,875 Virgin Flying Club miles which justifies the fee.

Benefit:  Comprehensive travel insurance for you and your family

This covers immediate family members under the age of 70 and includes 17 days of Winter Sports cover.  There was some concern in the comments on Friday that the clauses on pre-existing conditions are unreasonably harsh but I am not an expert on this.

If you currently pay for travel insurance then this would have some value.  If you have it via another source – mine comes from American Express Platinum – then you won’t.

Depending on your age and whether you do ‘winter sports’, a bargain basement family policy will cost between £50 and £70.  If you are not leaving Europe, you will pay less.  That said, the ‘top pick’ (based on generosity of terms and payout history) is from LV and costs around £200 for global cover and just over £100 for European cover.

You need to decide what value, if any, you place on this benefit.

Benefit:  £50 off a British Airways Club Europe booking for up to nine people departing from London

This is a benefit which someone probably thought was a good idea but has been messed up in its execution.

If you never pay for Club Europe then it clearly has no value.  That said, on a route like Paris or Amsterdam the premium over Euro Traveller would drop to around £50 with the discount so perhaps you would do it.

If you book Club Europe for cash on a regular basis for your family then it clearly has real value.

However … this is a one-off benefit.  More importantly, the discount code is only valid for 2 months.  If you think that you WOULD take advantage of this benefit, it actually makes sense NOT to apply now but to wait until you are approaching a point where you will be booking.

Tesco guarantees that you will have your code within 10 days of your application being accepted.  This is positive and means that, if you are planning to book Club Europe flights for cash, you could delay booking for 10 days until you have applied for the card and received your code.

I have 12 Club Europe segments in my diary between now and September but even I am struggling to see how I would make this discount work.  It may work for you though.

Benefits:  1% enhanced exchange rate when you buy travel money in a Tesco store using your card

I would value this at nothing, as I believe that I would still get a better deal using my 0% FX fee Post Office credit card or my 1% fee Curve Card for purchases abroad.  To get a small amount of cash, using an ATM using a normal debit card with a 3% fee is still likely to be a better deal.

What I don’t know is a) whether currency purchases are treated as a ‘purchase’ if charged to the credit card or b) if so, whether it counts towards the £5,000 to trigger the 5,000 Clubcard points bonus.  If the answer to these questions was ‘yes’ then it would improve the offer.

Benefits:  1 Clubcard point for every £4 you spend on the card outside Tesco

The current MasterCard and Visa offers on travel credit cards are weak which enhances this offer.  Converted to Avios, you would be getting 0.6 Avios per £1 based on 0.25 Clubcard points.  I have legacy cards which earn more than this so I do not value this benefit.  Only you know if this offer is substantially better than anything else in your wallet.

Remember that Tesco rounds down every transaction to the nearest £4, so a £7.99 transaction only earns 1 point and a £3.99 transaction earns nothing.

It is also worth noting that the Hilton HHonors Visa (which is free) earns 2 Hilton HHonors points per £1 spent which I value at 0.6p.  I doubt you’d value 0.6 Avios per £1 at more than this.  Annual fee cards such as Virgin Flying Club Black or Emirates Elite earn 1 mile per £1 spent on the MasterCard / Visa element whilst the Lufthansa Miles & More card is free and earns 0.75 miles per £1.


As I said initially, there is no easy answer here.

If you spend £5,000 per year in Tesco, get the card – you will do well with it

If you buy stand-alone travel insurance, it may work for you – if you spend enough in Tesco (at 1 Clubcard point per £1) and have no legacy Visa or MasterCard earning more than 0.6 Avios per £1 to justify the balance of the fee

If you pay for Club Europe, it may work for you – if you can time your application around a booking.  This is only a one-off benefit for the first year, however.

We then come to the sticky question of a sign-up bonus.  There isn’t one.  I assume that this situation will not be permanent, so you need to factor in another question:

Even if the card would work for me, should I sit it out until Tesco throws in a few thousand Clubcard points for getting it?

All in all, the card compares poorly with the new HSBC Premier World Elite MasterCard.   Your £195 fee gets you 40,000 Avios for spending £12,000 in the first year, airport lounge access, 1 Avios per £1 spent and (via the HSBC Premier current account) travel insurance.  However, with HSBC Premier restricted to people with large sums invested with HSBC or a high salary, you may not have the option.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.  By recommending credit cards on this site, I am – technically – acting as a credit broker.  Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

Bits: 7200 Avios with home insurance, £10 Boots card for joining TopCashback, HFP server issues
How to book Eurostar tickets using Amex Membership Rewards points
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  1. James67 says:

    Another question is ‘Will clubcard conversion rates to BA, avios and virgin be reduced?’ In the current climate I think that is very likely although as you pointed out Friday, it seems unlikely transfers will be totally scrapped. Experience with the current account suggests hanging on for a signup bonus may be a waste of time.

