The best supermarket financial products

by Neil Faulkner on 02 May 2012  |  6 comments
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Going with a financial deal from your supermarket could leave you considerably better off.

Tesco and Sainsbury's are encroaching more and more into selling us financial products, from savings to loans to insurance.

They haven't got tangled up in the messy, complicated business that has recently destroyed several of the UK's banks and building societies. As a result, they continue to offer many better products and take more customers away from traditional financial institutions.

Savings accounts

Just last week, Tesco increased some of its savings rates further to ensure it stays at the top of the best buy tables.

The top one-year fixed rate savings accounts

I have excluded accounts that are not online, but none of those beat Tesco anyway.

None of these top three savings accounts come from renowned financial institutions, which is a demonstration of how poorly the major banks are able to compete right now. As we now know, being with a big bank doesn't make you all that much safer.

Savings in all three accounts in the above table are protected by the Government in the Financial Services Compensation Scheme. Tens of thousands of pounds of your savings could be protected by the guarantee offered by the scheme.

Credit cards for new purchases and balance transfers

Sainsbury's narrowly misses out on being in the top five credit cards for both balance transfers and new purchases.

The Sainsbury's Shopper card offering 12 months at zero interest on both types of borrowing is some way off from the Nationwide Select card. The latter offers 17 months on balance transfers (3% fee) and 18 months on purchases. However, you have to open a whole new bank account to get the Nationwide account, which is more effort than some people are willing to make.

You can see the best credit cards for dual deals in my article from last week: How to use credit cards for transfers and new purchases.

Credit cards for new purchases only

But when it comes to credit cards that offer 0% interest on new purchases only, Tesco and Sainsbury's peform again, coming joint second:

The top credit cards for new purchases

Personal loans

Tesco makes it into the top five on personal loans.

Top five personal loans for those with excellent credit ratings

*Half of applicants will get a higher interest rate than the one advertised.

With all these loans, if you borrow £7,500, you're looking at repaying around £145 per month for five years, so at least £1,140 in interest. Be sure that you need to borrow, because that £1,000+ could be useful to you.

It's worth noting though that if you go for a £7,500 loan over three years, the interest rate on a loan from Sainsbury's drops below 6%. For more read this article.

Car insurance

Supermarkets are also competing with insurers.

It's difficult to make any generalisations about who's the cheapest insurer. However, I have run a few tests and found that on car insurance at least, Sainsbury's does pretty well against the competition, provided you have a Nectar card and use it often.

You might be entitled to a 20% additional discount (up from 15% a few months ago) on a policy that is already reasonably cheap for some people. Read more in Sainsbury's promising £300 of benefits with its car insurance.

But everyone is different, and Sainsbury's will not be competitive for everyone, so there is no substitute to shopping around for your car insurance.

More on savings and credit cards:

How to use credit cards for transfers and new purchases

The best money transfer credit cards

Banking gimmicks are no bad thing

How to build an excellent credit history