Shopping for the right supermarket credit card

By Emma Lunn

Going to the supermarket is a weekly routine for most of us. So it's no wonder that supermarkets offer their own credit cards, complete with rewards, to entice you to shop at their stores. But it's worth doing your research before choosing a supermarket credit card, as reward schemes can be tricky to compare.

The golden rule of all reward and cashback credit cards is to use them only if you can pay your bill in full every month. If you can't, it's likely that the interest you pay will dwarf the rewards you receive.

The two main players in the supermarket credit card market are Tesco and Nectar, but there are others too. (See chart.) supermarket-cards

 Tesco Clubcard credit card
A regular Tesco Clubcard is not a credit card. You can use it to collect points, no matter how you pay, as long as you present it at checkout. You can even give the card to other members of your household so they can collect points for you when they shop. But you can only collect points when you shop at Tesco.

A Tesco Clubcard credit card, however, allows you to collect Clubcard points no matter where you shop (five Clubcard points for every £4 spent at Tesco, one Clubcard point for every £4 spent elsewhere). Tesco offers four credit cards:

  • A purchase card, which offers the longest interest-free period;
  • A balance transfer card, which offers the longest interest-free period on balance transfers;
  • A balance transfer card with a low transfer fee;
  • A low APR card.

Each one comes with a trade-off. For instance the low APR card carries an interest rate that's roughly half that of the purchase card, but gives you a much shorter interest-free period. "We aim to offer Tesco customers a choice of consistently competitive credit card options," says David McCreadie, managing director at Tesco Bank. "Our new leading purchase offer reflects this ambition by providing good value, and by rewarding our customers' loyalty with the 'thank-you' of Clubcard points."

Sainsbury's Nectar credit card
Like Tesco, Sainsbury's offers a regular rewards card and a credit card. You can collect points with the rewards card when you shop at Sainsbury's. If you use the Nectar credit card, you can collect points no matter where you shop.

Unlike Tesco, though, you can earn even more points with your Nectar credit card if you use it in conjunction with your Nectar rewards card.

Each Nectar point is worth 0.5p. For every 500 points, you earn £2.50 in vouchers that can be used on entertainment, travel, restaurants or Sainsbury's shopping.

Sainsbury's shoppers can choose between a card with 0% interest on purchases and balance transfers and a low rate card. "For regular Sainsbury's shoppers who would prefer to have a credit card with a long-term low rate, it will be difficult to find a better credit card," says Stuart McKeggie, head of Sainsbury's Credit Cards.

M&S credit card
If Marks & Spencer food is more your taste, you can earn points with an M&S credit card. Five hundred M&S points are worth £5, and new cardholders get a bonus voucher for 500 M&S points when they open a card account.

Points are converted into M&S reward vouchers four times a year and can be used to buy most things in the store (although there are some exclusions).

Asda credit card
The Asda credit card offers straightforward cash back rather than points.

You get unlimited 1% cash back on your Asda shopping or petrol station spend and 0.5% cash back everywhere else.

SUPERMARKET CREDIT CARDS
  APR 0% Introductory offers
Balance transfer fee
Rewards
Tesco Clubcard
for purchases
16.9% Purchases: 18 months
Balance transfers: 9 months
2.9%
5 Clubcard points for every £4 spent in Tesco/Tesco online/Tesco fuel, 1 Clubcard point for every £4 spent elsewhere
Tesco Clubcard
for balance
transfers
16.9%
Purchases: 3 months
Balance transfers: 27 months
3.15%
As above
Tesco Clubcard low
balance-transfer fee
16.9%

Purchases, balance transfers:
12 months

0.9%
As above
Tesco Clubcard
low APR
7.8%
Purchases, balance transfers:
3 months
0%
As above
Sainsbury's Nectar
credit card
17.9% Purchases: 6 months,
Balance transfers: 15 months
3%
10 Nectar points per £1 on Sainsbury's shopping for the first three months from account opening (capped at £1,000 spend per month).
After the first three months, 4 points per £1 spent at Sainsbury's and 1
point for every £5 spent elsewhere

Sainsbury's Nectar
low-rate credit card
7.8%
none
0$
As above
M&S credit card
16.9%
Purchases: 15 months
Balance transfers: 12 months
2.9%
1 point for every £1 spent at M&S, 1 point for every £2 spent elsewhere
Asda credit card
14.9%
Asda Direct purchases: 6 months
Balance transfers: 12 months
2.9%
1% cashback at Asda, 0.5% elsewhere

 

See related: 5 questions to ask when comparing rewards cards, 5 tips for using rewards cards wisely

Published: 10 October 2013