Tesco to launch a £150 Premium credit card

If two sightings of something are enough to be called a trend, we have a new trend in loyalty credit cards – the premium-priced Visa or Mastercard.

Last week I broke the news about the HSBC Premier World Elite Mastercard.  This costs £195 but offers you 1 Avios per £1 spent and free airport lounge access.  You must be a HSBC Premier current account holder to apply.

Tesco Bank is now jumping on the bandwagon.  To be honest, I have no idea what they are thinking of.  The offering seems pretty weak although full details are not yet available.

You cannot apply for the card yet.  This is the package:

Annual fee of £150

Earn 1 Clubcard point for every £4 spent (rounded down, per transaction, to the nearest £4)

Earn 1 Clubcard point for every £1 spent in Tesco

However you dress it up, this is poor.  This is virtually the same deal – apart from the enhanced rate for spending in Tesco – that the FREE Tesco card offered until it was downgraded in December.

Let’s use the ASDA Money credit card, which pays 0.5% cashback as a statement credit, as a comparison.  That card is free.

You would need to be redeeming your Clubcard points for a deal worth 3 x their face value to beat the ASDA card – and even then, it would be so marginal that the £150 fee would not be worth it.

Let’s look at it from an Avios point of view.  You would be earning 0.6 Avios points per £1 spent (ignoring, for the now, the loss of value because transactions are rounded down to the nearest £4).

The free Tesco Mastercard gets you 0.3 Avios per £1 spent.

If you value an Avios point at 1p, you would need to spend £50,000 for the Premium card to be a better deal.

(50,000 x 0.6p per £1 of Avios = £300 of rewards, whilst 50,000 x 0.3p per £1 of Avios = £150.)

More astonishingly, just to recoup the annual fee in Clubcard vouchers – ie to get back £150 of vouchers at face value – requires £60,000 of spending.

It is totally bizarre and I cannot imagine what Tesco Bank is thinking.  If they were offering 0.5 Clubcard points per £1 then I could make a case (just) for recommending it to high spenders.  At 0.25 Clubcard points per £1 it is a dead duck.

Unless, of course, Tesco Bank offers a substantial sign-up bonus.  6,000 Clubcard points would get you 14,400 Avios or 15,000 Virgin miles for your £150 fee and you would get extra benefit from using the card for non-Amex transactions.  That would be the lowest worthwhile offer I think.  If the bonus was higher than 6,000 points I would recommend it without hesitation.  There was, however, no mention of a sign-up bonus in the teaser email I saw.

There is also a promise of ‘travel benefits’ included. Perhaps we will be surprised here but there is no reason why Tesco should be spending money on benefits few customers would value. Let’s wait and see.

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Want to earn more points from credit cards? – September 2024 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

SPECIAL OFFER: Until 26th September 2024, sign up for FREE Barclaycard Avios Mastercard and you will receive a sign-up bonus of 10,000 Avios. This is double the usual bonus! You only need to spend £1,000 within 90 days. Our full review is here. Click here to apply.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

SPECIAL OFFER: Until 22nd October 2024, the bonus on American Express Business Platinum is increased to up to 80,000 Membership Rewards points, worth 80,000 Avios. You will receive 8 points per £1 spent for the first three months, on up to £10,000 of spending. Click here to read our full card review. Click here to apply.

SPECIAL OFFER: Until 22nd October 2024, the bonus on American Express Business Gold is increased to up to 40,000 Membership Rewards points, worth 40,000 Avios. You will receive 4 points per £1 spent for the first three months, on up to £10,000 of spending. The card is FREE for your first year. Click here to read our full card review. Click here to apply.

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.