6,000 Avios (2,500 Clubcard points) on the £150 Tesco Premium Credit Card – worth it?

Back in June, Tesco launched 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

I was, for want of a better word, ambivalent about the card when it launched.  You were looking at a £150 annual fee for benefits which I felt, personally, were worthless.

Some readers disagreed with me.   I expected this – I did write originally that “Tesco has created a product which could work really well for some people but not for others.”

The ground has now moved a little:

Until 2nd January, Tesco Bank is offering 2,500 Clubcard points (6,000 Avio or 6,250 Virgin Flying Club miles) for signing up and making one purchase

The closure of the bmi Diamond Club MasterCard has left a lot of people without a decent Visa or MasterCard product for earning Avios

You are paying £150 to receive 6,000 Avios plus the other card benefits.  You really need to look at these other benefits to decide if the card is worth it.

Let’s go through them one by one:

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 with Tesco during your card year

This card would pay you 2.4 Avios points or 2.5 Virgin Flying Club on every £1 you spend at Tesco.  This is a very decent return if you spend a lot of money with them, even if you don’t spend £5,000 per year.

Let’s imagine that you DO spend £5,000 per year in Tesco.  This may be possible if you always buy your fuel there or shop for a large family.

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.  Some HFP readers have commented that the rules on pre-existing conditions appear strict 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.

Note that this benefit is being withdrawn on 31st December 2016 and you must apply for the card before this date to receive it.

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.

Whilst currency purchases made using the card at Tesco Travel Money are treated as purchases and not cash advances, they do NOT earn Clubcard points.

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.  With the demise of the bmi Diamond Club credit cards, which paid up to 2.5 Avios per £1 on a MasterCard, this is not a bad rate.

However, 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.

It is also worth remember that the John Lewis / Waitrose credit card pays you 0.5% cashback in the form of John Lewis and Waitrose shopping vouchers – and that card is FREE.  The ASDA Money credit card is also free and pays you 0.5% back in ASDA shopping vouchers.

Conclusion

As I said initially, there is no easy answer here.  This new deal offering 2,500 Clubcard points as a sign-up bonus may make it more attractive:

If you spend £5,000 per year in Tesco, get the card – you will do well with it.  For these people it is a decent deal even if you pay the full annual fee.

If you currently buy stand-alone travel insurance, it may work for you

If you pay for Club Europe, it may work for you – if you can time your application around a Club Europe booking to use the £50 per person discount code.  This is only a one-off benefit for the first year, however.

 

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 ac

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Comments

  1. If i use this card purely for spending at Tesco’s and buying Tesco’s Fuel then, according to my calculation, I would earn 4.75 avios points per £1 spent. This is more then the 3.9 avios per £1 I’d earn by using the Tesco’s credit card as a clubcard and paying with a BA Premium Amex. Does this justify the £150 annual fee? I’d easily spend £5,000 per year.

  2. Typical… I signed up to the Tesco Premium Credit Card last month so missed out on this… story of my life!

  3. I couldn’t justify the 150 annual fee for the second year, bearing in mind no bonus point’s. Do you think it could be cancelled easily at its anniversary date?