Credit & Charge Card Reviews (15): Tesco Premium Mastercard

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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.

If you want to check your credit record before applying for a new card, click here to get your free Experian Credit Score.

(EDIT:  This article was updated on 1st June 2018 and is correct as of that date.)

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.

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 Tesco Clubcard Mastercard Low Rate card. This has a very attractive representative APR of 5.9% variable.

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 few years ago.

Tesco Premium MasterCard credit card review

What is the sign-up bonus?

Until 11th July, you will receive 5,000 Clubcard points with your first purchase.  This is an excellent return and should offset the fee for the first year, meaning that the other benefits are effectively free.

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 this card is for you.

Benefit:  1 Clubcard point for every £1 you spend on the card in Tesco – 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 miles (or 3p of Uber credit) for 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. The free card gives 1 point for every £4 you spend in Tesco and has no annual bonus.

I recommend this card if you easily spend £5,000 per year in Tesco purely because of these 8,750 extra Clubcard points.  That would get you 21,000 Avios or 21,875 Virgin Flying Club miles which justifies the fee (or £262.50 of, say, Uber credit if you redeem for a ‘3 x face value’ Clubcard Boost deal).

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.

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.  Note that you do NOT earn Clubcard points when you use your credit card to buy travel money, even though it goes through your statement as a purchase.

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 but they have been very rare in recent years.  There are regular transfer bonuses of 10% to 20% into Virgin Flying Club.

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 have used vouchers to pay a regular Safestore bill and currently convert them to Uber at 3 x face value.

How does this compare to a cashback credit card?

The Tesco Premium Mastercard is, for the 90% of readers who cannot get HSBC Premier, the most generous Visa or MasterCard option for earning Avios.

However, paying £150 per year for a card earning 0.6 Avios per £1 does not justify the fee.

To get full value from the Tesco Premium card, you need to either:

  • get £150 of value from the travel insurance it provides, or
  • spend £5,000 per year on the card in Tesco, including fuel, in order to trigger the 5,000 bonus Clubcard points

Is this a good card to use when travelling?

As Tesco Bank adds a 3% foreign exchange fee, you might want to get a separate free credit card to use abroadThe Virgin Money Travel Credit Card (click here) is free and has NO foreign exchange fees.  You may want to apply for one of these as well.  There are no travel rewards card without a foreign exchange fee.

Conclusion

Until 11th July, the Tesco Premium Mastercard is very attractive.  The 5,000 Clubcard points you get for signing up are worth 12,000 Avios or 12,500 Virgin Flying Club miles.  Alternatively you could get £150 of Uber credit or redeem for many other Clubcard deals.  Your annual fee is effectively covered for the first year.

Assuming you convert your Clubcard vouchers to Avios points, the earning rate of 0.6 Avios points per £1 is OK.  This does not justify the £150 annual fee on its own after the first year.

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.

ENDS FRIDAY: Bargains in the great Qatar sale (eg Oz business £1330) and new solo traveller discounts
ALL MBNA airline credit cards withdrawn - what are your alternatives?

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Comments

  1. MBNA Virgin. I’ll miss this card, it’s been my default spend card for work items, and I’ve put £20K+ through it, in around 7 months. I got the companion voucher at £7K, but what I really want are the two upgrade vouchers from £5K and £10K. Do you think it likely I’ll get these if the card is withdrawn prior to the year being complete? Obviously no one knows for sure, but wonder if there were guesses based on previous similar situations. Will certainly miss the 2miles/£, was building a tidy VS pot without actually flying them.

    • My year is up in Dec so like you I want to make sure I have the upgrade vouchers, im also unsure whether to pay the £140 in Dec and see how long it continues or cancel and see what else comes up with the new cards etc.

      • Apparently the vouchers typically appear in your Flying Club account in the week or so before the fee applies. Once in your FC account you can cancel the card and not pay the fee without problem. The repeated advice is don’t use the card after the 1st year anniversary if you don’t want to pay the fee. Even if you get charged because you didn’t cancel in time, so long as you don’t use the card the fee can be cancelled.

  2. Richard G says:

    Has there been any sort of consensus on what’s the best Visa / Mastercard? (Premier aside)

    I use my Amex for most things, but obviously there are many places that wont take it.

  3. OT – I made some queries recently regarding best use of the BA PP Amex, thanks for the responses but there is one area I’m still not 100% sure on, therefore I will summarise in the scenario below…

    Jan 2017 – Husband opens new Amex account and BA PP card with Wife as supplementary cardholder.
    Aug 2017 – Husband achieves £10k spend and gets 2 for 1 Avios voucher, refers Wife for her own BA PP card with Husband as supplementary card holder.
    Sep 2017 – Husband downgrades to free BA blue Amex.
    May 2018 – Wife achieves £10k spend and gets 2 for 1 voucher. Both Husband and Wife’s vouchers redeemed for family of 4 travelling in 2019.
    June 2018 – Husband upgrades to BA PP card with Wife as supplementary card holder.

    My question is, will Husband then have until Jan 2019 or June 2019 to achieve the £10k spend for the 2 for 1 voucher?

    • Genghis says:

      Jan 19

    • Bob, why are you not cancelling your BA blue card you can easily be referred by your wife after 6/12! It seems a wast hanging onto it. She then gets a decent referral bonus 9k and you can get a further 26 k spend bonus. Once wife achieves her 241 she can refer you then cancels hers! Nice rotation going There!

      • I had thought about that option but am a bit reticent to churn too many credit card accounts. I have no such qualms over Amex charge cards however!

        Thanks for responding 🙂

    • Has anyone every tried the trick of earning the 241 and then downgrading to the free BA Card, waiting 2 months and then upgrading again meaning you will get another 241 when you hit the 10k. I’ve managed to do mine in 2 months so waiting the voucher to hit my account. I’ve already had the emailing me I’ve got it. Will downgrade once it’s there.

  4. OT, Who can tell me how to use the Lloyds upgrade voucher for my Partner on a return journey?

    Iv heard this can be done without the holder traveling, if you know how that is!

    • I’m sure someone will have done this, but maybe the system would let you input your partner’s details as the passenger if you try a dummy booking?

      • Thanks Anna, I need a connection so I always have to call Avios. I will give it a try!

    • I thought you just called them? AFAIK the online system can only handle a bog-standard return from London so lots of us end up having to call them, they’re thankfully pretty good on the phone.

  5. ‘(It is actually – and unexpectedly – going to be the last article in this series, given that the United and Virgin cards were suspended this week!)’

    Pfft. There will be new travel CC offers after this shake down and we’ll soon be back to moaning you’re not keeping up with stuff. It’s just a correction. It’s the nature of the beast with aviation 🙂

  6. OT but on the Lloyds saga – i’ve actually just had a letter from them saying the issue will be resolved by November 14th – let’s see what happens!

    The letter was sent on October 28th, sad state of affairs the post these days!

    • Fingers crossed for you Anna. I didn’t get a letter. I phoned when my 26 wks was up on 5/10 and was told when the statement for Oct posted all would be fixed! My o/s pts have manually been credited today so my account is up to date again.

      • I’m fully expecting the 14th to come and go and to be fobbed off again, but I suppose a letter is good evidence for the FOS case!

        • Are you expecting the FOS to make Lloyds rewrite their IT system?

        • No – just to adhere to their own Terms and Conditions. Someone’s got a bee in their bonnet today.

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