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A Great 'DEAL' On A Credit Card
Tesco Clubcard Credit Card
Member Name: zoe_page_1
Tesco Clubcard Credit Card
Date: 06/01/07, updated on 06/01/07 (3448 review reads)
Advantages: Clubcard points, even if you shop in Asda or Sainsburys
Disadvantages: Interest rate if you don't pay the full balance monthly
** The Basics **
The Tesco Clubcard Credit Card can be used to make purchases and withdraw cash all over the world. It comes with an interest free period of up to 46 days (depending on when in your payment-statement cycle the transaction takes place) although, in keeping with standard credit card arrangements there is NO interest free period for cash advances, and therefore these cost you an arm and a leg in interest. My card is a MasterCard so can be used anywhere where MasterCards are accepted (i.e. most places). The cards and now all chip-and-pin so you need to know your PIN before going shopping, though not to use the card online. In fact, I have found I don’t even need to have my card in sight to use it online since I now know the number and security details off my heart, but that is beside the point. The card comes with a credit card based on your status, though this can often be increased after a few months. The minimum credit limit is £250 but most people I imagine would get a few thousand to start with. There is a minimum income level for this card, which I think it about £5000 pa.
Opening the card is easy – because Tesco doesn’t have physical bank branches you can do it online or over the phone. In both cases you still need to sign a form and return it to them, but they post this out to you with a prepaid envelope so it is very easy. After that you’re good to go.
Now comes the important stuff:
** The Loyalty Bonus **
My sole reason for switching credit cards was to get a card that gave me something back. Because I pay off my account in full each month, the interest rate does not interest me, and I would rather accept a higher rate that comes with some bonuses such as cash back. The Tesco card I have (the Clubcard Credit Card) doesn’t offer cash, but it offers something almost as good: Clubcard points.
Most people who shop at Tesco are familiar with the Clubcard set up which rewards you with 1 point for every £1 spent in store or at a petrol station. You get quarterly statements which give you vouchers to spend at a rate of 1 point = 1 pence in store, but if you decide to use these for ‘Deals’ instead, you get a better rate of 1 point = 4 pence. The deals are quite wide-ranging with everything from gym memberships to magazine subscriptions to holidays to airmiles on offer.
So how does the credit card add to this? The card offers 1 point for every £4 spent, in addition to any points you get for being in Tesco, thus if you spend £4 in Sainsburys you get 1 point, but spend the same in a Tesco store and you’ll get 5 points – one for spending £4 on your card, and then 1 point per £ for being in Tesco. Now no-one if ever going to get that rich on Clubcard points (although they do go for an astonishing price on eBay every now and gain) but since they’re essentially free money, they’re not to be sneered at.
Imagine a month where I might put the following on my Tesco credit card:
Gym membership - £30
Groceries – £30
Internet connection - £16
Car insurance - £100 (yes – seriously)
Miscellaneous shopping - £100
If I spent £276 per month on my card I get 69 points for it, equal to 69p to spend in store or £2.76 to spend on deals. Over a year this would be over £30 of ‘free’ money. Add on things like breakdown cover, travel insurance, holidays, gifts and anything else I stick on my card, and over a year I probably make about £50 of ‘Deals’ credit just for using this card. I like this because it is truly free money – remember, if you are not paying off your card in full each month then the interest you pay would soon cancel this out, and you would be MUCH better off looking for a card with a lower interest rate. If, however, you are like me and use a credit card just as you would a debit card, then it’s quite a nifty loyalty scheme.
They have recently changed the system and now when you received a Clubcard statement your points from Tesco and your points from the Clubcard are calculated separately. While this doesn’t reduce the bonus you get, it can delay it. For example, if you rack up 599 points at Tesco and 599 on your Credit Card, you used to get £11.50 in vouchers, with 48 points carried over Now, you would get £5.50 from the Tesco points and £5.50 from the Clubcard (a total of £11) with 49 points carried over on each balance. Not a big difference – you could never lose out more than 98p in any month, and the points are still there, just not converted into vouchers for you at that point in time – but it is something that should be noted.
A huge plus from my point of view is that the points are calculated based on spending on the account rather than the balance at the end of the month. Most times these will be near enough the same but I had a recent instance where it mattered more. My internet connection had been playing up for 6 weeks and after a length complaints process, my provider agreed to refund my charges and give me a bit more money to cover the inconvenience. I came out of it about £50 better off, but because I pay for my internet with a regular charge on my credit card, that was how they made the payment. This naturally reduced my current balance on the card, but because of the way they calculate things, I didn’t lose out for having a smaller end-of-month balance because the points had been calculated based on total spend for the month. This also means if you choose to pay off your card before the statement date you are also not penalised.
