Tesco Clubcard credit card – the best ever card for spending?

Tesco shakes up the credit card market by increasing its interest-free purchase period to a market-leading 15 months

Tesco used to offer the best card you could find for purchases, then Marks & Spencer increased its 0% period to 15 months. The supermarket giant has now fought back, and its Clubcard Credit Card is now the joint market leader.

Don't pay interest until August 2012

If you want to spread the cost of an expensive purchase, a credit card with 0% purchasing power lets you do this interest free. During the introductory period, these cards waive interest on all new credit card purchases.

Imagine you spent on a card with a 15-month 0% period today, you would not pay any interest until August 2012. Taking out the card could be especially beneficial if you're hit with an unforeseen expense you can't currently afford such as car repairs or essential home improvements.

Despite an identical 0% purchase period, Tesco beats M&S when it comes to the balance transfer period — offering nine months while M&S does not carry a balance transfer period at all.

[Useful: Apply for the Tesco Clubcard Credit Card]

Earn rewards on your spending

In addition to its interest free period, this card can also be used to earn rewards - for every £4 you spend, you receive one Tesco Clubcard point worth a penny. You earn one point a pound if you use the card at a Tesco petrol station.

As well as using your points on discounts at Tesco, you can redeem them against foreign holidays, in restaurants or on days out.

Furthermore, Tesco has recently partnered with energy company E.ON to allow customers to put their points towards paying their energy bill.

Because the credit card acts as a Clubcard, you also earn standard Clubcard points when you shop at Tesco.

The downsides

With a whopping 24.9% interest rate on cash withdrawals and a fee of 3%, it's an expensive mistake to withdraw money on this card.

And when the interest free period expires, you'll be charged 16.9% APR on any balance left on the account. Therefore it's wise to ensure you clear the cost of your purchases before the offer expires and interest kicks in.

What are my alternatives?

If you're looking for a credit card primarily for balance transfers, Barclaycard currently offers the most competitive deal with 20 months — the longest-ever interest free period.

In addition, there are other more attractive offers if you would like a straightforward rewards card. For instance, the American Express Rewards Credit Card allows you to earn up to £90 worth of bonus vouchers in three months which can be spent at big name retailers such as Boots and Amazon.

Is the Tesco card right for me?

As long as you clear your debt in full before the 15-month offer expires, this card could be a fantastic way to spread the cost of purchases while avoiding paying interest.

However, you could get a better deal elsewhere on balance transfers or rewards and if at all possible, you should try to avoid using the card to withdraw cash.