    • Whilst we were eventually never offered a points bonus for the current a/c sign up, we were both offered £100, which is better than nothing (=10,000 Avios). I think this offer was fairly widespread. We didn’t accept this, as I thought I’d rather have had 5,000 Tesco clubcard points – but maybe on reflection I was silly to say no.

  2. Callum says:

    “Let’s imagine that you DO spend exactly £5,000 per year in Tesco. This may be possible if you always buy your fuel there or buy a lot of gift cards”

    Or you buy your food there, it is a supermarket after all…

    • I spend a fair bit in Tesco( 36% of the £5k target yesterday) but this card doesn’t work for me plus Mrs Yuff and I got the HSBC world elite card last week.

    • Krankyfly says:

      Callum has a family of 12 I am sure, hence he can spend £5000 on food in Tesco in a year.

      I have a family of 1. (2 if you count my goldfish). So for me it would be a struggle.

      • Callum says:

        I don’t do my shopping in Tesco full stop… I merely have the remarkable ability to observe what other people do or think. But maybe I’m just a genius?

        Unless you’re suggesting Tesco have created this card especially for you, it’s rather irrelevant whether you spend £5k a year there or not.

  3. @mkcol says:

    Time to download all my statements & see how much I actually spend at Tesco!

  4. I would easily spend £5000 a year at Tesco. It is my main source of Avois, that is only £100 a week on food alone. Plus what you buy via Tesco Direct, petrol etc. It is my supermarket of choice as son works for them and our club cards are linked so I also recive the staff discount. It sounds a lot of money but in reality it’s the weekly shop.

    • Genghis says:

      Tesco is my main source of avios too but most don’t come from food shopping

  5. Still looks like a poor deal to me unless you’re a regular, heavy Tesco shopper. It’s my main store but still lucky to spend over £30/week with them.

    The CE offer seems particularly useless, such a tight timeframe for usage and being for flights from London only makes it useless for any of us having to connect.

  6. vindaloo says:

    Surely the CE discount code is effectively a sign-up bonus?

    When considering the value of (effectively) 2 Avios per pound spent in Tesco, the baseline should be whatever card you would currently use in Tesco. For me that’s the BAPP Amex, so the gain would be only 2,500 Avios on £5,000 per year of spend. This isn’t enough for me even if I would hit the spend requirement.

    • Fair point re BAPP, although the Tesco card still gives 0.9 Avios per £1 more for Tesco shopping if you ignore the rounding down (which is less noticeable on big spends).

      • vindaloo says:

        Yes, sorry, was thinking it was 1 Avios per pound plus bonus of 5,000 for spending 5k, whereas it’s actually 2.4x those figures. So if you spend 5k per year you’re ahead 16,500 Avios versus the BAPP, which probably does justify the fee.

    • ‘The cheaper policies will usually have a lower level of cover. Experts recommend a minimum level of cover:

      £2m for medical expenses
      £1m personal liability
      £3000 cancellation – or enough to cover the total cost of your holiday
      £1,500 baggage
      £250 for cash
      Policy excesses under £100
      Cover for scheduled airline failure and end supplier failure as desirable
      Delay cover (e.g. £20/hour for first 12 hours).

      Pay close attention to excess charges too. The higher the excess, the cheaper the cover – but this may be an unwanted cost in the eventuality of a claim.’

      • I did read somewhere once that, despite that these ‘experts’ claim, there has NEVER been a £1m+ medical claim on a UK travel insurance policy. I’m amused as to what ‘expert’ considers £2m acceptable for medical costs but only £250 for cash.

        • Interesting although having seen some bills for patients who have been admitted to hospital in the USA for quite minor issues I wouldn’t have been surprised if a prolonged stay ended up hitting that mark – presumably the insurer tries to medivac the patient back to the UK before things get too prolonged, although that does of course necessitate that the patient is stable enough for transfer!

          • An AA flight attendant became ill mid-TATL and was admitted to an NHS hospital for several months. The bill to his insurers was over half a million GBP.

            Doctors working for these “medivac” companies can really rake it in. You fly out in J and patients get sent ‘home’ for the most ridiculous reasons (i.e. you don’t actually need to do anything because they are almost always perfectly well).

