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If you have the Tesco Premium Credit Card, should you be asking for a fee refund?

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Last Wednesday we told you that Tesco Direct, the Tesco non-food website, is to be closed on 9th July following years of losses.

This is disappointing for Avios and Virgin Flying Club collectors as Tesco Direct was a regular source of good, often exceptional, bonus point offers.

There is one other group of people who will be disappointed and possibly feeling legged over: holders of the Tesco Premium Credit Card.

What are the benefits of the Tesco Premium Credit Card?

The Tesco Premium Credit Card has a £150 annual fee.

You can check out the details here.  As usual I need to tell you that the representative APR is 56.5% variable, including the fee, assuming a notional £1200 credit limit.  The rate on purchases is 19.9% variable.

Let’s go through the benefits of the Tesco Premium Credit Card one by one.  The first one is the one that could now cause problems.

Benefit:  5,000 Clubcard points bonus if you spend £5,000 with Tesco during your card year (this is separate to the sign-up bonus)

Let’s imagine that you DO spend £5,000 per year in Tesco.  This may be possible if you always buy your fuel there, use Tesco Direct a lot or shop for a large family.  Things start looking interesting.

I can recommend this card if you easily spend £5,000 per year in Tesco purely because of the extra 5,000 Clubcard points at the end of the year.  That would get you 12,000 Avios or 12,500 Virgin Flying Club miles.  More importantly, you would have earned 2.4 Avios or 2.5 Virgin miles per £1 on all that £5,000 of spending which would be another 12,000 Avios or 12,500 Virgin miles.  And none of this factors in the value of the sign-up bonus.

Benefit:  1 Clubcard point for every £1 you spend on the card in Tesco or at Tesco Direct

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.  However, you can get the same rate from the Tesco Bank debit card on your Tesco shopping if you want to open a Tesco Bank current account.

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.  You should look at the small print of course, especially if you have pre-existing conditions.

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:  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 for every £1 you spend based on receiving 0.25 Clubcard points.  This is substantially better than the Lloyds Avios Rewards Mastercard which earns just 0.25 Avios per £1.

It is not the best deal for collectors of Virgin Flying Club miles.  You would be far better off getting one of the two new Virgin Flying Club credit cards.  However, if you were turned down for the new Virgin Atlantic cards then this is not a bad substitute.  The existing MBNA Virgin cards are closing in June.

Benefit:  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 you would still get a better deal using a 0% FX fee credit card or a 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.

Tesco Premium credit card bonus points

So, what’s the problem?

Unless you valued the travel insurance at £150 – which you might, but many people have cover elsewhere – the value in this card is the 5,000 bonus Clubcard points (12,000 Avios or 12,500 Virgin Flying Club miles) for spending £5,000 with Tesco in a card year.

Tesco Direct may have been a key part of this strategy.  After all, a couple of big electrical purchases via the Tesco Direct website – a laptop, a new flat screen TV – would knock off a large chunk of the £5,000 in one go.

Would Tesco Bank let you cancel the card with a fee refund?

Tesco Bank does not usually offer a pro-rata fee refund if you cancel the Tesco Premium credit card.  Your £150 annual fee is a sunk cost.

And yet ….. arguably, if you felt that the closure of Tesco Direct had now made it impossible for you to hit the £5,000 spending target for the 5,000 bonus points, you may feel that you are due a refund.

You could ask for one of a few things:

cancel and ask for a pro-rata refund for the unused months

cancel and ask for a full refund of your fee for the year

not cancel but ask for the fee to be refunded, either partially or fully

Would Tesco Bank allow this?  I have no idea.  It might depend on how far you are into your card year, whether you are or are not already on target to hit the £5000 of Tesco spend and how much Tesco Direct spend you have in the year to date.

Do let me know how it goes if you do ask for a refund.

PS.  If this card does sound interesting, despite the closure of Tesco Direct, remember that until 11th July, you will receive 5,000 Tesco Clubcard points when you sign up.  There is NO spending target to hit.  All you need to do is make one purchase in Tesco, or online from Tesco Direct, within two months of getting the card.  5,000 Tesco Clubcard points converts to 12,000 Avios or 12,500 Virgin Flying Club miles or £150 of Uber credit, amongst other things – although you are paying a £150 fee for the privilege.  Full details are 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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Comments

  1. Rob what does “feeling legged over” mean ?

  2. Alex W says:

    Another option might be to ask Tesco to credit you with 5000 Clubcard points despite not hitting the £5000 Tesco spend. I think I would prefer an£150 refund though!

  3. James says:

    I used to have this card and managed the £5,000 buying fuel and a weekly food shop. It works out at £96 per week in Tesco.

    I then cancelled the card as their bank account ID checks were rather cumbersome.

    I called up and received a pro rata refund on the annual charge.

  4. They must like you then! When BMI closed, some people got that and others (me) got a ‘nothing’ card. Sounds decent actually, I would keep it – at least for travel.

    • Jay-Marc says:

      I had the old no-fee version of the MBNA AA card and the replacement for that is the Horizon Visa with the same features as above, but without the financial incentive to stay. Still looks a decent enough free card to keep in the portfolio though.

    • the real harry1 says:

      I’m proud to say I also got a nothing card 🙂

    • Stuart says:

      Same offer of the Horizon card here in replacement for AA card, which is better than the “no benefits” card which, like Rob, I got at the end of BMI’s tie up with MBNA.

  5. JohnW says:

    A letter from MBNA has arrived this morning stating that ‘the relationship between MBNA & Etihad Guest is coming to an end on 21st July 2018’.

  6. OT:

    Just been rejected for the Virgin Atlantic free card (despite already holding the + version!!). I recall other people had similar issues and there was a link posted here or something similar where you can appeal the decision?

    • I doubt that will work if you already have one. I have been suggesting a 6 month gap to be honest.

      • Fair enough 😀 Went back and found the relevant articles, as I remembered they stated you could have both, and get 2 sign-up bonuses, so thought this would be OK. When I went back and checked you did mention their responsible lending policy would flag up applications if made too close to each other. Will leave it a few months 🙂

  7. I got the same as you. Will lkeep it for use abroad in the future once my Lloyds Avios Duo expires in the Autumn, I don’t expect a replacement 🙁

  8. Fenny says:

    I saw this yesterday. It’s a limited time offer until around July, I think.

  9. Aaron says:

    FWIW, I tried to get a pro-rated refund for the card fee, given the tesco direct closure and they were having none of it.

    Firmly stuck to the T&Cs of the card point…

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