Is this the best ever card for spending?
Tesco shakes up the credit card market by increasing its interest free purchase period to a market-leading 15 months.
Until Marks & Spencer increased its 0% period to 15 months earlier this year, Tesco had offered the most competitive purchase card at 13 months. By adding an extra two months to its interest free period on its Clubcard Credit Card, the supermarket has positioned itself as the joint market leader.
Don’t pay interest until August 2012
If you want to spread the cost of an expensive purchase, a credit card with 0% purchasing power could be an attractive option. During an introductory period, these cards waive interest on all new credit card purchases.
Imagine you spent on a card with a 15-month 0% period today, you would not pay any interest until August 2012. Taking out the card could be especially beneficial if you’re hit with an unforeseen expense you can’t currently afford such as a new car or essential home improvements.
Despite an identical 0% purchase period, Tesco beats M&S when it comes to the balance transfer period – offering nine months while M&S does not carry a balance transfer period at all.
Earn rewards on your spending
In addition to its interest free period, this card can also be used to earn rewards - for every £4 you spend, you receive one reward point worth a penny. Alternatively, you could earn one point per pound if you use the card at a Tesco petrol station.
Although it might be tempting to simply spend your points to get discounts on your Tesco shopping, you can also redeem them against foreign holidays, in restaurants or on days out.
Furthermore, Tesco has recently partnered with energy company E.ON to allow customers to put their points towards paying their energy bill.
Because the credit card acts as a Clubcard, you also earn standard Clubcard points when you shop at Tesco.
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The downsides
When the interest free period expires, you'll revert to a 16.9% interest rate. Therefore it's wise to ensure you clear the cost of your purchases before the offer expires and interest kicks in.
With a whopping 24.9% interest rate on cash withdrawals and a fee of 3%, it could be an expensive mistake to withdraw money on this card.
What else is out there?
If you’re looking for a credit card primarily for balance transfers, Barclaycard currently offers the most competitive deal with 20 months – the longest ever interest free period.
In addition, there are other more attractive offers if you would like a straightforward rewards card. For instance, the American Express Rewards Credit Card allows you to earn up to £90 worth of bonus vouchers in three months which can be spent at big name retailers such as Boots and Amazon.
The final verdict
As long as you clear your debt in full before the 15-month offer expires, this card could be a fantastic way to avoid paying interest.
However, you could get a better deal elsewhere on balance transfers or rewards and if at all possible, you should try to avoid using the card to withdraw cash.
Apply for the Tesco Clubcard Credit Card
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**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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