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 ASDA Money credit card is 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. Yes. Your math(s) look about right. Bear in mind though that you would get the 1 club card point per £ in Tesco regardless of what card you use. I find it much better just to look at the delta.

    • Thanks…”you would get the 1 club card point per £ in Tesco regardless of what card you use. I find it much better just to look at the delta.” Sorry not sure what that means?

      • Delta in maths refers to the difference or a change – Genghis is meaning that as you get the 1 Clubcard per GBP as standard (regardless of payment method) he wouldn’t factor it into the calculation and would only be looking at what difference using the Tesco Credit Card made

        • So does this mean I could payin Tesco with my Amex and swipe the Tesco CC for the points? Surely this would mean that I technically wouldnt be “spending” my £5000 on the Tesco CC to meet the minimum £5000 for the bonus? Sorry to be such a numbskull!

        • No, it wouldn’t count as spend on the card. The main use of this to date has been at Tesco petrol stations where using the Tesco credit card as a Clubcard (which the assistants are used to) gives higher earnings.

          Overall I don’t spend anything near £5k/year with Tesco (as long as you exclude gift cards!), even though they’re the main supermarket I shop at!

        • Thanks Alan

  2. Ah I see , ok! Thanks

  3. So if I divide 30000 Avios by spending £84 its a value of 3.5 pence per Avios??? Thats a lot per avios point. Probably not worth it for me.

    • I think you lost me at “the…” lol! Maths never my strong point!

      So in simplistic terms I would get 5000 points bonus for spending the £5K, 5000 points for spending £5k on the card PLUS 5000 points anyway for swiping my CC as a clubcard? So 15000 points + the 2500 sign up bonus (42000 avios?) Would this work with shopping at Tesco online? I presume I need to change my CC details on there if I get the new card instead of my usual one

      • In simple terms, yes but not how I would think about it. Works with online. No need to change CC details on your online account

      • I don’t think that’s the right logic, Liz. Where’s the cost of the BA card in those numbers?

      • True I didn’t factor that in – but if you can afford to divert your Tesco spend to this card and still get sign up bonuses elsewhere then this is a good card. We have just cancelled 2 platinums and 1 SPG and about to cancel a 2nd one. Planning on getting the BAPP next but think this will work for me too.

      • Seems semi-permanent.

    • Very true. I was calculating the simple earning rate on the card. The same is to be done for other cards when you think about getting them to ensure you get best value for you.

      I churn heavily such that the average return is a lot higher (e.g. for Plat with wife referral it’s 92k MR = £920-£80 on fees on £4K spend = 21% return)

      But we still need somewhere to put all our annual spend after we (wife and I) have done 4 Plat and SPGs for sign ups and 2 (or thereabouts) BAPPs for 241 etc. In past 12 months also done 2 Lloyds Amexes, 2 Virgin White, 1 IHG, 1 Virgin Black but done lots of other expenditure on DC – I might be missing some).

      Point being is that if after you’ve churned / you’re not inclined to churn, you need somewhere to put your expenditure. So for us who shop at Tesco, if I think we will spend £5k in Tesco (and I’ll see what happens re gift cards) then I’d be quite happy for this 4.2% earn rate.

  4. i would spend about £6000 a year in Tesco’s on petrol and groceries etc.I currently swipe the Tesco free credit card but pay with my BA amex card and get an extra 1.5 points. Can I use the new Tesco Premium card and pay with my BA amax card the same way?

  5. I see Raffles is now Rob 🙂

  6. 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.

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

  8. 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?

    • the real harry says:

      no, not easy at all, you’re going to be robbed blind by Tesco, they thumb their lips to the ombudsman and to UK law 🙂

    • Quick telephone call or even a letter and it’s gone.