You can view credit cards in one of two ways: (1) they make modern life easier by removing the need to be forever taking out cash and allowing you to access internet bargains, or (2) they are instruments of evil that tempt us into purchases we otherwise wouldn't have made and help us rack up huge levels of debt, which the card companies then charge us painful amounts of money on (over 20% interest in some cases). As the sort of smug person who always pays their credit card off in full every month (and has only once gone over my limit in 10 years of using plastic), I fall firmly into the first camp. I like having a credit card. I find it convenient, invaluable for online shopping and more secure than carrying cash with me in many instances. They are also fantastic in emergencies - as I found out when my car broke down!

However, some months back, I had a letter from my credit card issuer MORE THAN, informing me that their credit card division had been taken over by Lloyds TSB and my card would therefore no longer be available after May this year. I could let my card automatically convert into the one that Lloyds TSB were offering all MORE THAN customers, but that meant downgrading from a competitive cashback card to one with no rewards and a fairly uncompetitive interest rate. I declined their offer and set about searching for a new credit card. There are hundreds of different cards currently crowding the UK market, but why amongst all the deals on offer did I decide to choose the Tesco Clubcard Credit Card? My decision was influenced by a number of factors:

1) As I had just started my first "career job" after leaving university, I was on a relatively low income, so would not qualify for most cards that require a minimum income level (which rules out any gold, platinum or black cards).

2) According to financial advice site Motley Fool, the most important question you should ask yourself when choosing a new credit card is "do I intend to pay off the balance in full each month?". If the answer in "no", then APR (annual percentage rate, or what proportion of the debt you pay to the credit card company in charges) should be your first consideration. If your answer is "yes", then perks should be what you are after. As I always control my spending and pay the balance off in full, then a perks credit card allows me to get freebies for spending money I would have spent anyway at no charge to myself.

3) As I didn't spend large amounts of money on my card, then I didn't need to consider companies that attract customers with 0% interest, cheap balance transfers or high credit allowances.

4) I would prefer a card that paid out more regularly that the annual return you get with most reward schemes, so I can get my hands on tangible results more quickly. I would also prefer if the rewards contributed to a scheme I was already in, so to help concentrate my rewards into one place rather than have them spread across many schemes.

These criteria led me to two real contenders: the Nectar AMEX card (which converts cashback into Nectar points) and the Tesco Clubcard Credit Card (which unsurprisingly gives you Clubcard points). I choose the Tesco card for the simple reasons that VISA is more widely accepted than AMEX, and I use the Clubcard scheme more widely and consistently than I do Nectar. This card fitted my needs very well, having only low level restrictions on who could apply (you are required to be a UK resident and earning just £5,000 a year), in paying out rewards in the form of Clubcard points (which I already collected), and in adding the points to my Clubcard account quarterly. Unusually for a rewards card there was no initial bonus for taking it out or first use, the one point where it compared poorly to the Nectar AMEX card (who are quite generous to new customers, giving them a 1,000 point bonus upon first use of the card). The opportunity to top up my Clubcard account on a regular basis was too good to miss, though.

For those of you unfamiliar with the Clubcard scheme, let me just take a minute to explain how it works. Clubcard is a loyalty scheme run by Tesco and a number of external partner companies that allow you to collect points that are later redeemed for rewards. In Tesco, you are given 1 point for every pound spent in store, on petrol or on Tesco.com; there are also additional points to be had for re-using carrier bags (1 point per bag) and through bonus point offers (such as 50 extra points for buying a product promoted in store). Partner companies include Avis, Powergen, Marriott Hotels and Nationwide Autocentre, again with a rate of 1 point per pound spent being given. Provided you collect at least 150 points in a quarter, you will be sent a pack of Clubcard vouchers, which include coupons to use in Tesco (usually bonus points for specific purchases) and your points tally converted into vouchers. You can spend the vouchers in store and get their face value off your shopping, or convert them into Clubcard deals, where you can get 4 times their value; deals include Airmiles, Blockbuster video rental, days out and restaurant offers. I do my grocery shop in Tesco on most weeks and also buy petrol there, so I manage to get between £10 and £20 in vouchers per quarter.

According to their website, the Tesco Clubcard Credit Card gives you "5 points for every £4 you spend at Tesco and 1 point for every £4 you spend everywhere else". This is a bit misleading, as the rate of 5 points per £4 spent in store actually includes the points you earn through using your Clubcard rather than giving you an extra 5 points on top of this: this is not made clear in any of the literature, and I only found this out after getting my card. Although I am still getting an extra point for every £4 I spend wherever, this misleading statement implies you are getting a much better deal than you actually are, which wasn't an encouraging start. Aside from this, the card also gives you a period of 0% on purchases and balance transfers (it was 6 months when I took the card out, and is currently advertised as lasting to May 1st 2007). The APR of 16.9% is also listed as a benefit, but I don't find this especially exciting: when the rate can be beaten by Barclaycard (typical 14.9%), then this is a pretty good indicator that it is not the best out there! While it doesn't matter to me, if you don't clear your debts each month, then the few extra points you get are far outweighted by the amount of interest you are paying.