If you don’t already have a Clubcard when you sign up, they open an account for you. If you do, you can ring up and they will combine the two accounts so your Clubcard and credit card feed into the same pot of points. There is one thing I would note about the card that comes from a result of it being both a credit card and your Clubcard. Sometimes when I go to Tesco I spend very little – since my ‘corner shop’ is a Tesco I sometimes literally just pop in for a newspaper or a loaf of bread. In these instance although I want the being-in-Tesco Clubcard point I don’t bother paying on my credit card as it seems a bit silly for just a few pounds (though, actually, they don’t have a minimum spend for cards as some places do). So, I hand over my credit card and always make sure I clearly state “I’ll use this as my Clubcard, but I’ll pay cash”. However, some of the newer members of staff can’t always cope with this, especially when they swipe the card and it comes up as ‘Mastercard payment’. If they look around panicking I tell them how to deal with it (you can cancel out of it on the till and put in a cash payment) or, if that fails, I tell them to leave it and I will pay on the card after all, but it does seem a bit silly when all I want is a £1.30 copy of the Saturday Times. I suppose I could just not hand over my Clubcard and forgo my shopping-in-Tesco point (and my extra point for being green and reusing a bag) but I don’t see why I should – after all 2 points every week is still £1 over a year, or £4 if I make it into a Deal. Also, several staff members will take my credit card off me and ask me if I also have a Clubcard, not registering that the two are one and the same – not a big issue, but a bit annoying as it always makes me double check I have given them the correct card.
** Keeping Track of Spending **
I don’t think I would ever consider signing up for a financial service such as a credit card if it didn’t come with an online banking facility. I like to be able to check my transactions on a regular basis, must more than the once per month paper statement you get. Tesco do allow you to monitor your account online, but because of a rather strange set up, in order to activate internet servicing you have to have an actual bank account of some kind with them. Thus, when I signed up, I also had to sign up for another service – I chose a savings account, deposited £1 and have ignored it ever since. This fact was not well advertised when I signed up for the card – I had to ring to ask why I couldn’t activate the online side of things – but was quickly sorted out for me. I have had this card while working and travelling abroad and having online access to statements made my life so much easier to manage, even when I was at the other side of the world from my bank accounts.
The speed at which transactions are available to view online depends on the company involved from what I can tell, but they usually make it online within 1 – 3 days, as do any refunds or other credits. Paper statements come on a monthly basis, dependent, I think, on when you opened the account. While I have cancelled all my current account paper statements, you cannot cancel the ones with this card, I think so users can’t claim they didn’t know the extent of their spending because they had not checked a statement. Sending out paper copies doesn’t mean they don’t go straight in the bin unopened, I know, but at least the card providers are doing what they can.
** Fraud Prevention **
I’ve had this card for some time, but am only now prompted to write about it because of the following. This morning after working up an appetite at my gym I stopped at the Tesco next door and bought some stuff for lunch, a newspaper and some fantastically reduced crackers for next Christmas (it’s off the point, but they are really swish and fancy, and now down to a bargain £1.80 for 12). I paid on my Tesco credit card. Later, I finally found the hotel I wanted to stay in in Madrid at the price I wanted to pay, and promptly booked it. Or rather, I tried to, but my card was rejected. Before I had a second to think about it both my mobile and my landline started ringing – two members of staff from Tesco card fraud prevention were keen to speak to me about this ‘suspicious’ transaction. The one who got there first quickly ran through some security details, verified my recent purchases and authorised the payment, so I could go on and book the holiday. She couldn’t say why this purchase had been flagged up (it was only a few hundred pounds, and I regularly put hotels and flights on this card) but did mention it was registering as a company in Turkey, which may have been the trigger. Not that you can’t use this card abroad – you can, and I regularly do – but getting from shopping in Manchester to shopping in Istanbul in 90 minutes is pretty impossible. I was quite impressed with their promptness at contacting me, and at sorting out the problem, much better than a previous experience I had with a different card where my car purchase was blocked as ‘unusual spending’ but no-one contacted me to tell me this.
** Summary **
In irresponsible hands, credit cards can be dangerous, and in that respect this card is no better or worse than others available. But, for responsible shoppers, it helps reward you for shopping, no matter where you plunk down the plastic, and as long as you only buy what you would have done anyway if you didn’t have the card, it’s a nifty way to get something back from the corporate world.
** Fast Facts **
Current interest rate (as of 6/1/07): 16.9% APR for purchases, 21% APR for cash advances.
For new customers, 0% fixed until 1st May 2007 on all purchases (not cash advances)
Minimum repayment: 3% of outstanding balance or £5.00, whichever is more.
** Links **
For info on the card
For info on Clubcard deals
Summary: Shop till you drop, and get rewarded for it.