GM Card Review

It seems that every business wants to issue an affinity credit card to enhance customer loyalty and stickiness. The auto manufacturers are no exception. We shall look at the GM Card here and see how this stacks up.

5% Rebate on ALL purchases - The one area where the GM card really shines is that you can earn 5% "rebates" for ALL purchases. No other card that we know of has this feature. Yes, the better cash back credit cards allow you to earn 5% rebates, but only on certain categories of expenses (some on a rotating basis) and perhaps their online shopping portal. But this card let's you earn 5% on all purchases. There is a catch off course. And it is that you can only redeem it for a new eligible GM vehicle (talking about locking someone in!).

The GM card also allows you to earn extra rebates when you shop online with their online partners. This works similarly to programs like shopdiscover.com and citi bonus cash center. When you go to partner retailer sites through your account login, you can earn extra rebates (see partners and rebates below).



A little word about their rewards - The beauty of the GM rewards is that you can use your rewards even after you have negotiated a price with your dealer. You can also use them with any offers. So by skillful negotiations, making use of offers and using the allowance, you really can save a lot on your next GM vehicle.



The catch is that there is a cap on how much rewards you can use for each GM model. In other words, the rewards have a redemption allowance, but it is easy to find. For example, a 2010 Chevrolet Aveo has a rewards redemption allowance of $1000 while a 2010 Chevy Avalanche has an allowance of $2000. All you have to do is read the redemption allowance chart on the GM Rewards Card site. (see screen shot below).



Annual Fee and APR - GM charges you no annual fee and gives you a zero APR on all balance transfers and purchases for the first 12 months (that's 12 billing cycles to you.)

Peer Comparison - There are very few auto credit cards these days. The cards from Chrysler, Jeep and Dodge are no longer available. Toyota though, has credit card for their customers. Like the GM card, you can earn 5% rebates but only on products you buy at Toyota (like your repairs). And unlike the GM card, the Toyota credit card allows you to use rewards for servicing (if you are the type that brings your car to the dealers).

The other auto card available today is the Subaru credit card. The Subaru card allows you to earn 3% rebate (or rewards) equivalent and like the Toyota credit card, it allows you to use points for servicing your car or buying any spare parts (as well using it for a new or leased vehicle).

Verdict - There are some pros and cons of the GM Rewards Card. The best feature is that it allows you to earn unlimited rewards on all your purchases. At 5% the GM Card gives you an easy way to earn hundreds of dollars a year. They also have a online shopping portal which other auto credit cards lack. The only catch is the redemption allowance, but it is easy enough to read on their website and if the average cardholder redeems $1300 on a new car purchase you've done pretty well for yourself.

The big negative of this card is that you cannot use it for servicing your GM vehicle (unlike the Toyota and Subaru reward program). The other negative point is that you can only redeem up to a certain amount of rewards for each vehicle model (the average being about $1,300).

Based on the features of this card, I would say that it will suit folks who know for sure that they are going to buy a new GM vehicle in the foreseeable future. Because you are capped on how many reward dollars you can use for each model, you have to be careful not to accumulate more rewards than you need (since you cannot use them for servicing). With 5% rebates being paid, it does not take much to accumulate the necessary rewards. An average spending of $20,000 will get you $1,000 in rewards. Many folks will be able to reach their required rewards with just a years spending on the card. So if you know roughly when you will be getting a GM car and know how much you spend on your credit card a year, you can do the math and work backwards and figure out when you apply for the GM Card. Just be careful not to earn more reward dollars than you need.