To apply for this particular card, you do not need to be a prior member of the Clubcard scheme; you can collect points just on the credit card if you wish (although why anyone would do that is beyond me), or get a Clubcard at the same time as your credit card to make the most of it. Application is either online (at www.tescofinance.com/personal/finance/finance/cred itcards/clubcc/apply.jsp) or by phone, and it was a straightforward enough process requiring some personal details and my Clubcard number to link my current Clubcard account to my new credit card account. I chose to apply online, and was given notice of my acceptance in a matter of minutes, with my card arriving a couple of weeks later. For security reasons, you then need to ring Tesco personal finance to activate your card so that they know the person who applied for it has received it safely.

It seemed appropriate that the first use of my shiny new credit card should be in Tesco itself. Having done my weekly shop, I queued at the till and proudly handed it over to pay for my shopping...only to find the card rejected every time the cashier tried to process it. This was frustrating (not to mention embarrassing), but fortunately I had my debit card on me to cover the cost of my groceries. The first thing I did upon arriving home was to phone Tesco personal finance to find out what had gone wrong. It seemed the person I spoke to when I rang to activate my account had in fact not activated it at all, but he assured me that it had now been done. I did carry my debit card with me the next time I tried to use my Tesco credit card, though, just in case it went wrong again. Fortunately, my card now seemed to work properly and after a while I relaxed.

In August of this year, my quarterly Clubcard vouchers dropped through my letterbox. I eagerly opened them to see what extra goodies I had earned with my new card, but was dismayed to see that that "Tesco personal finance" section of my statement was blank. Another phone call to Tesco followed. This time, the problem was that my Clubcard and credit card account had not been correctly linked together, despite my providing my details fully and correctly during the application process. I had apparently earned over 60 points since taking out my credit card, but they remained on my credit card account rather than being transferred to my Clubcard because the two accounts had not been associated with one another. The assistant apologised and linked my accounts together, and surely enough the bonus points from using my credit card soon began to appear on the bottom of my Tesco receipts. Whether I will get the 60 points from the first quarter transferred to my account remains to be seen, as they don't appear to have shown up on my latest Clubcard statement.

Overall, I have had mixed results with this card. The application process was nice and easy. Once activated, the card has never been rejected in store (something that used to happen regularly with a former card I had, despite there being ample credit on it at all times), I have had some extra Clubcard points, and my statements have always been correct. On the downside, the support from Tesco personal finance has been less than I would have expected, with their administration being poor (apart from the errors activating my card and linking it to my Clubcard, they also took three weeks just to change my title from Miss to Doctor, whereas every other organisation I contacted managed to do this within 10 days) and there frequently being long delays to get through to their call centre. They only give you a small window in which to pay off your monthly bill compared to other credit cards I have dealt with (in one month I only had a week between receiving my statement and the deadline date). The rate of points is also quite poor given the amount spent to earn them, and I wish the earning rate had been clearer to start with. I am also a little disturbed my the high credit limit I was given in relation to my earnings; it seems rather irresponsible of them to be looking to profiteer this way and I'm sure it would be a great temptation to many people.

So do I recommend the Tesco Clubcard Credit Card?

Yes, if:
- You want to top up your Clucard points balance regularly.
- You pay off your credit cards in full each month. 16.9% is a steep rate.
- You are prepared to be on the phone to call centres a lot.

No, if:
- You have debt to clear on a credit card or only pay the minimum balance each month. Go for a card with a cheaper rate, or you will be paying more than you earn in Clubcard points.
- You can get accepted for a card than offers a more competitive cashback rate (some American Express cards offer up to 2%).
- You don't bother with the Clubcard scheme already.
- You prefer to clear your monthly balance by cheque, as you probably won't have time to post it and let it clear by the deadline Tesco personal finance give you.

www.tesco.com/clubcard/clubcard
http://www.tescofinance.com/personal/finance/fina nce/creditcards/index.jsp



UPDATE - May 2008
Quite a lot has been happening with Tesco Clubcard credit card recently, so I think it is time for an update to this review.

