Tesco Bank, a unit of the United Kingdom grocery chain Tesco PLC, is using its brand recognition and a priority to draw more consumers into its stores to provide a perk most bankcard issuers are unable to offer–0% interest on all purchases for 13 months for new customers of its Tesco Clubcard credit card.
The offer represents the longest introductory 0% rate available in the UK credit card market and applies to all purchases made with card, not just Tesco purchases, a Tesco spokesperson tells Paymentssource. Additionally, the MasterCard-branded card includes a nine-month 0% introductory rate on balance transfers with a 2.9% fee.
Most credit cards in the UK offer 0% on purchases for an average of 56 days, and the trend has been to shorten that period, Matt Simester, director of Auriemma Consulting Group in the United Kingdom, tells PaymentsSource. For Tesco to extend this offer to all purchases makes this card “a stunning development in the market,” he adds.
Tesco also can afford to make more-attractive offers because “the company wants to sell more products rather than just offer cards as a return on investment, making it hard for traditional banks to compete,” Simester adds.
And with consumers’ general dissatisfaction with traditional bankcards, “Tesco has the ability to be more aggressive in the market and offer more-attractive deals as the company builds business,” Simester says.
The Clubcard also offers cardholders reward points on purchases made at any merchant, not just Tesco. Consumers receive one point per £4 (US$6.21 or 4.80 euros) spent using the credit card.
The card also doubles as a regular Tesco grocery Clubcard when used to make purchases in Tesco stores. Cardholders may collect standard Clubcard points when making purchases with the card either in-store or online. Moreover, Tesco offers double rewards points, giving customers two points–worth one penny each–per British pound spent in the store or online, the company noted in a news release.
Clubcard holders also receive a 10% discount on Tesco Travel Insurance and pay no cash-advance fee on Tesco Travel Money when using the card to pay. Tesco Travel Money enables consumers to purchase international currency through the retailer either in-store, online or by phone. Cardholders may earn 25 Cardclub points per £250 spent on Travel Money.
Indeed, Tesco is showing itself to be a strong contender among all UK issuing brands. Recent research conducted by Auriemma regarding brand strength suggests that Tesco is the No. 1 brand in the UK, Simester notes.
Tesco seems to be positioning the company as treating “consumers quite fairly in an otherwise volatile economy,” he says.
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