      • I’ll stick with Amex plat Ins. I have found them great on the two occasions I’ve had problems. Going to the Apple store today to pick up a new iphone 6 as the old one got water damaged on our last trip. The cost is £459 which Amex ins is covering £409.

  7. Although tesco is my main shop, this still looks a pretty dismal deal. We will stick with our 2 BAPP cards.

  8. James67 says:

    £5k a year on a £24 Lloyds avios is a minimum 6250 avios a year if all on the amex, double that if spend in first 6 months plus refer bonus. Interest free for 1 or 2 years so can recoup about 5% on spend via high interest current accounts by saving as opposed to paying. It gets you nearly home and dry on voucher too, that is worth another 50k+ avios on a zone 7 or above off peak return redemption in business class. So the tesco premium card makes no sense at all if goal is purely avios for longhaul business class redemption on BA and partners.

  9. I have scarily just added up my Tesco spend for past 12 months across all those credit cards I churned and excluding all the odd pence I spent a crazy £16k in Tesco – Tesco has been our main supermarket since 1988 – we put 95% of our shopping there, all our fuel incl my husbands business fuel, gift cards, wine and direct stuff. So if I did that again going forward I would earn 16k + 16k + 5k cc pts X 2.4 = 88800 – I think I should take out this card after all.

    • James67 says:

      This is exactly the type of thinking tesco hope to capitalise on Liz. It is not 88800 avios, it is 88800 less basic cc earnings on shop minus whatever avios (plus indirect benefits) you would gain from using an alternate card to pay for your tesco shop. If the answer is positive then tesco premium works but if answer is negative (and it easily could be) the alternate card is better. And after all that you still have to factor in annual fee.

      • I only need one 2-4-1 voucher per year and so can still get this plus a gold/platinum churn – I may or may not drop the IHG after this year and just stick with Hilton – I got my IHG fee waived so will continue on to get me free night certificate – I also have Virgin upgrade vouchers to use up – I have just renewed our virgin black to give us more options IE virgin miles/IHG/Hilton but will,probably not go for a 3rd year – may consider the Tesco card later in the year. I think it will work for me. Aren’t you getting 7.2 Avios /£1 or the first £5k spend then 4.8 Avios /£1 thereafter plus you have to factor the fee.

        • James67 says:

          This and other comnents below rely on conversion rate remaining 2.4 which I doubt it will given tesco desire to cut costs. I think somrbody also commented Friday that 5k bonus posted after a year, if that is case then 2 x£150 fee unless somebody keeps the card long term

          • Andrew* says:

            Yes, that was me I think… if the points don’t post until after year end you’ll be paying £300 for your bonus… no-one has the card yet so we can’t see if they post after you hit the spent requirement… (I’m thinking Liz and a gift-card spree…)

    • Genghis says:

      It depends on how much you spend overall.

      For instance, an Amex Plat sign up through referral and then referral to partner and then his sign up bonus yields 35K+18k+35k = 88k MR points = 88k avios. This is for only a combined £4k spend and can cost a lot less than £150 depending on how long it takes for you to spend on the cards (given the Amex pro-rata refund).

      If you spend a lot every year on everything and spend way more than you can spend on decent points earning credit cards, then this Tesco card is decent. However, make sure that you are hitting your Amex Platinum, SPG card churns and 2 x BAPPs first IMO.

      • That’s it exactly Genghis – as long as you can hit your own personal targets on the other cards alongside this new Tesco card the earning rate is better than using BAPP for me anyway. Everyone has their own goals and targets to hit.

    • That’s my thinking. Hit the spend targets for the 2 x BAPP cards first then (potentially) taking the Tesco card. I’ve just recently cancelled our 2 Amex rewards cards and will reapply after 6 months, so currently looking for another earning card, albeit it comes with a hefty fee. The travel insurance is a non starter for me as my wife has a pre existing health condition (extra £150 per year with the “free” rbs travel insurance) I’m not far off Liz’s spend so it could work for me.

      • Genghis says:

        If you think you will spend the £5k a year at Tesco and hit 2 x BAPP in spend, you’re better off running the Tesco card and one BAPP concurrently so as to ensure that you divert all Tesco expenditure to the Tesco card.

      • I won’t spend that amount again – I bought a lot of 3v cards last summer before they stopped and used them to buy from high street vouchers to pay for sainsburys vouchers etc and sold loads to my in laws so it wasn’t all my spend!

