Pick Up A Loan With Your Groceries

With reports of their milestone £2bn-plus profits, Tesco have been dominating the news recently. It is estimated that in the retail sector £1 in every eight goes through Tesco’s tills. But it’s not solely groceries that consumers are filling their trolleys with at the nations favourite supermarket.

Their financial products such as, unsecured loans and credit cards, are proving just as popular their finest food range or clothing range.

Tesco Personal finance posted a £202m profit- up £160m on 2003’s figures. It has issued 1.4 million car insurance policies, 1.7 million credit cards and has outstanding lending balances of £3bn.

Tesco now also offer mortgages and have sold 300,00 home insurance policies. Their personal loans are as competitive as any lender with keen interest rates.

Hard to believe that when Sainsbury beat Tesco in the race to be the first supermarket to offer financial products, that eight years down the line its initial three products would grow to sixteen.

When Tesco and Sainsbury’s entered the personal financial market, financial experts were more than a little sceptical, suggesting they should stick to what they were best at and that their products would be a flash in the pan. They have been proved more than wrong regarding this analysis.

With Asda and Marks and Spencer entering the fray, the link between financial services and the grocery sector is expected to grow. In fact Sainsbury’s predict the number of consumers using supermarkets for banking will rise from 5.8million to more than 14million in 2008.

But are the products on offer from the supermarkets as competitive as those on offer from the conventional firms?

According to Daniel Newbolt, head of personal finance at Moneyfacts,” Tesco are dominating the news with their £2bn plus profit, and we continue to see the supermarkets providing competitive personal finance products that give the high street lenders a run for their money.” Sounds like a resounding yes then.

“Both Sainsbury’s and Tesco offer competitive loan and credit card products. With the credit cards, not only do you benefit from low introductory offers, but you also earn money-off vouchers for your shopping. This is a great way of maintaining customer loyalty.”

While supermarkets do offer competitive products, buying off the shelf does not always guarantee value. With this in mind the old adage of shop around still applies when shopping for personal credit.

21/4/05