On Christmas Eve 2007, I received my December statement from Tesco and duly phoned up straight away to clear the full balance with my debit card. This phone call lasted longer than usual, as the assistant I spoke to initially said my card had been declined due to "a problem" with the address it was registered to. As I had only moved house days earlier, I wasn't too concerned about this; I gave my previous address, and was told that this time my card had been accepted and the payment had gone through. I double-checked that my bank had updated the address associated with my debit card, but then thought no more about it - after all, I was rather busy unpacking and preparing for Christmas. Due to this unusually busy time, I didn't notice that the debit card payment hadn't been taken until I received my January statement (something I would normally have picked up much sooner), when I saw a £12 "non-payment" fee and £7 of interest had been applied to my account. It took several phone calls to get to the bottom of the matter, which turned out to indeed be due to me moving house, just not in the way I first thought: an incorrect postcode had been copied from my letter informing Tesco of my change of address, which was why the debit card payment had been declined. It does leave the interesting question over whether the call centre assistant I originally spoke to had made a genuine error in saying the payment had been taken, or whether she was lying to get me off the phone so she could go home for Christmas, doesn't it? It was only when another assistant had been thorough enough to check my full address (not just the first line) that the error in the postcode came to light and was corrected. A letter of complaint got an apology and the £12 charge refunded to my account a couple of weeks later, but Tesco had not refunded the £7 interest, despite the fact that it originated from the same error as the other charge they had reimbursed.

Further problems arose in my February statement. This bill showed that another interest charge of £1.57 had been applied to my account, and more worryingly, two transactions for large sums in US dollars showed up that I had certainly not made. I called Tesco up immediately to report these transactions, and to try and put a stop on the card to prevent it being used again in this way. I was told that the payments would be credited back to my account while an investigation into them was carried out, but I was not happy to hear that the card couldn't be stopped, only "watched" for any further potentially dodgy uses; although the fraudulent payments were not Tesco's fault (in fact I am very careful with my card, so I have no idea where thieves could have got the details from), I felt it could have been handled better. The largest transaction made by whoever had cloned my card was for just over $600 (£320), so this was a very worrying development indeed. I was just left waiting around for Tesco to credit this money back to my account while they investigated the transactions, hoping that I wouldn't have to cover these horribly large sums of money. I didn't exactly feel reassured. I did get some good news in early March, however, when I got a further letter of apology and all the interest charges re-credited to my account. The question of the fraudulent payments remained, though fortunately the fraud team did manage to catch another dodgy payment going to the same company (this time for $700) and check it with me before they authorised the payment. This, at least, was some comfort that the "watch" on my account was working.

When my March statement arrived, I was dismayed to note that the promised credit of the disputed payments back to my account had not happened - so I had yet another incorrectly applied interest charge to sort out (sigh). After several attempts to get through to the disputes team, I eventually managed to discuss the issue of the fraudulent payments in my account with someone who could help me. Apparently I should have been sent dispute forms when I originally called up a month previously, and this hadn't been done - which was why the transactions I had reported were not credited back to my account, and why they had not been investigated. Fortunately, this time the forms did turn up a few days later and I returned them straight away in the vague hope that this time Tesco would actually do something about it.

Then my April statement arrived, and I opened it with some trepidation - what had gone wrong this month? The good news was that the previous fraudulent transactions had been credited to my card in full, which was a relief. However, because of the delay in crediting this money back to my account, a further £12 late payment charge and another round of interest had been triggered. The icing on the cake was that there were two further fraudulent payments that had slipped through Tesco's "watch", for a London congestion charge (I haven't been to London since 2004) and a hotel stay in Thailand (where I have never been). By this time I was nearly in tears with it all, especially as I couldn't report these transactions straight away as the relevant department only worked office hours, and I first noticed the problem at 5.30pm on a Friday. I duly sent off another letter of complaint to Tesco Personal Finance and patiently waited until 9am Monday to report these further problems. This time, I was told that putting a stop on my account was, and always had been, entirely possible. Another case of me being misinformed, and a situation that I think makes Tesco Personal Finance liable for the second round of fraudulent transactions; if they had stopped my card when the first fraud arose, it would have been impossible for the second one to have happened. As part of this process, I was told to destroy my card and a new one would be issued to me...although I cannot imagine that I will ever use it. The new card arrived surprisingly fast, and my account details had been linked to the new number correctly, which came as something of a shock!

It is now May 1st as I write this, and the problems appear to have finally been solved. Today I received a personal letter from a customer services manager at Tesco Personal Finance, responding to my list of complaints. I am assured that all members of staff who let me down or misinformed me will be "retrained", that the latest lot of charges have been refunded, and that my account has been credited - with £15 to cover the cost of all the phone calls and letters to them over recent months, and a further £50 by way of apology for all the "inconvenience" they have caused. This is a huge relief, and I now intend to close down my account and take this credit elsewhere.

I think the moral of this story is clear - don't get your credit card from Tesco Personal Finance.