Credit Card Review: General Motors MasterCard

Stars: 3 out of 5

Pros: High rebate

Cons: Rebate only good for GM car purchase

The Bottom Line:

Going to buy GM?

Consider this credit card

Limited rewards

A Decent Rewards Card If You'll Use the Rewards

When my parents discovered that they could tow their trailer with a GM minivan, they were sold. And when they discovered The GM MasterCard, they couldn't wait to get their hands on it.

That enthusiasm passed to me. When I first got out of college, I had to build my credit (I had none at that point). A few years of waiting and I was eligible for this card as well. And I enthusiastically rushed out and got it.

I still have the account. Why, I don't know. I haven't used it in a couple years. Maybe it's because I've got rewards sitting there waiting to be used. I've found rewards cards I like better and use too much as it is. But I can't see myself ever using this card again. The rewards are better elsewhere.

The Card I Have

Since my card is several years old, my terms are different from the terms you can get if you apply today. With my card, the rewards are straightforward. You earn 5% on every purchase made toward a GM vehicle of your choice, including cars made by Chevrolet, Buick, Pontiac, GMC, and Cadillac, but NOT a Hummer. Yes, that's right, 5%. Of course, there are limitations. You can only earn $500 in any one year. That limits your rebate potential right there. You can only accrue rewards for 7 years, which means the max you can have at any one time is $3,500.

But here comes the biggest catch. Each car has a limit to the amount of rebate you can get. Most cars don't let you redeem more then $1000 when you buy the car. According to their website, only one car (the Chevy Express Van and the GM equivalent) will let you redeem a full $3,500 in 2008.

The GM Flexible Earnings Card

As rewards cards became more popular, the number of people who wanted a traditional GM card must have declined. Why do I say this? Because if you go to their website today (www.gmcard.com), you'll find that they now offer the GM Flexible Earnings Card.

What's the difference? With the new card, you have a choice what kind of rewards you want. You can chose to get 3% back on all purchases toward a new GM car (a step down from the 5% I get). Or you can get 1% credit on all purchases toward the purchase of any new vehicle. Or you can get earn cash. Again, you'll earn 1% back on all purchases and you must redeem in increments of $100.

The Nuts and Bolts

One advantage to the card is that there is no annual fee. That was one reason I jumped on this card so many years ago and why I never bothered to cancel it later. Why bother when it costs you nothing to let it sit there collecting dust?

They offer an introductory rate on balance transfers of 0%. Of course, when you read the fine print you'll see that doesn't apply to new purchases or cash advances. And, if you miss a payment or are late, it will cease to apply.

As with most credit cards, your interest rate will vary. The current range is between 14% and 21%. My interest rate is currently 21%. Now keep in mind that, while I haven't used the card for a couple of years, I never missed a payment and was never late. Heck, I always paid the balance off every month in full. I have excellent credit overall. So I'm not sure who gets the lower rates, but it sure isn't me.

The card offers cash advances. There's a 3% service fee and a slightly higher interest rate that kicks in on the day you borrow the money.

I'll admit I never had to deal with customer service. I used the card and paid the bill when it came.

As with most credit card companies these days, they do offer a web site. Once you log in, it is easy to track your current balance and charges. They also let you pay your bill on-line. Since I like to give my bank account information to as few people as possible, I have never used that option.

My Thoughts

I've already stated that I don't use my card any more. It has nothing to do with poor service to interest rates. (Heck, I never pay attention to my cards' interest rates.) I stopped using it for one reason alone. I found other credit cards that offered rewards I would actually use. Since I pay off my balance every month, the rewards are the only thing that makes any difference between cards. I simply decided that I didn't want to keep earning rewards I was never going to use and instead switched to something that actually rewarded me.

So if you are interested in purchasing a new GM vehicle in the future, this would be a good card to look into getting. Even if you think it might be a possibility, the new flexible card might be a good way to hedge your bets. But if you aren't interested in a new GM vehicle, you'll be happier looking somewhere beside the GM MasterCard.