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.
Want to earn more points from credit cards? – August 2022 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.
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.
EDIT: Until 25th October 2022, there is an exceptionally generous sign-up bonus on The Platinum Card. You will receive 60,000 Membership Rewards points – double the usual amount – and £200 to spend at Amex Travel. You need to spend £6,000 within six months to earn the bonus.
British Airways American Express Premium Plus
25,000 Avios and the UK’s most valuable card perk – the 2-4-1 voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points, £200 travel credit and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
15,000 points bonus and 1.5 points for every £1 you spend Read our full review
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:
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
British Airways Accelerating Business American Express
30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review
Capital On Tap Business Rewards Visa
10,500 points bonus – the most generous Avios Visa for a limited company Read our full review
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.