Maximise your Avios, air miles and hotel points

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 points from credit cards? – January 2021 update

If you are looking to apply for a new credit or charge card, here are our January 2021 recommendations based on the current sign-up bonus

You can see our full directory of all UK cards which earn airline or hotel points here.

British Airways American Express card

British Airways American Express

5,000 Avios for signing up, no annual fee and a companion voucher for spending £20,000 Read our full review

BA Premium Plus American Express card BAPP

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

Nectar American Express

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

American Express Platinum card Amex

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

15,000 points bonus and the most generous non-Amex for day to day spending 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:

American Express Business Gold card

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

Earn both Avios and BA On Business points with your business spending Read our full review

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company Read our full review

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.

Comments (25)

  • 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…