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Credit & Charge Card Reviews (20): Tesco Premium MasterCard

This is my review of the Tesco Premium MasterCard credit card.

It is part of my series of articles looking at the major UK loyalty credit cards and discussing whether or not they are worth applying for.  These articles will be linked to the relevant sections of the ‘Credit Cards Update‘ page.  My other UK airline and hotel credit card reviews can be found here.

Key link:  Tesco Premium MasterCard application form

Key facts:  £150

The representative APR is 56.5% variable, including the annual fee, based on a notional £1200 credit limit.

If you want to check your credit record before applying for a new card, click here to get your free Equifax credit report and score.  Your first 30 days are free then it’s £14.95 per month.  You can cancel at anytime.

As with all rewards cards, this is not a suitable product for you if you do not clear your balance in full every month.  You should focus on a credit card with a low interest rate such as the AA Low Rate Card. This has a very attractive representative APR of 6.4% variable on purchases and balance transfers.

About the card

The Tesco Premium MasterCard is issued by Tesco Bank, which is now wholly owned by Tesco following its acquisition of Royal Bank of Scotland’s stake a couple of years ago.

Tesco Premium MasterCard credit card review

What is the sign-up bonus?

Until 5th January 2017, Tesco Bank is offering 2,500 Clubcard points when you take out the card and make one purchase.

The usual sign-up bonus is nothing.

Any other benefits?

Yes.  A long list of them.  The key issue is what value, if any, you place on them as this will decide whether or not this card is for you.

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.

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

If you book Club Europe for cash on a regular basis for your family then it clearly has value.  This benefit is being withdrawn on 31st December 2016 and you must apply for the card before this date to receive it.  You must book your Club Europe flight within two months of receiving the code.

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.

What do I earn per £1 spent on the card?

You earn 1 Clubcard point for every £4 spent on the card on a ‘per transaction’ basis.

It is important that potential applicants understand what this means. At the most extreme, if you bought 100 items at £3.99 in separate transactions, you would earn zero Clubcard points. A £7.99 transaction would only earn one point.

One Clubcard point is worth 2.4 Avios or 2.5 Virgin Flying Club miles, so every £1 spent on the card gets you up to 0.6 Avios or 0.625 Virgin miles.

In Tesco stores, the earning rate increases to 1 Clubcard point per £1 spent.

You will receive a statement once a quarter containing your Clubcard vouchers, and you can convert these online to Avios or Virgin or redeem them for any of Tesco’s other ‘Clubcard Boost’ deals. You can even spend the vouchers in-store at Tesco at their face value, although this is a poor use of them.

Tesco used to run fairly regular transfer bonuses with Avios.  After a three year gap these restarted in Autumn 2015, although the bonus was restricted to 20% and limited to £100 of converted vouchers per account.

Any other quirks?

Yes.  Your credit card doubles up as a standard Tesco Clubcard.

It is perfectly acceptable to hand over your Tesco credit card in a Tesco store and ask them to swipe it as a Clubcard.  You can then pay for your shopping on a more lucrative credit card!

What is an Avios point worth?

This post outlines my view of what an Avios point is worth, based on your typical redemption patterns.

One key benefit of Tesco Clubcard points is that you do not have to convert to Avios.  Unlike dedicated airline credit cards, you have the option to convert to Avios or Virgin miles, but there is also the flexibility to use them for any other good Tesco deals that come along.  I use a large pile of vouchers to pay a regular Safestore bill ….

How does this compare to a cashback credit card?

My default comparison card is the AA FuelSave Credit Card.  This card is free in the first year and offers 0.5% cashback on all spending, 2%-4% cashback on fuel purchases and – in year one – free AA breakdown cover.  The representative APR is 22.4% variable.

Whilst the Tesco Premium MasterCard is the most generous Visa or MasterCard option for earning Avios for most people, you should still consider whether a non loyalty card would be a better deal.  Paying £150 per year for a card earning 0.6 Avios per £1 makes little sense when a free card can give you 0.5% cashback.

Remember that the Tesco card has an FX fee of almost 3% for foreign currency transactions.  You may want to consider getting a separate card to use abroad which charges no foreign exchange fees.  I recommend the Lloyds Avios Rewards card which also earns Avios points – even on your 0% FX transactions!  It comes with a 4,500 Avios sign-up bonus if I refer you.  My review of the Lloyds Avios Rewards card is here.

Conclusion

The sign-up bonus is OK (2,500 Clubcard points is worth 6,250 Avios) but is not enough on its own to justify the fee.

Assuming you convert your Clubcard vouchers to Avios points, the earning rate of 0.6 Avios points per £1 is OK.  This too does not, in any way, justify the £150 annual fee.

The real driver of whether you get the card should be whether you spend £5,000 per year in Tesco or not.  If you do, the 5000 bonus Clubcard points are a decent annual bonus.  If you would also use the travel insurance provided with the card, the package becomes interesting.

The application form for the Tesco Premium MasterCard can be found here.

(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.

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About Head for Points

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Comments

  1. Worth mentioning that if you buy fuel from Tesco with a normal clubcard you get one point per £2 (1.2 avios per £1). If you use the premium credit card you get one point per £1 for the credit card use, and one point per £1 for the fuel so in total 2 points per £1 (4.8 avios per £1) which is a good deal!

  2. How quickly do Tesco send the £50 off BA flights code after applying for the card?