EDIT: This card is no longer available to new applicants and has been withdrawn from the Tesco Bank website as of late June 2018. The card continues to function for existing cardholders.
There is a perpetual dilemma that exists among UK-based miles and points collectors surrounding Visa and MasterCards. Put simply, while there are good points-earning credit cards available in the UK, the vast majority of these are American Express cards. Now let me set the record straight from the start. In the UK, you will earn the highest number of reward points be it Avios, Virgin, Etihad or Emirates miles by using an American Express-branded card – end of.
Yet, although acceptance of American Express is growing, especially among larger chains, many smaller shops still will not take Amex. This means you need a suitably lucrative Visa/MasterCard accompaniment to sit alongside whichever Amex you happen to be using currently.
Over the next few months, I will be taking a look at some of the strongest-performing non-Amex card products on the market in terms of the miles and points rewards they offer.
Today I will be starting with the Tesco Premium Credit Card.
Unusually for a rewards credit card, Tesco made the decision not to offer a permanent sign-up bonus with this card. They did run a 2,500 Clubcard points sign-up bonus for a couple of months last year, but that hasn’t reemerged.
There is, however, a special offer running at the moment: Customers who successfully apply for the card by the 31st August 2017 will receive a £50 Tesco gift card.
This will be delivered to the address on your card application within 8 weeks of your first transaction.
What is a Clubcard point worth?
This card allows you to accrue Tesco Clubcard points when you spend on your card. But what can I get with a Clubcard point?
We know that at the very least, Clubcard points can be redeemed at face value for vouchers to spend in-store at Tesco. There is also a range of partners that offer up to 4x your voucher value for your points e.g Uber, Goldsmiths, Pizza Express and more.
As this article has a miles and points slant though let’s remind ourselves of what a Clubcard point is worth in ‘miles and points terms’:
- 2.5 Virgin miles or
- 2.4 Avios
- 3.325 Hilton points (via conversion from Virgin miles)
- 2.5 IHG points (as above via Virgin)
I offered some further analysis regarding conversion options for Clubcard points in this article here.
Day-to-day earnings rate
There are 2 different rates to bear in mind here:
1.) Rate when spending at Tesco = 1 Clubcard point per £1 spent
2.) Rate when spending outside of a Tesco – 1 Clubcard point per £4 spent.
In Tesco – 1 point per £1
Note: The Clubcard points earned on spend in Tesco are in ADDITION to the regular points you also earn by scanning your Clubcard at checkout. This means you are actually earning 2 Clubcard points per £1 spent, for a total of 5 Virgin miles/4.8 Avios per £1, which is a superb return!
That makes this card by far the best card for earning Avios when shopping in Tesco.
The only thing that comes close is the British Airways Premium Plus Card which earns 1.5 Avios per £1 (which when added to the points collected via your Clubcard would equal 3.5 Avios per £1)
If you are focusing on collecting Virgin miles, it is less clear-cut. This is because the Virgin Black Credit Card offers a substantial 2 miles per £1 spent (on the Amex) which would equal a combined total of 4.5 Virgin miles per £1 – not much in it.
Outside of Tesco – 1 point per £4
This equates to 0.6 Avios per £1 (0.25 Clubcard points per £1 x 2.4 Avios conversion rate = 0.6). On paper that is a very respectable earnings rate for a non-Amex card, however, the reality is quite different.
Tesco doesn’t round up your transactions and give you 1 Clubcard point per £4 spent on the total. Instead, it gives you a point for every ‘whole’ £4 transaction. That means you would earn no points on a £3.99 purchase. Similarly, you would receive just one point if you were to spend £7.99. This can quickly have a crippling effect on your points collecting abilities.
1.) If you spend £5,000 on your Premium Credit Card at Tesco in any year you will receive 5,000 bonus Clubcard points.
That is a very decent incentive worth a potential 12,000 Avios/12,500 Virgin miles.
