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

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

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

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

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

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.

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.

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Want to earn more points from credit cards? – April 2024 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.

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:

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

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.