Better Plastic For Borrowers And Shoppers!

This week, Tesco launches a credit card which refunds one month's interest each year, but how does it stack up against its rivals?

On Wednesday, 5 April, Tesco Personal Finance launches a new credit card aimed at rewarding cardholders who borrow on their plastic.In partnership with the Royal Bank of Scotland, Tesco created its financial services arm in mid-1997 and now has over 1.8 million cards in circulation. Hence, the UK's biggest supermarket chain has proved that it can shift banking products as well as beans and bananas.Still, will Tesco's latest offering fly off the shelves or sit there gathering dust? Let's look at what's on offer from the new Tesco Bonus credit card:A 0% on balance transfers and purchases deal until 1 January 2007 (note that there's a 2% handling fee for balance transfers, minimum £2, maximum £50);The standard interest rate for purchases is a typical 12.9% APR;A twelfth of the annual interest paid by the cardholder is refunded as an anniversary gift; andSpending earns Tesco Clubcard points, plus you're protected by FraudSafe security features.The introductory 0% offer is very good, as it gives cardholders who apply quickly close to nine months' interest-free credit on both balance transfers and new spending, which is the longest double 0% deal.What's more, only two cards beat Tesco for 0% on purchases: the table-topping Sainsbury's Bank credit card (ten months at 0%) and the Nationwide BS Classic card (nine months). However, you can get a year's interest-free credit on balance transfers with the market-leading Halifax One card, which has the same transfer fees, making it the clear winner in the transfer market.Thus, the Tesco Bonus credit card is a good card if you want to transfer balances and continue to make retail purchases. As for the interest back offer, this is something of a gimmick. In effect, you're getting back roughly 1% of your balance each year as a reward for borrowing, which brings down the annual interest rate from 12.9% APR to under 11.9%.Although this is an attractive standard rate (it beats all but about 44 cards of 319 listed in the Moneyfacts database), why pay interest at all? By surfing your debt between a succession of 0% cards at six- to twelve-month intervals, you can become a rate tart and avoid paying interest altogether!Tesco reckons that three in ten cardholders (30%) are paying interest on their debt each and every month, coughing up £3 billion a year in the process, so millions of us have a lot to learn about playing our cards right. Thus, if you'd like to learn more about controlling your cards, read Your Ultimate Guide To Credit Cards.More: Check out the delicious deck in our Credit Card centre!