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Capital One offers co-branded automotive rewards card with GM

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Capital One (NYSE: COF) and General Motors (NYSE: GM) recently announced a multi-year extension of their co-brand card partnership and the launch of the new GM Card from Capital One. The arrangement joins two powerful brands to offer a new product in the credit card category.

“Co-branded credit card partnerships . . . play an important role in the broader credit card market, particularly in the rewards space,” says Kathleen Pierce-Gilmore, a spokesperson for Capital One. “Customers express interest in rewards products that offer rich value as well as flexibility and ease of use. This is why we at Capital One focused on creating a transformational value proposition with new GM Card from Capital One that we just launched in partnership with General Motors.”

Why create a financial product with bundled features? According to Capital One, customers wanted a straightforward way to earn and redeem the rewards they earn on their card. “Companies that offer rewards credit card products are able to build loyalty and innovative ways of marketing that actually deliver greater value to customers and growth opportunities for the company,” says Pierce-Gilmore.

Features of the new GM Card from Capital One include:

  • 5 percent earnings on the first $5,000 of net card purchases every year and an unlimited 2 percent earnings on all other purchases
  • No limits on the amount of earnings a customer can accumulate
  • No expiration of earnings
  • No limit on the amount of earnings that can be redeemed toward the purchase or lease of a new Chevrolet, Buick, GMC, Cadillac vehicle
  • No annual fee
  • Access to World Elite MasterCard benefits including Trip Cancellation Insurance, Emergency Card Replacement, and MasterCard Travel Services -- a suite of travel benefits including amenities, upgrades, VIP Status, premium travel offers from best-in-class travel companies, and world-class travel advisers available 24/7 to address cardholders’ specific interests and provide complimentary travel planning.

Industry observer Lynnette Khalfani-Cox believes that companies engaged in credit card partnerships can use these alliances to benefit and gain synergies in a variety of ways. “They can leverage the collective strengths of their respective brands,” says Khalfani-Cox. “They can tap into one another's customer research and better focus their efforts to reach targeted clients, which in this case is often a more affluent spender who uses credit cards more often and more responsibly. And they can also achieve greater operating efficiencies in specific areas, like marketing and advertising.”

The market for credit cards is also hyper-competitive with plenty of players. Thus, companies are experimenting with ventures that enable their products to stand out.

“In my opinion, a lot of credit-card partnerships are routine, kind of run-of-the-mill endeavors,” says Khalfani-Cox. “There are scores upon scores of travel-related rewards credit cards, for instance, mainly focused on airline and hotel rewards. Those are fine. But there are far fewer offerings that provide other types of valuable rewards in niche sectors such as automotives.”

Companies are looking to differentiate themselves through creativity, exciting rewards and special perks.

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