EDIT: This card is no longer available to new applicants and has been withdrawn from the Tesco Bank website as of late June 2018.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.
Three weeks ago, I took a closer look at the Tesco Premium Credit Card and whether it’s worth its £150 annual fee.
In that piece, I mentioned the unusual lack of a welcome bonus available on the card:
“Unusually for a rewards credit card, Tesco doesn’t offer a permanent sign-up bonus with this card…we haven’t seen a decent ‘public’ offer this year.”
Well, the powers that be at Tesco Bank are clearly reading Tricks of the Trade because their website now displays the following offer:
Until 11th July 2018, they are offering a bonus 5,000 Clubcard points when you’re accepted for the card and make your first purchase.
If you’ve previously decided against applying for this card due to the lack of sign-up bonus (I know I have), here’s a quick run through of its key features:
Day-to-day earnings rate
The Tesco Premium Credit Card earns Tesco Clubcard points for all of your daily spending. The amount of point you earn will depend on where you use the card:
- Rate when spending at Tesco = 1 Clubcard point per £1 spent
- 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!
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).
If your focus is collecting Virgin miles, the Virgin Reward+ Credit Card (a Mastercard) offers a far more generous 1.5 miles per £1 spent.
Disappointingly, Tesco doesn’t round up your transactions and give you 1 Clubcard point per £4 spent on your total expenditure. 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 for spending up to £7.99.
This can quickly have quite an effect on your points collecting efforts.
1.) 5,000 bonus Clubcard points when you spend £5,000 on your card in a year
When this card and the 5,000 points bonus were 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.
This bonus is available as a recurring yearly perk rather than just a one-off first-year bonus. One of my biggest bugbears with the HSBC World Elite Mastercard is that it offers 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’s 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’ve written about previously, there is a useful 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 of Clubcard points – earning 1 point per £1 spent. There’s no requirement to actually pay with your Tesco credit card. You’re free to 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.
I don’t think this should affect your decision to apply for this card though.
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.
Should you apply for the card purely for the welcome bonus?
To answer that question, we need to consider the value of 5,000 Clubcard points versus the annual fee.
Option 1 – Redeeming Clubcard points at face value to spend in-store
Bad deal. You’d only be getting a £50 discount off your shopping (while paying a £150 fee).
Option 2 – Airline miles/hotel points
From a travel perspective, a Clubcard point is worth:
- 2.5 Virgin Atlantic Flying Club miles or
- 2.4 British Airways Avios
That means the welcome bonus on this card is worth:
- 12,500 Virgin miles
- 12,000 Avios
Poor deal. You’d be ‘buying’ 12,000 Avios or 12,500 Virgin miles for £150 which works out as 1.2-1.25p per mile – that’s expensive.
Option 3 – Uber credit
5,000 Clubcard points (£50 of vouchers) convert to £150 of Uber credit.
Decent deal. As long as you can make use of the Uber credit, you’re guaranteed to break even at a minimum.
Option 4 – Other Tesco Clubcard partners
Good deal. You’d be getting anywhere from £150-£200 of value from your sign-up bonus.
Previously, I wrote that the case for applying for this card hinged largely on whether you’ll manage £5,000 of Tesco spending annually.
This new bonus changes that.
Depending on how you’d choose to redeem the bonus – you may well be able to justify the annual fee based solely on that.
However, if you’re likely to spend £5,000 a year at Tesco, this card becomes a no-brainer, at least for the first year.
The 5,000 points bonus for meeting the £5,000 spend, combined with this sign-up bonus means you’ll be earning a total of 10,000 Clubcard points for £150.
In terms of airline miles, you’re effectively paying £150 for 10,000 Clubcard points worth 24,000 Avios or 25,000 Virgin miles. That works out at 0.6p per mile. Pretty good and certainly much cheaper than buying them directly from the airlines.
You’ll also be earning 0.6 Avios per £1 on all of your general spending – the best rate on the market for collecting Avios (bar the HSBC Premier World Elite Mastercard) using a non-Amex card.
Then there’s the travel insurance which, assuming you’re currently paying for some sort of policy, should allow you to save a fair chunk of money.
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.