EDIT: This card is no longer available to new applicants and has been withdrawn from the Tesco Bank website as of late June 2018.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.
This article is part of a refresh of our travel reward credit card reviews. Over the last few weeks and months, I’ve been revisiting, adding to and updating all of our in-depth credit card features. You can find all of the most up-to-date articles here.
In the UK, you’ll earn the highest number of frequent flyer miles be it Avios, Virgin, Etihad or Emirates miles by using an American Express-branded card – end of.
However, although acceptance of American Express cards is growing, especially among larger chains, many smaller shops still don’t take Amex. This means you need a good Visa or Mastercard to sit alongside whichever Amex you happen to be using currently.
One of the strong contenders for this role in your wallet is the Tesco Premium Credit Card. Launched in 2016, it offers a decent benefits package.
But does it do enough for you to justify paying its £150 annual fee?
Unusually for a rewards credit card, Tesco doesn’t offer a permanent sign-up bonus with this card.
They did run a targeted 5,000 Clubcard points sign-up bonus at the beginning of the year. A more widely available 2,500 Clubcard points sign-up bonus ran for a couple of months in 2016, while a £50 Tesco gift card was offered for a period last summer. However, those offers are inconsistent and we haven’t seen a decent ‘public’ offer this year.
What’s a Clubcard point worth?
This card earns Tesco Clubcard points when you spend on your card. But what can you do with Clubcard points?
We know that at the very least, Clubcard points can be redeemed at face value for vouchers to spend in-store at Tesco.
If your preference is travel rewards points, a Clubcard point is worth:
- 2.5 Virgin Atlantic Flying Club miles or
- 2.4 British Airways Avios
- 3.325 Hilton points (achieved by converting Virgin Flying Club miles – this article explains how that’s done)
- 2.5 IHG points (as above via Virgin)
I looked at some other options for converting your Clubcard points, including Uber and Hotels.com, in this article.
Day-to-day earnings rate
The Premium Credit Card earns points at two different rates depending on where you are using the card:
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.
At Tesco – 1 point per £1
The Clubcard points you’ll earn when paying with your Premium Credit card in Tesco are in addition to the regular points you’d earn anyway as a Clubcard member. This means you’re actually earning 2 Clubcard points per £1 spent, equivalent to 5 Virgin miles/4.8 Avios per £1 – a superb return!
That makes this card the best Avios-earning card when shopping in Tesco.
It beats the British Airways Premium Plus Card which earns 1.5 Avios per £1 (when added to the points collected via your Clubcard would equal 3.9 Avios per £1). It also trumps the Amex Gold/Platinum cards which earn the equivalent of 1 Avios per £1 (plus Clubcard points = 3.4 Avios per £1).
If your focus is collecting Virgin miles, the maths is less clear-cut. That’s because the Virgin Black Credit Card (currently closed to new applicants) offers a substantial 2 miles per £1 spent. When combined with your ordinary Clubcard points that equals a 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’)
- 0.625 Virgin miles per £1 (0.25 Clubcard points per £1 x 2.5 ‘Virgin conversion rate’)
On paper that’s a very respectable earnings rate. In fact, it’s actually the most generous Avios-earning, non-Amex card in the UK (bar the HSBC Premier World Elite MasterCard which has fairly restrictive eligibility criteria).
However, the reality is quite different.
Disappointingly, Tesco doesn’t round up your transactions and give you 1 Clubcard point per £4 spent on the total amount. Instead, it gives you a point for every ‘whole’ £4 transaction. That means you would earn no points at all on any purchases below £3.99. Similarly, you would receive just one point if you were to spend £7.99.
This can quickly have quite an effect on your points collecting abilities.
1.) 5,000 bonus Clubcard points when you spend £5,000 on your card in a year
This is a very decent incentive worth 12,000 Avios/12,500 Virgin miles or £150 in Uber credit.
When this card and the 5,000 points bonus was first launched, I was expecting the terms to be very restrictive. I 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 is available as a recurring yearly perk rather than a one-off first-year bonus. One of my biggest issues with the HSBC World Elite MasterCard is that it offers a generous bonus for first-year spend, but no incentive for customers to keep the card for the 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.) Petrol trick
As I have written about previously, there is a nifty trick available to anyone with a Tesco credit card product.
When you fill up with petrol at a Tesco filling station and swipe your Tesco credit card, you’ll earn double the normal rate and receive a full Clubcard point per £1 spent. There’s no requirement to actually pay with your Tesco credit card. You’re free to then pay using whichever card you’d like.
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. For foreign spending/getting cash abroad, you’d still be better off with many of the cards I highlighted in my analysis of the best card to use abroad.
The annual fee is £150.
Unlike (directly issued) American Express cards, this fee is not refundable pro-rata if you chose to cancel your card 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 the unique selling point of this card is.
If you were thinking of getting this card purely for the higher points earning at Tesco, you need to remember that the Tesco debit card (free with for current account holders) 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’re likely to spend that amount anyway, this card may well appeal to you.
I’m going to split this verdict in two:
If you won’t/aren’t likely to spend £5,000 annually at Tesco
This may be an easier decision if 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 an excellent 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.
If you will/may well spend £5,000 a year at Tesco
Assuming you can spend £5,000 a year at Tesco (between fuel, supermarket shopping, Tesco Direct etc), the 5,000 bonus Clubcard points means you will break even on the fee – given that you can cash out those points for £150 in Uber credit for example.
In terms of airline miles, you’re effectively paying £150 for 10,000 Clubcard points (5,000 bonus points + 1 Clubcard point per £1 on that £5,000 of spend) worth 24,000 Avios or 25,000 Virgin miles. That works out at 0.6p per mile. Not horrendous and certainly much cheaper than buying them directly from the airlines. Personally, I still prefer to pay less than that when earning my miles, but I could see why that number makes sense for people.
You do also have to factor in the benefits you’d have received had you put that same £5,000 of spending 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.
Disclaimer: The above information is intended solely as a helpful guide to relevant card products on the market and the various rewards they offer. You should, of course, always conduct your own research as the recommendations provided within may not be suitable for your personal financial requirements.