Two decades ago, banking where you buy your bread might have seemed strange, but the leaflets for loans and insurance that adorn supermarket checkouts are now as familiar a sight as the groceries on the shelves.
In fact, with trust in traditional financial services providers at rock bottom, adding a credit card or savings account to your shopping basket might seem to make more sense than ever. But do supermarket products deserve a place on your financial shopping list?
Supermarket general insurance
We obtained quotes for car and home insurance, using three different scenarios for each type, and also ran quotes on three comparison sites using the same details.
If price is your main consideration, there are cheaper alternatives to supermarket policies. For example, in our high-risk scenario, Tesco’s car insurance was 451% higher than the cheapest comparison site quote we found.
Shopping for insurance isn’t just about price – you’ll also need cover that meets your needs. We assess the quality of providers’ standard car and home insurance policies to generate Which? policy scores. Asda, Sainsbury’s and Tesco all score below average for their policies.
Only John Lewis’ car insurance policy achieves a score that’s well above average. All of the supermarkets, except Asda Money and Sainsbury’s, score above average for the quality of both their buildings and contents insurance.
Go further: visit our car insurance reviews to find out how major policies are rated
Supermarket personal loans
If you’re looking to borrow a lump sum over a fixed period, you could do worse than adding a supermarket loan to your shopping basket. M&S, Sainsbury’s and Tesco are regular fixtures in our Best Buy tables for loans of £5,000 and £10,000.
Sainsbury’s is particularly competitive for both smaller and larger loans, charging just 5.7% on £5,000 paid off over three years, and 4.9% on £10,000 paid off over five years.
Go further: see our round-up of the cheapest personal loans on the market to help you find the best deal.
Supermarket savings accounts
While savings rates remain pitifully low across the board, most supermarket accounts beat average rates and several are among the best of a bad bunch. Tesco’s Internet Saver and Sainsbury’s Extra Saver, for example, feature in our best rate table for instant access accounts – both paying 1.3% AER.
However, Tesco’s account includes a 12-month bonus of 0.55%, meaning you’ll need to move your money after a year to maintain a competitive return. But even without the bonus, this account has paid an above-average rate for three years, making it one of the most consistent instant access savings accounts.
Go further: don’t let your savings languish in an uncompetitive account – see our best-rate savings accounts
Supermarket credit cards
If you regularly shop with one particular retailer, a reward card could make financial sense. Most supermarket credit cards offer the equivalent of 1% cashback for in-store purchases, and between 0.1% and 0.5% on purchases made elsewhere. But the rewards are paid in loyalty points that can only be redeemed in store or with selected partners.
Supermarket credit cards pale in comparison with the most generous reward card currently on the market from House of Fraser, which pays 3% on in-store purchases and 1% elsewhere. But, again, you’re limited to spending your rewards in store. You’d be better off swapping a supermarket card for the best-rate cashback card – provided by American Express – which pays 1.25% on all purchases and a 5% introductory rate capped at £125 for the first three months.
Remember that cashback and reward cards are only worth considering if you pay off your credit card bill in full each month, because otherwise the interest will soon outweigh the rewards earned.
Go further: find the best credit card for you by taking a look at our credit card reviews