Our bottom line
The Tesco Bank Low APR Credit Card offers a very competitive interest rate as well as enticing rewards that could make it an appealing everyday card. The low standard APR might appeal to those who occasionally carry a balance short term, while the Tesco Clubcard points can provide a nice return on spend, especially for regular Tesco shoppers. The card offers one month of 0% interest, so if you’re looking for a longer 0% period, you’ll have to look elsewhere.
Credit Rating Requirement: Good/Excellent
What I like
- Low APR – As its name suggests, the card has a relatively low APR (annual percentage rate). This could be appealing for consumers who sometimes do not pay their credit card in full at the end of the month, and therefore are charged interest on the outstanding balance. Over the long run, paying a lower interest rate on debt can lead to significant savings (as outlined below).
- Interest savings – With the average credit card APR coming in at around 19%, the 9.9% rate on Tesco’s Low APR card can definitely save you money if you happen to carry a balance. Though your best bet is still to simply pay down your balance each month.
- Rewards – The Tesco Bank Low APR Credit Card offers cardholders the chance to collect Tesco Clubcard points. For every £4 spent at Tesco, one Clubcard point is collected. For every £8 spent at non-Tesco stores, one Clubcard point is collected. Clubcard points can be exchanged for vouchers at a variety of retailers across the company’s partnership network. Through Clubcard Boost, it may even be possible to treble the value of vouchers for some retailers.
- No annual fee – The card does not have an annual fee. This may mean it is of interest to a wide range of consumers, from those who wish to use it frequently to those who use it occasionally.
What could be improved
- No 0% interest rate period – Previous offers on this card included a small 0% introductory period, but that’s been removed. It’s not a game changer for the card, but it is a nice extra perk.
- Foreign exchange fee – Using the card while abroad will cost cardholders an additional 2.75% per transaction due to a non-sterling transaction charge. Therefore, spending in currencies other than sterling can lead to significant costs in the long run. It may be worth having a second credit card that does not have a non-sterling transaction charge for use when abroad.
- Lack of sign-up bonus – With the credit card marketplace being highly competitive, a number of cards have sign-up bonuses to tempt consumers. The Tesco Bank Low APR Credit Card does not offer any bonuses such as additional Clubcard points at the time of writing.
How does it stack up?
At the time of writing, it is possible to obtain credit cards that offer an introductory 0% interest rate period on purchases that stretches beyond two years. Therefore, even though the Tesco Bank Low APR Credit Card may have a competitive interest rate, consumers may be able to further reduce the amount of interest they pay on purchases through having a card with a relatively long 0% introductory period.
However, introductory periods inevitably come to an end. Some of the cards that have 0% introductory periods on purchases then switch to relatively high-interest rates once the introductory period has ended. Any interest payments avoided during the introductory 0% interest rate period may be offset by high-interest payments later. Therefore, the Tesco Bank Low APR Credit Card could have appeal among consumers who are searching for a competitive interest rate that may be sustainable.
The Tesco Bank Low APR Credit Card’s rewards are relatively appealing. They help to differentiate the card versus its rivals, with the Clubcard scheme offering a variety of partners and a wide range of choices on where vouchers can be spent.
Consumers wishing to apply for the card should have a good credit score. The card is available to consumers who do not have more than one other Tesco Bank credit card and who have not applied for a Tesco Bank credit card in the last month.
As with any credit card, the advertised interest rate is a representative rate. This means that it must be offered by law to at least 51% of applicants, with the remainder potentially being offered a higher interest rate.
Therefore, even though it is called a ‘low rate’ credit card, it may be worth checking that the interest rate offered to you is appealing versus that of rivals.
How to apply
Applications can be made online, with the process taking less than ten minutes. When applying, details such as your employment status, previous address history, and bank account information may be required, so it is a good idea to have these to hand.
It is also worth checking that you meet the eligibility criteria before applying. These stipulate that applicants should have an annual income of at least £5,000 and be permanent residents in the UK unless they are in the armed forces.
Is the Tesco Bank Low APR Credit Card right for you?
If you are looking for a competitive interest rate over the long term, while also being rewarded for spending on a credit card, the Tesco Bank Low APR Credit Card could be of interest. It may allow the 40% of consumers who do not pay their credit card in full each month to benefit from a relatively low-interest rate on new purchases over the long run.
However, it is possible to obtain credit cards with introductory 0% interest rate periods that run more than two years at the time of writing. If you plan to pay off your balance within the introductory 0% interest period, a credit card with a long period could be the best option. If the balance is not cleared by the end of the introductory period, though, a relatively high-interest rate may then be applied.
Therefore, the appeal of the card largely depends on personal circumstances and how you intend to manage and repay your credit card balance over the long run.
The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. Also, while we aim to feature some of the best products available, we do not review every product on the market. Learn more here. Any opinions or statements in this article belong to the author, and may be shared by The Motley Fool, however they were not provided or endorsed by our affiliate partners, unless expressly indicated.
The Motley Fool has recommended shares in Lloyds, Tesco and Barclays.