Tesco are offering a great deal on their own Tesco Credit Card which is too good to miss if you are a regular shopper at Tesco (and even if you don’t shop at Tesco they are worth a look). You can save money in not one, but three ways!
- Interest free credit on new purchases for 13 months
- Interest free balance transfers for 9 months subject to a 2.9% fee
- Bonus store points
Let’s look at an example on what this is worth to me.
In the next 9 months, I have have a couple of major purchases planned: a flat screen, High Definition TV and a family holiday in France, which is about £3000 in total, so let’s say I could borrow at 10% per annum and due to purchase timing I am able to benefit from 8 months interest free; then we have 3000*10%*8/12 =£200.
As for balance transfers then we bought a car in October 2010 and made part payment of £8,000 using a 9 month interest free facility on another credit card which expires in May 2011. What we can do is roll over the debt onto the new card (and keep our lump sum repayment in a long term investment account). The 2.9% fee for 9 months should be compared against a typically 7.5% rate which offers a 4.6% saving. Therefore the Tesco Credit Card will deliver an interest saving on the car re-payment of 4.6% * 8000 = £368
Our household spends about £600 a month on shopping which gives me a 150 store points a month which is worth £6 a month or £72 a year providing I spend them on Tesco’s special Clubcard Deals vouchers, where I can redeem four times the vouchers face value . If I spend all the points in the store the saving is only £18 a year. Also, if I spend £300 in store in the first 2 months then I get a bonus of 500 points worth between £5 and £20.
So, in the first year the Tesco Credit card could make a savings of between £591 and £660 depending on whether I spend the storepoints in store or on Tesco Club card deals.
What else is there to know? Well, the APR is competitive at 16.9% which is the same as Barclaycard and only 1 and 2 basis points more than Virgin and MBNA respectively
And the small print?
There is a 2.9% fee on all balance transfers made during the first 9 months from account opening and balance transfers are limited to 95% of the credit limit.
One other thing to note is when when Tesco say 9 months they do not mean 9 months, their systems calculate the interest as free on 9 statements which can mean just 8 months and a day if you’re unlucky. So do not get caught out at the end of the period and make sure you clear any outstanding balance on your 9th bill after joining.
Tesco Credit Card – Choosing The Right Credit Card Offer
The Tesco Credit Card favours Tesco store customers with a bias towards new purchases rather than balance transfers.
If you are looking for more than 9 months interest free credit on balance transfers there are plenty of better options available, such as the Barclaycard Platinum Simplicity Credit Card with up to 17 months interest free. The latest credit card comparisons is a good starting point to find the right card.