Credit card Guides

Supermarket credit cards guide

Most people, and families especially, spend a significant amount of money on their supermarket shopping, so taking out a supermarket credit card can earn you “points” that will save you money on your weekly shopping - leaving more for the nicer things in life.

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What are supermarket credit cards?

Most of the major supermarkets offer a credit card that works like any other reward credit card, as well as offering deals like 0% balance transfers and interest free purchases for a promotional period.

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How do I choose the right supermarket credit card?

The whole point of a supermarket credit card is that you can save money that you would have to spend on your shopping any way. So the best card for you is usually the one offered by your local supermarket - the one you use most often.

If you live within close distance of a number of stores, then you should look at the different features and loyalty schemes offered by each card.

“Points” are deliberately confusing things to collect. It can be difficult to work out how much you need to spend to earn, say 100 points, and then, what that 100 points would work out as in real terms.

And you’ll also need to look at other useful features like the length of balance transfers, the fee you’ll have to pay to move your money, and the standard APR - all these will affect the card you choose.

Tesco Clubcard credit card

Five Clubcard points for every £4 spent at Tesco, one for every £4 elsewhere
100 Clubcard points is worth £1
13 months interest free on balance transfers
13 months interest free on Tesco purchases
Thee months interest free on other purchases

Obviously, the Tesco Clubcard credit card is good for people who do a lot of their shopping at Tesco (www.tesco.com), as it offers five Clubcard points for every £4 spent at Tesco, one for every £4 elsewhere.

As well as 13 months interest free on balance transfers, with a three per cent transfer fee, you’ll also be able to take advantage a massive 13 months interest free on all Tesco purchases, and three months elsewhere. You will also get bonus Clubcard points when you spend in store.

However, it’s best to use this card only for spending in Tesco, and for transferring debt from another card. And make sure that you have cleared any additional spending - either in Tesco or elsewhere - before your interest free periods end, or you’ll be charged 16.9 per cent APR, forfeiting any benefits.

Tesco Bonus credit card

Unique interest payment rebate; 1/12th of your interest will be refunded
14 months interest free on balance transfers
13 months interest free on Tesco purchases
Thee months interest free on other purchases

Rather than offering Clubcard points in return for your spending, the Tesco Bonus credit card (www.tesco.com) offers you 1/12th of your interest back.

Like the Tesco Clubcard credit card, it also offers 14 months interest free balance transfers - with a three per cent transfer fee, 13 months interest free on Tesco purchases and three months on anything you spend elsewhere.

However, you should always avoid paying interest, and this card - with its offer of an interest rebate - could tempt you not to always clear your balance after the promotional periods.

But at all costs, you should always avoid interest payments. The 1/12th that you’ll receive back will be nothing compared to the 15.9 per cent that you’ll have to pay.

If have debts and interest seems unavoidable to you, you would be better off taking out a Lifetime balance transfer card, that would give you a low rate until you clear your balance transfer, or just a Low APR card for spending, if you don’t already have a large credit card debt.

As far as spending in Tesco goes, you would be better off going for the Tesco Clubcard credit card and making sure you don’t pay interest.

Sainsbury’s credit card

Up to four Nectar points for every £1 spent at Sainsbury’s if you use your Nectar card in addition to your credit card
100 Nectar points is worth 50p
0 months interest free on balance transfers
12 months interest free on Sainsbury’s purchases

This card is similar to the Tesco Clubcard credit card in that it offers points, a balance transfer and interest free purchases in store.

So if Sainsbury’s (www.sainsburys.co.uk) is your supermarket of choice, you can take out a card that as well as offering 10 months interest free balance transfers (a three per cent free applies), will give you a year of interest free shopping in Sainsbury’s and four Nectar points for every £1 spent in store.

As with its Tesco counterpart, this card is best used only for spending in Sainsbury’s, and for transferring debt from another card. Make sure that you have cleared any in store spending before your interest free period ends, and by the end of each month if you’ve been shopping elsewhere, or you’ll be charged 15.9 per cent APR, making any savings you’ve made worthless.

Asda credit card

Earn points that can be converted into Asda vouchers every November
Nine months interest free on balance transfers
2p off every litre of Asda petrol

Although this card offers an 0% balance transfer and money off petrol at Asda, you’d be best off using it for only one of these, or you’ll find that your payments against your petrol and any other spending, will go against your balance transfer first, leaving you paying 16.8 per cent on everything that you’ve bought.

All credit cards are tiered in this way, and your repayments are allocated to those balances carrying the least interest - or none at all, such as promotional transfers. But because most people aren’t aware of the way that credit cards work, they transfer their debt, and then take advantage of the other great promotions attached to their card, without realising that they would be better off using a different card for their spending.

Marks & Spencer &More credit card

One Marks & Spencer reward point for every £1 spent in store and one point for every £2 spent elsewhere
100 reward points gives you £1 in reward vouchers
Interest free shopping everywhere for the first six months (currently until 31 July 2008

Six months interest free shopping is good, and can even wok like an interest free loan as long as you make sure that you can clear the balance at the end of the promotional period. Otherwise you’ll be left paying a big 18.9 per cent on all of your spending.

You’ll also get reward points to be redeemed in store, or even given as gifts in the form of Marks & Spencer vouchers.

However, as with many of these cards, the reward points work out as very little in real, monetary terms. The Marks & Spencer reward points work out as 0.8 per cent cashback, though you could easily find a cashback credit card that consistently gives a one per cent return, and even some that will offer as much as four per cent for the first three months.

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Compare supermarket credit cards:

Card	0% Balance Transfer Length	0% Purchases	0% Purchases In Store	Reward
Tesco Clubcard	13 Months	3 Months	13 Months	5 clubcard points for £4 spent at Tesco, 1 for £4 elsewhere
Tesco Bonus	13 Months	3 Months	13 Months	A rebate of 1/12th of any interest paid
Sainsbury's Credit Card	10 Months	3 Months	12 Months	4 nectar points per £1 at Sainsburys 1 for every £5 elsewhere
ASDA Credit Card	9 Months	3 Months	n/a	2p off every litre of Asda fuel
M&S &More Credit Card	7.9% for 2 years	Until 31st July 08	2 years on furniture	1 reward point for £1 spent in M&S or £2 elsewhere

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The best card for you

Both the Tesco Clubcard and the Sainsbury’s credit card are good choices if you spend a lot in these stores, and by combining the points and balance transfer offers a family could save as much as £500 using one of these cards, as well as being able to take advantage of the in-store interest free spending.

However, the other cards are not that great, and even if you do regularly shop in Asda, or Marks & Spencer, you’d get a much better deal by taking out one card for your balance transfer and a second card for spending.

A similar strategy would be to take out a supermarket card for grocery shopping, and a cash back card for general shopping, allowing you the benefits of both.

If you do decide to take out two cards like this, look for a reward credit card with a good cashback rate - which you’ll be able to spend wherever you like, or a good Airmiles credit card, so you can reward yourself with a city break or much deserved holiday.

Above all, make sure that you always clear your balance before any promotional period ends; otherwise you’ll end up paying a lot more in interest than any of your rewards are worth.

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