If you've got poor credit and are hoping to improve it, the Tesco Foundation Credit Card is a solid choice. Let’s explore the Tesco Foundation Credit Card, which unlike many credit-building cards, allows you to collect rewards while helping you improve your credit score. Let’s explore how this card works, its pros and cons, and how it compares to other credit-building options.

About Tesco Bank

Tesco Bank, established in 1997, is a subsidiary of the well-known Tesco supermarket chain. The Tesco Foundation Credit Card is part of Tesco Bank’s suite of financial products, designed to help individuals build or rebuild their credit history.

About Tesco Foundation Credit Card

The Tesco Foundation Credit Card is user-friendly and accessible via the Tesco Bank app on your smartphone. It provides a flexible credit limit, charges no annual fee and provides Tesco club points, all targeted to improve credit score.

How the Tesco Foundation Credit Card Works

Here’s a quick overview:

1. Application Process: Start with an initial eligibility check online. If you pass, you’ll complete a full application, which includes a credit check.

2. Card Management: Manage your card through the Tesco Bank mobile app or online banking. This allows you to track your spending, check your balance, and make payments easily.

3. Usage: Use the card for everyday purchases and earn Tesco Clubcard points.

Building Credit with Tesco Foundation Credit Card

The Tesco Foundation Credit Card is designed for those with poor credit history. Here’s how it helps: 

• Timely Payments: Making your payments on time shows financial responsibility, which positively impacts your credit score.

• Credit Utilisation: Keeping your credit utilisation low (using less than 25% of your available credit) can boost your score.

• Text & Email Alerts: It helps you stay on top of your finances, reducing the risk of missed payments.

What are the benefits?

• No Annual Fee: Many credit-building cards charge an annual fee, but the Tesco Foundation Credit Card does not, making it free to use.

• Lower APR: With a representative APR of 29.90% (variable), it offers a lower APR compared to other credit-builder cards, which often have APRs between 35-55%.

• Rewards Scheme: Earn Tesco Clubcard points on your spending, which can be redeemed for discounts at Tesco or its partner stores.

• Credit Report Access: Access your TransUnion credit score through the Tesco app, helping you monitor and improve your credit.

What are the drawbacks?

• Low Credit Limit: Initial credit limits range from £250 to £1,500, which is relatively low. Maintaining a balance under 25% of your credit limit is crucial for improving your credit score.

• High Interest Rates: While the APR is lower than other credit-building cards, it’s still high compared to regular credit cards. It’s important to make payments on time and in full to avoid interest charges.

• No CCJs: Tesco Bank does not accept applicants with County Court Judgments (CCJs).

Comparison to Other Products

When compared to competitors like the Thimbl Credit Card and Aqua Classic Credit Card, the Tesco Foundation Credit Card stands out with its rewards scheme and lower APR. Thimbl & Aqua both have high APR and no rewards program, making Tesco’s offering more appealing.

What do people think of Tesco Bank?

Tesco Bank enjoys an excellent reputation on Trustpilot, with 30,000+ reviews and an overall rating of 4.3 out of 5. Customers appreciate the straightforward application process and the clubcard points.

Conclusion

The Tesco Foundation Credit Card is fairly straightforward, user-friendly with a helpful customer service team. A viable option for those with poor credit scores with the opportunity to earn Tesco Clubcard points. Always compare different credit-building products to find the best fit for your financial needs.

Please note: this is not financial advice, and you shouldn't rely on it to make any financial decision.

If you are in debt or struggling, StepChange or MoneyAdvice are able to provide free advice and help: StepChange Debt Charity | Money Advice