This past October, Capital One (NYSE: COF) and General Motors (NYSE: GM) announced a multi-year extension of their co-brand card partnership and the launch of the new GM Card from Capital One. In a press statement, both companies announced that the GM Card would be a “transformational new product in the automotive rewards credit card category”.
Users of the card will see 5 percent earnings on the first $5,000 of net card purchases every year, as well as, an unlimited 2 percent earnings on all other purchases. There are no limits, no expiration, no limits, no annual fee and access to World Elite MasterCard benefits.
The new GM Card will be joined by four other card designs including Chevrolet, Buick, GMC and Cadillac.
“Co-branded credit card partnerships aren't as widespread in 2013 as they had been in years past, mainly because many smaller and less profitable cards have gone away,” says personal finance expert Lynnette Khalfani-Cox. “But more than 100 sizable co-branded credit card partnerships still exist today, like the agreement between GM and Capital One, which recently launched an innovative automotive rewards credit card. Overall, I think that companies with strong brands, great products, and a creative bent will continue to thrive when teaming up to offer credit cards to consumers.”
Some industry insiders contend that credit card partnerships will continue to evolve in order to attract new customers, build loyalty, and gain market share. Joining two brands, a popular practice between Hollywood and corporate America, is a powerful way to gain exposure and stand out in the marketplace.
Since its launch in 1992, GM Card Earnings have been redeemed toward the purchase of nearly 7 million new GM cars, trucks, SUVs and crossovers.
“Consumers want value, simplicity and they don't want to have to think about it,” says Kathleen Pierce-Gilmore, a spokesperson for Capital One. “While a lot of companies attempt to offer unique rewards value propositions, there are often times too many complexities and restrictions. Consumers want to earn and redeem rewards easily and they want their rewards to be relevant. Companies can differentiate themselves by getting creative with their offerings that are designed based on consumer insights and align with what consumers want in their rewards card.”
The GM card comes with MasterCard World Elite product, as well, thus offering customers more perks like car rental coverage, trip cancellation insurance and concierge service. Pierce-Gilmore contends that the new card differentiates itself by offering a combination of features aimed at adding value for the consumer.
On their part, General Motors hopes that the line of credit can boost company revenue through car purchases. “Our customers have never had a better or bigger lineup of new Chevrolet, Buick, GMC and Cadillac models to choose from to meet their needs,” said Chuck Thomson, general manager, GM Retail Sales and Marketing Support.
“We are introducing 27 new or refreshed cars, trucks and SUVs in 2013 and 2014 – an average of one per month – and the new GM Card is the key for customers to put one in their driveways.”
According to Capital One, their research shows that card users want 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.