  10. Mark Priest says:

    But wouldn’t you still be better off using your BA Amex at Tesco?

    • Frenske says:

      The Tesco Premium card returns ~4.8 Avios per pound, provided you spend £5000 at Tesco and compare that to 1 Avios per pound with the BA Amex.

      • Not really 4.8 IMHO – you’re including the ‘Clubcard Clubcard points’ – which you would get anyway with other forms of payment.

        So reduce that to 3.6 – which is only true if you just hit the £5000 spend and don’t go much over.

        If you subtract the £150 fee as essentially all cost & no value attributed to the insurance, you’re down to 2.1 Avios per pound.

        It is similar to my 2 point/£ Amex card but I’m not compelled to send £5000 a year to Tesco.

        • Genghis says:

          It is 4.8 avios Harry.

          Assuming £5k spend at Tesco:
          5k points from the credit card spend
          5k bonus
          Total Tesco points = 10k for £5k spend, therefore 2 points per pound, therefore 4.8 avios per pound (assuming 2.4 avios / cc point rate).
          The ‘clubcard clubcard’ points would yield another 5k cc points.

          • Thanks for correction, the old math let me down again :)

            Anyway, I’ll still reduce the 24,000 Avios by the £150 fee (which I’m calling 15,000 Avios).

            So we get a net 9,000 Avios for £5,000 spend = 1.8 Avios/ £.

            Worse than my 2 point Amex card.

            (OK somebody pls check the math!)

            • James67 says:

              I’m in agreement and I tried to explain something similar above without resorting to specific numbers. I just think this cards a dud. By your reasoning regards the fee, if you have to pay a second annual £150 to get the bonus it comes down from 9k to -6k avios! Don’t really think it will be that bad but my point is that most avios collectors can get a greater benefit via adding/churning other cards to their portfolio, regardless of how much they spend in tesco, as opposed to taking out this card.

            • Genghis says:

              I agree with those numbers!

              I think the credit card just doesn’t offer enough benefits for me to justify the £150 price tag p.a.

              1) The net 9,000 avios for £5k spend (Harry’s calcs) at 1.8 avios / £ is less than my BMI card
              2) I get my travel insurance from another source
              3) I would never pay cash to fly Club Europe so the £50 off for spend within 2 months is worth zero.

              I’ve not totted it up but we spend over £5k a year at Tesco – over groceries, wine and direct. If this card is aimed at people like me, they’re certainly not attracting me to take up the card.

              However – if you’re reading Tesco – a sign up bonus (10k club card points) to justify the £150 might swing things for me :)

            • Don’t you spend £5k on Lego a month already Harry?

            • I probably go over £5K a year without much in the way of groceries or petrol. Which is why I am keen to see if it’s worth the £150 fee vs the alternatives. Currently my conclusion is that it’s not – but when they phase out my BMI Amex OR Tesco give us a decent joining up bonus, I’ll reconsider.

  11. Any news/rumours if IHG will be introducing oping up applications for its credit card anytime soon? Cheers

    • No, and I would know because I am apparently going to be involved in the launch! But I literally know nothing about it, not even the issuer.

  12. You guys are some serious spenders. I used to live next to the Tesco in Kensington/Earls Court on the A4 and my wife and I did a “weekly shop” and carried everything home by hand, I think the most we ever spent per week was £50, if we were restocking on toilet paper or something.

    Not including 3V in these obviously – I was happily buying £100 per week and paypal-ing the full value directly into my bank account for 3-4 years until HFPers started taking them all away

  13. Gave this some thought over lunch and realised that Tesco Bank don’t accept aplications from those in Isle of Man !

    • Krankyfly says:

      Isle of Man is not financially stable enough for Tesco….
      (or they simply don’t know where it is….)

  14. Jon Connell says:

    Forex counts as a purchase on the standard Tesco MasterCard, so my assumption this would apply with the new card too. I wonder whether the 1% is in addition to the better rate for pre-ordering? Tesco forex rates are competitive and you get points for them, which is why I always use them to get cash for travel.

  15. I spend a £100 a week at Tesco on food and drink as a single bloke, according to my records I spend nearly a thousand a year on newspapers alone ! If i moved my fuel spend back there that would be another circa £120, I moved it away after there was a fuel contamination issue a few years ago.

  16. Oh that is £120 a week on fuel, I didn’t want you thinking I have Prius , although the economy would be better than 25 mpg Discovery

  17. Genghis says:

    Sorry I don’t follow

  18. Yep – Tilly71 – I was just ascribing a value to equate Avios to real money, most people accept 1p/ Avios is a fair rule of thumb (though individual valuations vary).

