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.
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 moneysavingexpert.com ‘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.
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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.