Supermarket giants sweep up with keen rates and deals on credit cards, loans and more

A "lean and mean" set up gives the supermarkets a distinct advantage

The supermarket giants have been successfully selling financial products for around 18 years in the UK and the keen rates and discounted deals continue to make them a popular choice.

With all the accounts and cards being sold online or by phone, no bank branches to maintain or the cost of extra in-store staff eating into profits, this "lean and mean" set up gives the supermarkets a distinct advantage.

As well as keen pricing, there's the convenience factor – including free parking right outside the store, 24 hours a day in some cases – something that most high street banks will never be able to offer.

The advertising is slick and well positioned, which ensures millions of shoppers can't help but notice the display of money and insurance advertising staring them in the face as they put the groceries on the conveyor belt. Credit cards, personal loans, mortgages, savings, insurance and travel money – the shelves are stacked with award-winning top value deals.

Credit cards offering reward points is a very strong product area, built on the huge success of the Clubcard loyalty scheme at Tesco.

Similarly the cashback credit card from Asda, which gives you 1 per cent back on all grocery and fuel spending is a popular loyalty-based product and one that Asda say isn't going to be axed or cut any time soon, unlike recent decisions from Capital One and NatWest/RBS.

Unsecured borrowing is a particularly strong area, with Tesco Clubcard featuring prominently in the best buys with the second longest interest-free term for card purchases at 21 months, with Sainsbury's Bank not far behind at 18 months.

Similarly Tesco Bank and Sainsbury's Bank are also in the top 10 for 0 per cent balance transfer deals at 35 months and 34 months respectively.

Supermarket banks are just as competitive in the personal loans area and have dominated the best buy tables in the last three years. For loans of £7,500 and £10,000 Tesco Bank charges just 3.8 per cent APR representative and is a top six player, along with M&S Bank and Zopa.

Tesco is also establishing itself in the mortgage market, particularly for longer-term fixed rate deals. It is currently topping the best buys with 2.59 per cent for five years, and a £195 fee to 75 per cent loan to value.

Supermarket banks have always excelled at offering no-nonsense products and savings accounts is another area in which they fare well.

While the top slots in the savings best buys tend to be occupied by the less well known banks and niche financial players, both Tesco and Sainsbury's are never too far off in their pricing and frequently offer a better return than the main UK banking brands. Last year Tesco launched its current account, which offers a good all round deal with Clubcard points on debit card spending, a competitive overdraft rate and credit interest of 3 per cent on balances up to £3,000.

Switching numbers have been quite positive and that's not really a surprise with many consumers seeing current accounts as an alternative home for some of their savings nest-egg.

There's frequently talk of challenger banks threatening the monopoly of the big high street banks; however it's the supermarkets that have the double whammy of huge weekly footfall and simple competitive product ranges to really make a difference.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk