Worth paying 2% fee on Tesco Mastercard to get the points?

MerlinMags

I like to pay for everything on my Tesco Mastercard, as I then get clubcard points which eventually buy a cheap family holiday. More and more companies are telling me there's a 2% or £2.75 charge for using a credit card instead of a debit card.

I keep trying to calculate whether it is worth paying the small fee, in case the points I earn will give me a greater reward when I cash them in. Are my calculations correct?

• Car needs insuring: £200
• Credit card fee is 2% = £4
• Tesco only give 1 point for every £4 spent as it is not inside a Tesco store
• I earn 51 points which equates to a 50p voucher
• The Boost/Rewards system lets me quadruple that to £2 when I book my holiday.
• So I am spending £4, to get £2 off elsewhere...bad idea!

Alternative fee system...

• Car needs massive repairs: £500
• Credit card fee is flat £2.75
• I earn 125 points = £1 voucher (25p carried over)
• Boost this 4 times to £4 tokens
• So I am spending £2.75, to get £4 off elsewhere...hurrah!

Summary:
If offered 2% charge, use your debit card instead.
If flat £2.75 fee, and amount is over £500, use credit card.
Under £500; use debit card.



Hmmm...I suppose it is worth using the credit card to get Section 75 protection too. Do you get any protection at all with a debit card?

grumbler

As posted in some other thread

bsms1147 wrote: »

...
- 1 clubcard point for each £4 spent .. (equivalent 0.25% ...cashback ...; up to 1% ... if points are boosted)

This maths is much simpler than yours and makes the answer to your question pretty obvious - even ignoring the fact that when using points for booking a holiday you don't get pure x4 as you are likely to find a better price by shopping around.

Gromitt

MerlinMags wrote: »

Car needs massive repairs: £500

• Credit card fee is flat £2.75
• I earn 125 points = £1 voucher (25p carried over)
• Boost this 4 times to £4 tokens
• So I am spending £2.75, to get £4 off elsewhere...hurrah!

Last time my car needed repairs I thought "outside the box". My local garage doesn't have any card fees.

"I can do debit or credit, if debit is cheaper for you how about we split the difference?". The discount I got was higher than the points I would have received, even if you quadrupled them. For smaller repairs I just pay in cash, which gives even better discounts.

29Black

If you're really keen on Clubcard points, you can now sign up for their bank account that pays 1 point for £4 transactions in Tesco (same as CC), but more importantly 1 point for £8 spent elsewhere.

In theory you could use your Clubcard Credit Card to pay for purchases that do not charge a fee, and then when you repay it using your new Tesco debit card account, you would get extra points by repaying it on the £8 to 1CC point rule.

System

People keep talking about a loophole that doesn't exist.

You don't get clubcard points when paying credit card bills with the Tesco Bank debit card.

29Black wrote: »

In theory you could use your Clubcard Credit Card to pay for purchases that do not charge a fee, and then when you repay it using your new Tesco debit card account, you would get extra points by repaying it on the £8 to 1CC point rule.

Jennifer_Jane

Actually, what I do is keep my utility bill direct debit to as low as possible, then use any credit cards which have favourable rewards to make up the balance as an ad hoc payment. Something to consider rather than paying a 2% charge.

bsms1147

grumbler wrote: »

even ignoring the fact that when using points for booking a holiday you don't get pure x4 as you are likely to find a better price by shopping around.

This is the killer. The 'boost' is a false economy when the bosted prices are expensive to begin with.

eg, Say I can boost my £10 Tesco vouchers to a £40 theme park ticket (4x value!). However, instead I could use freely available half price tickets (£20 each) or buy online (£25 each). 'Real world boost' of this '4x' is therefore around 2x or 2.5x, equivalent to ~0.5% cashback when boosted '4x'.

Your maths is sound, but Tesco clubcard points are a poor form of cashback. As I outlined elsewhere, there are clean 0.5% cashback cards; also ones where you can earn a clean 5% for a trial period, then 0.5%+ ongoing. Personally my favourite (and current) cashback card is the Amazon card; 1% cashback everywhere, 2% at Amazon. The points are only spendable at Amazon though, but since a) I'd buy things from there anywhere at some point in the future, and b) the prices are fair compared to the 'boosted' Tesco prices, it's a no-brainer.

Underscoring this though is that overall rewards would often be better if slow-stoozed compared with cashback cards.

MerlinMags

Fair point. I use the Tesco tokens to buy my holiday from Park Resorts, who insist I pay their 'brochure price' rather than the online price. However, this is only a 10% difference. I agree that other items in the Boost catalog have their prices hiked.

Pizza Express vouchers is our other option; now those are not more expensive than paying with cash! No price hike - only restriction is food only, not drinks. Excellent price/quality kids menu there too.

Stoozing is too much effort (and worry) for me, but your suggestion of a 1% Amazon card seems worth investigating. If I spend £15k a year on my card, I'd get £150 Amazon vouchers? That would be helpful at Christmas....but it's not as much as a £400 holiday. Hmmm....

grumbler

MerlinMags wrote: »

...I'd get £150 Amazon vouchers? That would be helpful at Christmas....but it's not as much as a £400 holiday. Hmmm....

Unless I misunderstand something, you keep struggling with the basic maths.

You get 1% with Tesco after the 'bust'.
You get 1% with Amazon.

How can it be £400 v £150 if you spend the same amount?

bsms1147

MerlinMags wrote: »

Pizza Express vouchers is our other option; now those are not more expensive than paying with cash! No price hike - only restriction is food only, not drinks. Excellent price/quality kids menu there too.

Maybe, maybe not. Pizza express always have offers on though, and a Tastecard would pay for itself after a couple of visits.

MerlinMags

grumbler wrote: »

How can it be £400 v £150 if you spend the same amount?

Well, I know I currently get over £400 worth of holiday (plus the odd pizza) each year with Clubcard...and I know I don't spend £40,000 per year on the Mastercard...therefore I could never earn as much with Amazon at 1% cashback.

Buying food (1 point per £1) and petrol at Tescos (1 point per £2) must raise the equivalent percentage above the 1% rate you refer to?

£100 a week at the supermarket (family of 5, not yet MoneySavingExperts) means 5200 points a year, which 'boosts' to an extra £208 reward token. £30 spent on petrol a week would give another £60 reward token per year.