When this card was first launched and I saw the 5,000 points bonus, I was expecting the terms to be very restrictive, I even half expected to see fuel purchases excluded. But no, the Tesco Bank website says this:
Qualifying spend includes any purchase transactions in Tesco Stores UK (excluding Tesco Opticians, Tesco Mobile and Tesco Travel Money), Tesco.com (UK only), Tesco Direct, F&F Clothing, Tesco Wine by the Case and Tesco Petrol Filling Stations (UK only, excludes Esso).
A year begins on the date the account was opened and each anniversary of that date and ends 12 months later.
I am pleased to see that this bonus seems to be available as a recurring yearly perk rather than a one-off first-year bonus. One of my biggest bugbears with HSBC World Elite MasterCard is that it offers a generous bonus on first-year spend, but no incentive for customers to keep the card for a second year.
2.) Travel insurance
Travel Insurance is included assuming the primary cardholder is less than 70 years old. It also covers your immediate family members under the age of 70. You’ll be insured for as many trips of up to 31 days as you like and the policy also includes 17 days winter sports cover each year as standard.
Like the American Express Platinum card though, there is no coverage available to those over 70 which may deter some.
Access to the full list of T&C’s and exclusions can be found here.
3.) Clubcard/petrol trick
As I have written about previously, there is a much overlooked nifty trick available to anyone with a Tesco credit card product.
When you fill up with petrol at a Tesco filling station, you will earn double the normal rate and receive a full Clubcard point per £1 spent. There is no requirement to then pay with your Tesco credit card. You are free to pay with whichever card you are channelling your spend through currently.
4.) Travel money
Cardholders are eligible for a 1% enhanced exchange rate on Tesco Travel Money when you buy in-store.
Offer applies to the advertised in store rate on the date of purchase for foreign currency notes, foreign currency traveller’s cheques and prepaid foreign currency cards.
I wouldn’t view this as a consideration in terms of applying for this card. You would still be better off with many of the cards I highlighted in my analysis a couple of weeks ago.
The annual fee is £150.
Unlike (directly issued) American Express cards, this fee is not refundable pro-rata should you choose to cancel at some point during your card membership year.
This card has a representative APR of 56.5% variable based on a 19.9% interest rate on purchases, a £150 annual fee and an assumed £1,200 credit limit.
Is this the card for me?
The first step to answering this question is to flesh out exactly what is the unique selling point of this card.
If you were thinking of getting this card purely for the higher points earning on Tesco spend, you need to remember that the Tesco debit card (free with a current account) also offers a boosted 1 Clubcard point per £1 spent in Tesco (rate locked in until at least April 2019).
You may value the travel insurance if you don’t already have a policy in place and that could well help to offset the fee.
But the biggest attraction has got to be 5,000 bonus Clubcard points – worth 12,000 Avios/ 12,500 Virgin miles – when you spend £5,000 in a year at Tesco. If you are likely to spend that amount (between fuel, supermarket shopping etc) this card may well appeal.
Assuming you can spend £5,000 a year at Tesco, the current £50 gift card offer means that I can just about justify the fee versus the bonus points.
You are effectively paying £100 for 10,000 Clubcard points worth 24,000 Avios or 25,000 Virgin miles (based on 5,000 bonus points + 1 Clubcard point per £1 on that £5,000 of spend) which is a good deal.
But you would have to factor in the benefits you would have received if you had put that same £5,000 of spend on a different card. Spending that amount on the British Airways Premium Plus Card, for example, would have taken you halfway towards a 2-4-1 companion voucher.
This may be an easier decision if you find that the travel insurance works for you. With unlimited trips per year and winter-sports cover, such a policy would cost a fair bit if purchased independently.
Earning 0.6 Avios per £1 is a decent return for a non-Amex card, but if you don’t expect to earn the 5,000 bonus Clubcard points or have been paying for a separate travel insurance premium, this card isn’t a particularly attractive proposition.
Disclaimer: The above information is intended solely as a helpful guide to the relevant card products on the market and their various features. You should, of course, always conduct your own research as the recommendations provided within may not be suitable for your personal financial requirements.
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