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Roadfly Magazine
Issue Seven
Table of Contents

Past Issues Index
Roadfly Magazine
G. Gordon Liddy
Issue Seven
May 27, 2003
G. Gordon Liddy
Credit Card Rewards Programs
Frozen Rotors
Bentley Continental GT
Porter Cable Buffer
Coming Next Issue
Jay Leno
Hot Rod Tour
Paint Film
Porter Cable Rotary

Plastic Promises: What you need to know about credit card rewards programs, cont.
Visa & MasterCard: Looking forward to your interest.

Interest rates are how the credit card companies make their money, and according to recent figures, they're making a lot of money...over $21 billion was earned in interest charges in the year 2000 alone.

Interest rates are often used to entice consumers into enrolling for a particular credit card - promises of "low introductory rates" that are often sub-prime (0%, 0.9%, 1.9%, 2.9%) get interest-laden credit card holders to quickly sign-up with a new card. However, those rates are often extremely temporary - some cards charge as much as 31.99% when the introductory interest schedule expires.

Consumers quickly became aware of this near-bait-and-switch routine, so credit card issuers went back to the drawing board in an effort to attract new customers (incidentally, the average cost for a credit card company to acquire a new customer is around $80 per cardholder).

The next logical step: credit card rewards! Use your card to buy everyday items, and they'll give you something in return.

Credit card rewards programs are often more difficult to translate and comprehend than the interest rate debacle. The 30-second TV ad promises that within a few months, you and your loved ones will be vacationing at exotic locations - free of charge - just for using your VISA card. Other ads promise cash back, or rebates on big purchase items like cars; is it too good to be true? Usually.

Let's take a look at a few of the more popular rewards programs - BMW Financial Services (BMWFS) offers rewards programs designed specifically for BMW drivers such as rebates on future loans or leases, additional mileage on lease allowances, or a variety of BMW merchandise.

General Motors offers the GM card, which promises rewards that are similar to the BMW card. Ford Motor Company, Subaru, and many other manufacturers also have programs similar to BMW and GM, but for this article, we'll focus on BMW and GM's programs.

Other credit card rewards programs such as the Shell MasterCard promise users free gasoline with every purchase, while other cards like the "Saturn Card" provide Saturn owners with the opportunity to finance Saturn goods and services under more favorable terms and conditions.

Let's dive in to these cards and compare the pros and cons. Beware - we had to perform an exhaustive search, print hundreds of pages of paper and call all of the barely-legible phone numbers to get the skinny on these cards. We strongly suggest you do the same before jumping in to a credit card program. It pays to read the fine print, and it pays to do the research.

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