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By Sarah Wray Staff Writer
Tuesday, 15 April 2008
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0% Supermarket Credit Cards
How do the Sainsburys and Tesco Credit Cards Compare?
Sainsbury's credit card
- 0% for 12 months on Sainsbury's shopping
- Typical APR: 15.9%
- Introductory Purchase Rate: 0% for 3 months
- Balance transfer rate: 0% for 12 months
- Balance transfer fee: 3% (minimum £3)
- Cash withdrawal rate: 19.95% pa
Read our review of the Sainsbury's Credit Card (Standard) and Sainsbury's Credit Card (Platinum)
Tesco Clubcard Credit Card
- 0% for 13 months on Tesco shopping
- Typical APR: 16.9%
- Introductory Purchase Rate: 0% for 3 months
- Balance transfer rate: 0% for 13 months
- Balance transfer fee: 2.5%
- Cash withdrawal rate: 24.942% pa
Read our review of the Tesco Clubcard Credit Card
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TWO new credit cards from supermarket giants Sainsbury’s and Tesco mean that you can pay for your shopping with your credit card, and not pay any interest on it for a year.
We talk you through how to make the most of these 0% deals and how to avoid getting stung.
What you get with these deals
With the Sainsbury's credit card you get 0% on all your Sainsbury’s shopping for a year. You also won’t pay any interest on your non-Sainsbury’s shopping for three months.
With the Tesco Clubcard credit card you get much the same deal with 0% on all Tesco spends for 13 months, and the same 3 months interest free rate on non-Tesco purchases.
Woohoo!
0% deals can bring a number of benefits to shoppers.
The main benefit is obviously the ability of the consumer to pay off their card bill over a few months, without paying any interest.
These can be especially useful if you want to buy a large item or some expensive electrical goods, for example.
The 0% deals also extend to online purchases at Tesco Direct and the Sainsbury’s online equivalent. These online stores sell goods such as kitchen appliances, contact lenses, electrical goods and more.
Both cards also provide an interest free deal on balance transfers for the first year (Sainsbury’s) or 13 months (Tesco). Neither card has an annual fee.
The fact you can also rack up reward points while you use these cards is handy.
- At Sainsbury’s you get 4 Nectar points for every £1 spent at Sainsbury’s, and 1 Nectar point for every £5 spent elsewhere.
- Tesco gives you 5 Clubcard points for every £4 spent at Tesco, and 1 Clubcard point for every £4 spent elsewhere.
Boo!
If you play by the consumer rules these 0% deal cards can be a real help, and help you plan financially. However, if you rack up a bill and don’t pay it off within the interest free period you could be in trouble.
The Tesco and Sainsbury’s card APRs are 15.9% and 16.9%. Although they could be worse, paying money you’ve spent at the supermarket back at this rate is hardly a bargain.
Mark the end of the interest-free period up on your calendar or set a pre-emptive alert on your phone to avoid a schoolboy error such as this.
Make sure you are clear about what is and what isn’t interest free. Taking cash out at the machine is NOT interest free and is not cheap so avoid it at all costs.
Interest on these transactions is charged at 19.95% APR for Sainsbury’s and 24.942% for Tesco. Ouch!
To add insult to injury be aware of a nasty little thing called Allocation of Payments. It basically means you’ll pay the highest interest transactions off last. So any cash transactions are likely to linger on your statement until you clear it altogether.
Also, remember that any non-Sainsbury’s or non-Tesco purchases that you make, and don’t pay off before the three-month interest free period is up, will also cost you.
It’s down to Allocation of Payments again – when three months is up these purchases will accrue interest, while any credit card repayments that you make will go towards balance transfers or Sainsbury’s/Tesco purchases first.
To cut a long lecture short: know when those interest-free periods end and clear the balance before they do!
Should you consider applying for one of these 0% supermarket credit cards?
A 0% deal card such as Tesco’s or Sainsbury’s could suit you if: - You regularly shop at Sainsbury’s or Tesco
- You want to buy a large purchase and know you can pay the debt off gradually before the interest-free period ends
- You won’t be tempted by cash advances
Say no to these types of cards if: - You don’t regularly shop in Tesco or Sainsbuiry’s
- You just want to free up some extra cash each month by whacking your shopping on a credit card
- You’re not sure if you can pay off any bill before the interest-free period ends
- You are in the habit of taking cash out with your credit card
- You are forgetful and may let the interest-free period lapse without paying the bill off in full.
Verdict
0% supermarket cards like Tesco’s and Sainsbury’s are nothing to be scared of and can be a great way to save you money and help you with your cash flow.
However they only work to your advantage if you understand the terms of the card thoroughly and beware of any traps that could take money from you and give it straight to the credit card companies.
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