What’s the deal?
In the first instance, the Tesco Clubcard Credit Card with Low APR offers a three-month interest reprieve on all new purchases and balance transfers (there is no balance transfer fee). After this time, a 7.8% representative APR (which is joint market-leading) will apply to purchases for as long as you have the card - while a slightly higher rate of 8.1% (representative) will apply to balance transfers.
Like Tesco Bank’s three other Clubcard Credit Cards, the new Low APR deal allows you to build up Clubcard points quicker. Customers will collect one point for every £4 spent on their card outside Tesco while, inside the store and at its petrol forecourts, you’ll be able to earn five points for every £4 spent – a quicker rate than you could achieve with a standard Clubcard loyalty card.
Who's it good for?
Loyal Tesco shoppers with no existing credit card debt who want a bread-and-butter credit card deal and might not always entirely clear their balance.
The Tesco Low APR card is pretty transparent and does what it says on the tin, but the 7.8% rate for purchases - which is the main focus of the card - is only representative. This means it only needs to be offered to 51% of successful applicants. Fall into the other 49% and you’ll invariably be offered a higher APR.
Even if you do qualify for the advertised rate, you shouldn’t take this card for the deliberate purpose of borrowing as the best personal loans could be cheaper. If you are looking for a loan of £3,000 for example, peer-to-peer lender Zopa offers a representative rate of 7% if repaid over two years and an even lower 6.5% if repaid over three years. Not only is the cost of the interest cheaper but you will have an end-date by which time you’ll be debt-free.
While the new Low APR card may appeal to regular spenders at Tesco (remember this means petrol forecourts too), the cost of any interest, even at 7.8%, is likely to outweigh the financial benefit of the Clubcard points. So, still endeavour to clear your balance every month.
What’s the verdict?
This is a welcome addition to Tesco’s Clubcard credit card range and if you are not entirely convinced you will clear your balance each month, it’s definitely worth a look. After all, paying a rate of 7.8% on a debt you haven’t cleared is still a lot better than the typical APR of 18%.
The advertised 7.8% rate is, in fact, joint top of the tables for ‘low rate for life’ cards, alongside the Sainsbury’s Bank Nectar Low Rate Credit card and Sainsbury’s Cashback Low Rate Credit Card. But, as these come with the same 7.8% representative APR, the related perks make them a better option for Sainsbury’s shoppers.
When shopping around for ‘low rate credit cards’, don’t be fooled by the MBNA Rate for Life Card which offers a seemingly lower 6.9% APR on new spending as that rate only applies to purchases made in the first 90 days. Any spending made after this point (that you don’t pay off) will be hit with a representative APR of 16.9% (variable).
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct