Gee where do we start? GE or GM?... Well, GE was first out of the chute.
GE Captital introduced the "GE Rewards MasterCard" September 2nd. The new GE program rewards cardholders with a variety of coupons redeemable at 24 nationally known retail and service companies. GE says cardholders can accumulate more than $1,00 a year in savings with the new card.
There are three types of coupons generated by the GE card: "Rewards Checks", "Savings Certificates" and "Rebate Certificates". For every $500 charged to the card Ge will issue a $10 "Reward Check" good towards products or services offered by the 24 participating merchants. Every three months a $10 "Savings Certificate" will be issued to cardholders from each participationg retailer. Cardholders signing up for Sprint, HBO, Cinemax or who by GE appliances will receive "Rebate Certificates" in various amounts.
If you regularly do business with the participating companies and like to deal with coupons the new GE card could be for you. However this card is not free and may prove to be expensive for most consumers.
GE is charging a $25 annual fee and a variable interest rate of 18.4% for most cardholders. (GE says it will give select cardholders a lower 14.9% rate but declines to specify the qualifications.) The $25 annual fee is significantly above the national average of $17. Furthermore the industry has been moving away from charging annual fees to cardholders who use their cards regularly. The GE interest rate is also above the industry average of 18.07%. What makes the interest rate even more unattractive is the formula used. The card is 12.4% plus the prime rate (now 6%). This spread is one of the highest in the industry. If the prime rate climbs back to 10% or 11% the new GE card would potentially be the most expensive card in the nation.
If you avoid interest charges by paying off in full each month, like 29% of the nation's cardholders, this card could still be a bargain. For $25 a year you could acquire more than $800 in coupons. If this sounds good then consider where you can redeem them: Kmart,Toys 'R' Us, Macy's, Kid 'R' Us, Kinney Shoe, Foot Locker, Builders Square, Waldenbooks, Hyatt Hotels & Resorts, Northwest Airlines, Bullock's Lady Foot Locker, Kids Foot Locker, Going to the Game, Hertz, HBO, Cinemax, Sprint, Athletic X-Press, Circuit City, Champs Sports, GE Appliances, OfficeMax and The Sport Authority.
For more information or an application call 1-800-437-3927 (1-800-GE-REWARD).
One week after the GE rollout, General Motors launched "The GM Card". The new Mastercard enables cardholders to accumulate savings towards the future purchase of a new GM car or truck. Household Bank, the tenth largest U.S. issuer, is issuing the GM card.
Every purchase made with the card earns a 5% rebate. Cardholders can earn up to $500 per year in rebate over a maximum of seven years. An additional 5% rebate can be earned, with no annual limit, for charging purchases made with GM's partners: MCI, Avis and Marriott. (GM says new partners will be announced shortly.) New cardholders can should receive an immediate 5% rebate by transferring balance from another credit card.
Based on current spending, the average cardholder should accumulate at least $1,000 over a seven year period towards a new GM vehicle. To earn the maximum an average cardholder would have to quadruple current credit card purchases. (Average bank credit card spending is 2,400 per year.) It is possible under the GM program to accumulate enough rebate to cover the entire cost of new car. For example a high rolling cardholder charging $60,000 a year with $50,000 coming from purchases made with MCI, Avis or Marriott could rack up about $20,000 in rebates over seven years. (Incidentally the GM credit limit is $10,000.)
While the GM program will not appeal to everyone it is attractively priced. GM does not charge an annual fee and offers a variable interest rate of 16.4%. The interest rate is 10.4% plus prime. As a mass issued product the GM card represents a good deal for most consumers. By comparison AT&T's Universal card currently charges a variable 16.4% rate and $20 annual fee for new cardholders. AT&t's rate will be lowered to 15.9%, October 1st, and the annual fee can be waived for life if you transfer at $1,000 from another credit card to the Universal card.
There are two drawbacks to he new GM MasterCard. If you have your eyes set on a new hotselling Saturn car, the GM card will not help you. The other disadvantage is the use of the "two-cycle average daily balance method" to calculate interest charges. This method can be costly for some cardholders. Depending on the timing of purchases made with the GM card interest charges for the first month you carry a balance forward could be nearly double what you would pay with most other cards. Since most cardholders consistently revolve the impact of this method over time is minimal. However cardholders who irregularly pay-off the balance, occasionally carrying balances, will pay much higher interest costs with the GM card.
All things considered the GM card is the best nationally available deal to come along since the introduction of AT&T's Universal card in March 1990. The pricing is reasonable and the rebate program is automatic and generous with a clearly defined goal.
For more information or an application call 1-800-846-2273 (1-800-8GM-CARD).
An unusual twist to the interest rate war emerged from Providence, Rhode Island this month. Fleet BAnk is lowering interest rates to 11.9% for purchases made between Oct. 31st. and Jan. 31st. Given sluggish consumer spending other issuers may follow Fleet's strategy.
Affinity cards (VISA and MasterCard marketed exclusively through an organization by a bank) are rolling right along. Nearly three million amateur bowlers (members of American Bowling Congress) can now apply for a special MasterCard issued by Marine Midland Bank (NY). For more information call 1-800-446-5336.
Just a reminder: to get a free annual copy of your personal TRW credit report call 1-800-392-1122.
Every bank credit cardholder in the country should have an owner's manual to explain in plain wisely. Problem is: How do you get consumers to read such a manual?
VISA U.S.A. announced, September 14th, a new consumer publication "Credit Cards: An Owner's Manual". This new 24 page booklet is illustrated with original cartoons of the popular comic-strip character, Cathy (created by Cathy Guisewite). It combines the best of two worlds, frank talk and humor.
The new booklet is part of VISA's ongoing consumer education initiative called "CreditWise". Two years ago VISA launched a contemporary personal financial planning and management program for high school students called "Choice & Decisions".
To obtain your personal copy call 1-800-847-2511.