    Ie I was perhaps silly to hold out for 5,000 Tesco clubcard points (=12,000 Avios =£120) when I could just have taken a slightly lower cash amount. Bird in the hand etc.

    Did some people get 10,000 clubcard points for the current a/c sign-up? If so, maybe I wasn’t so stubborn after all.

  19. The ‘once a week £100 weekly spend’ is finished, unless all you buy is processed food. That is why Tesco is closing some out of town stores and scrapped another 40 under development, and is starting to sublet space in others. It is also why Sainsburys bought Argos – to fill empty store space.

    There are 4 of us but all our shopping is carried home by hand and we rarely buy more than 2 carrier bags of food at once. Rare we spend over £40 at once. Buy fresh stuff for 2 days then restock.

  20. Worzel says:

    Mike 7:06/9 am:

    Looks as though the card might be working for you.

    “Nearly a thousand” is a lot to spend on newspapers-and a pain placing them under the Landy + trying to keeping them in place.

    Just wondering whether 4 or 5 drip trays might be an easier and less expensive option?

    :) .

  21. Frenske says:

    Goddamnit, my car does around 47.5 mpg. I never get Avios rich this way.

  22. Yes, there was a targetted 10k offer.

  23. Worzel says:

    I appear to be in the minority and value at around 0.5p/Avios.

  24. James67 says:

    Some got 5k, some 10k, never heard of anybody get cash before you. I got nothing at all, like most others I guess.

  25. Genghis says:

    Agreed. Although I still think people get ‘big shops’ but just less often. We get a Tesco delivery about once every two weeks to buy meat, cleaning products etc then every few days pick up fresh food (not necessarily from Tesco but wherever is most convenient)

  26. James67 says:

    Rob, don’t forget to feed your Nanny!

  27. Assuming everyone is like you is a common error by people on this site…

    The weekly shop is not REMOTELY over – millions of people still do it, and when I last worked in a supermarket 2 years ago it was completely normal for people to be spending well over £100 a week. And that was Asda, I’d imagine Tesco shoppers are generally slightly more affluent.

  28. Not to mention there’s no requirement to spend it in one go anyway. 3 visits of £34 is the same as 1 visit of £100.

  29. I tend to go for 0.75p – I always think 0.5p minimum (given hotel redemption options) but feel I’m over valuing them at 1p so I split the difference. Have managed some excellent redemptions that are clearly better value than this but when calculating whether to go RFS via LHR or direct on an LCC I tend to use the 0.75p value – even then BA rarely make sense nowadays with the double connection cost.

  30. Worzel says:

    Alan 8:43 am:

    Good approach and viewpoint it seems to me.

  31. That is bottom end valuation though given that wine, hotels etc come in at 0.5p per point.

  32. Frenske says:

    Well just using the point to get cash off the ticket price should give you 0.67p per Avios. This is my redemption price of the Avios. Occasionally I manage to get something like 0.85p per Avios on a RFS.

  33. Kiddie leftovers :-)

  34. honest, guv! :)

    Hello Mrs harry,
    Switch to our current account and we’ll give you £100 cash just because you’re a Tesco Bank customer.

    Simply apply and request to switch using the Current Account Switch Service by 30th June 2015. If accepted, you’ll receive the £100 cash once the switch is complete.

    Switching your current account is quick, easy and stress-free

    The Current Account Switch Guarantee means we take care of everything for you. As part of this process, your old account will be closed. Our current account also has a £5 monthly account fee, which you don’t pay if you deposit £750 per month.

  35. I think I have just realised what the problem with this card. You need to shop in Tesco to get the benefit from this.

    That is NOT a sarcastic remark. Tesco Bank operates separately from Tesco Grocery and there is no logical reason why one should drive the other, in the same way that I am sure many Avios collectors (especially via never fly on BA either for cash or on redemptions. Avios don’t care.

    Like it or not, the key market for a £150 credit card is shopping at Waitrose and M&S. If this card gave 0.5 Clubcard points per £1 spent then I would recommend it wholeheartedly and could generate huge numbers of sign-ups even from people who never go into a Tesco.

    Look at it another way. Let’s imagine there are 1m people in the UK who would pay £150 for a credit card if the benefits were good enough. Tesco has 27% of the grocery market but I am guessing, amongst that 1m people, it is lower – lets say 20%. Tesco Bank needs to offer benefits which the other 80% of its potential market would value.