Credit Cards

Capital One’s New GM Card Signals a Change for Auto Credit Cards

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There are several different cards available from car manufacturers that feature credit card rewards in the form of discounts on their next vehicle. While many of these cards have limitations on how much of a discount cardholders can claim, Capital One and GM have just introduced a new automotive rewards card that allows cardholders to earn unlimited rewards toward the purchase or lease of their next new Chevrolet, Buick, GMC or Cadillac.

How the New GM Card Works

Cardholders receive 5% back on their first $5,000 of annual purchases in the form of rewards dollars toward the purchase or lease of a new GM vehicle. After the cardholder’s first $5,000 of purchases each year, the rate of return is 2% with no limit and no expiration date. In contrast, the previous version of this card offered cardholders 5% back on all purchases, but limited discounts to a “redemption allowance” of $1,000 to $3,000 per vehicle.

According to Suhki Sahni, spokesperson for Capital One, “By offering customers unlimited reward dollars toward the purchase of a new GM vehicle, Capital One is trying to expand its No Hassles rewards philosophy to cards that are co-branded with our partners.”

As part of the World Elite MasterCard program, the GM card from Capital One offers cardholders benefits including trip cancellation insurance, emergency card replacement, and access to MasterCard Travel Services that includes travel advisers who are available 24/7 to address cardholders’ specific interests and provide complimentary travel planning.

There is no annual fee for this card, and new cardholders receive 12 months of interest-free financing on new purchases.

What to Look for in an Automotive Rewards Card

In many ways, cards offered by automobile manufacturers are similar to other retailers’ cards. Both types of products allow cardholders to earn rewards on all their spending toward in-store purchases while earning more rewards when using their card at that store. With automotive cards, customers need to be on the lookout for caps on the rewards that can be earned in a year, or redeemed at one time for new vehicle purchase. Also, credit card users should consider whether or not rewards can be earned or redeemed for purchases of parts, accessories or service, or just for new vehicle sales. Finally, cardholders should strongly consider whether they want to commit their spending to a card that earns rewards that are only valid for a particular purchase, rather than cash-back rewards that can be spent on a vehicle or any other purchase. Therefore, automotive rewards cards are best used by those who are die-hard fans of a particular brand, not by those who may want to shop several manufacturers before buying their next car.

And as with any rewards card, it’s important to charge only what you can afford to pay off each month, or the money spent on finance charges on your balance could counteract the benefits of receiving your rewards. If you tend to carry a balance from month to month, you should consider using a low-interest credit card.

How the GM Card From Capital One Stacks Up

Here are some other car manufacturers’ credit cards so you can compare.

The Subaru Card From Chase

This card offers 3% returns that can be redeemed for nearly any purchase from one of its dealers, including the sale and lease of new and used vehicles, as well as parts and service. Nevertheless, this card caps rewards at $500 annually, which is equal to the customer’s first $16,666 of spending. After that limit is reached, cardholders can earn no further rewards from this card until the next year. There is no annual fee.

The Chrysler MasterCard From First Bankcard

Applicants receive one point per dollar spent on most charges, double points from travel purchases, and triple points from qualifying purchases made at Chrysler Group Dealerships including parts, repairs and maintenance. Cardholders can use an unlimited number of points toward the purchase of a new Chrysler Group vehicle, or they can redeem their points parts and service. In addition, points can also be redeemed for merchandise, travel, gift cards or cash back. There is no annual fee.

Mercedes-Benz Credit Cards From American Express

Mercedes-Benz offers two different cards from American Express; the standard Mercedes-Benz credit card and the Mercedes-Benz Platinum card. The standard card offers a $500 certificate each year that cardholders charge $5,000 in purchases. Other benefits include 1,000 excess miles waived at lease end and a $50 certificate each year upon account renewal. But rather than receiving rewards toward the purchase of a new vehicle, card members receive points in the American Express Membership Rewards program. Cardholders earn 5x rewards for Mercedes-Benz purchases, 3x at U.S. gas stations, double points at restaurants and one point per dollar on all other transactions. New cardholders also receive 10,000 points when they charge $1,000 in purchases within the first three months of card membership. There is an annual fee of $95.

With the Platinum version of this card, new cardholders earn 50,000 Membership Rewards points after spending $3,000 within their first three months of card membership. Card members also receive a $1,000 certificate each year that they make $5,000 in purchases, as well as the numerous travel benefits of other American Express Platinum cards, plus five points per dollar on select Mercedes-Benz purchases. There is an annual fee of $475.

To find the right rewards credit card for you, you can research and compare rewards credit card offers.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

Image: iStock

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