Earn up to 6.75% with this credit card

The Tesco Clubcard Mastercard offers as much as 6.75p back for every £1 you spend. But is this card really as good as it seems?

I don’t know about you, but I’ve never had much time for reward cards.

This is partly because I’ve found most of the rewards on offer tend to be restrictive and, quite frankly, rubbish.

Also, whenever I’ve compared a reward card to a cashback card, I’ve found the cashback card offers a better deal. Usually, you earn cashback far more quickly than you earn rewards and at a much better rate. So - if you wish - you can go out and buy yourself the reward you would have earned with the rewards card using the cash you have earned instead!

For this reason, I’ve been a fan of the American Express Platinum Cashback card for years. Since I took it out, I’ve earned around £150 every year in cold, hard cash. It’s served me well, but it’s not accepted everywhere like Visa and Mastercard credit cards are. And recently, my head has been turned by the Tesco Clubcard Mastercard.

This is partly because my needs have changed. While in the past, I have always been in the lucky position of being able to pay off my credit card bill in full each month, recently I’ve been doing some expensive home improvements. I’ve been saving hard for years to be able to carry them out, but - rather than raiding my ISA to pay the hefty bills - I decided to take out a 0% on purchases credit card instead.

That way, I could take my time to pay for my purchases, while my existing savings continue to earn interest tax-free!

Interest-free spending

My priority was to get the longest interest-free period available, which is why I went for the Tesco card. The fact that this card rewards you for your spending with Clubcard points didn’t matter to me. The market-leading offer of 15 months at 0% interest most certainly did.

But once I’d made my purchases, which sadly came to thousands of pounds, I received my first credit card bill - and my first set of Clubcard vouchers.

Rewards with your bill?

Suddenly I realised that, by using this card, I wasn’t just going to be able to benefit from spending interest-free while saving at a high rate of interest in my ISA. I could also effectively earn cashback as well - as long as the rewards were relevant to me (bearing in mind Clubcard vouchers are valid for two years from the date of issue).

The trouble was, I’ve never been a huge fan of the Tesco Clubcard scheme and, after scanning the offers on the Clubcard rewards site, I was struggling to find a way to use them. I don’t particularly want free entry to Alton Towers or a subscription to Classic Rock magazine, thanks very much.

But then I discovered that the vouchers could be tripled in value and exchanged for national rail train tickets. It’s a really simple swap where each £5 voucher can be exchanged for £15 off the total cost of your train fare. You can swap as many or as few vouchers as you like and travel on any UK train-line in the country.

As I imminently needed to buy some train tickets, this ‘reward’ effectively turned £40 of rather useless vouchers into cash: £120 to be precise! (Read Save £100s by shopping at Tesco to find out more about how I did this, and how you can do it yourself.) 

Which card is better?

But, even assuming that you can spend the Clubcard points at triple their face value, could the benefits of spending on this card really beat the cashback you can earn with the American Express Platinum Cashback card?

After all, you can still earn Clubcard Points with a normal Clubcard when paying with American Express (2 points per £1 in Tesco stores and 1 point per £1 on Tesco Fuel).

*Clubcard points have been tripled and turned into pence for the purposes of this comparison.

On the surface, the Tesco Clubcard Mastercard looks really good - assuming you, like me, are happy to spend your points somewhere they will be tripled in value. If so, and you use the card to buy your shopping from Tesco, you’ll earn a whopping 6.75p back for every £1 you spend. You’ll also get 3.75p for every £1 you spend on petrol at Tesco filling stations.

That means, if you’re a relatively big spender at Tesco supermarkets and petrol stations - spending say, £400 a month on groceries and £100 a month on fuel - you’ll earn £30.75 a month in rewards with the Tesco Clubcard Mastercard.

By contrast, you’d earn just £12.50 on your American Express Platinum Cashback card in months where the rate is 2.5% and only £6.25 thereafter. However, if you got a normal Clubcard and used it at Tesco check-outs when purchasing with your Amex card, you’d get an extra £27-worth of Clubcard points. This could take your total earnings to as much as £39.50 a month.

And unfortunately, with the Tesco card, you’ll only get 0.75p for every £1 you spend outside of Tesco land. That’s at least 0.5p (40%) less than you’ll get with American Express.

Plus remember, with American Express, you’re not limited by what you can spend your earnings on, unlike the Tesco card.

So which card is better?

There is no question that the Tesco Clubcard Mastercard is the better card to have for interest-free spending and rewards.

But if you’re only looking for a card that rewards you for your spending, I’d have to conclude that the American Express Platinum Cashback card is still the market leader, even if you shop heavily at Tesco. (If you do, you simply need to make sure you get a normal Clubcard too - and remember to use it!)

What do you think of these cards? Let us know using the comments box below!

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