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.
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:
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
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.
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.
£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.
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.
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.
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 points from credit cards? – October 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 (SPECIAL OFFER), £200 travel credit and unbeatable 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.