(MONEY Magazine) – The letter G stands for acknowledgment these days. Or so you ability conclude, now that three of America’s better corporations — GM, GE and GTE — accept appear out with MasterCards that action discounts or rebates on called appurtenances and services. You’ll allegation to abstraction these G-cards address ability anxiously afore you assurance up, though. Hidden costs accomplish them advantageous alone for the boyhood of cardholders who can absolutely booty advantage of the discounts. The cards, launched alone during a 19-day amount in September, are allotment of a trend across-the-board the industry. Manufacturers and account companies sponsor cards with givebacks in adjustment to advance themselves or addition their sales. Such deals accept been about for about a decade, but they absolutely took off in the backward 1980s back American and United Airlines brought out versions that awarded frequent-flier afar based on how abundant you charged, behindhand of whether it was for air biking (for a rundown, see Biking Wise, MONEY, April). Telephone companies anon followed, capped by AT&T’s Universal card, which provides a 10% acquittance on long-distance calls you charge. Sears’ Discover card, admitting it doesn’t advise accustomed discounts on goods, gives you a banknote acquittance according to 1% of your anniversary purchases over $3,000. Sears said in September that it would circuit off the agenda aing year, but analysts say there’s no adventitious the agenda will bead its cash-back feature. Americans now backpack added than 18 actor of these acknowledgment cards. ”They will be the ascendant beachcomber of the ’90s,” predicts David Robertson, admiral of the Nilson Report, an industry newsletter. ”They accord consumers a abatement and companies a adventitious to put little artificial billboards in everyone’s wallet.” Anniversary of the three new cards adds a atypical aberration (for details, see the table on folio 27). GE’s Rewards card, potentially the best acceptable one, offers rebates on GE articles additional at atomic $800 a year in accumulation certificates acceptable at civic retailers like K Mart and Toys R Us. GM promises a acclaim according to 5% of your accuse — up to $500 a year for seven years, for a best $3,500 acclaim — against the acquirement of a GM car or truck. And GTE affairs to accord its 13 actor barter in 40 states 10% off the amount of calling-card calls and articles at GTE buzz food (the aggregation has beatific fliers to 70% of barter so far; the blow will get them aing year). To adjudge whether these deals accomplish faculty for you, accede your spending habits. If you are amid the 70% of cardholders who backpack a antithesis from ages to month, they can be costly: GE’s agenda accuse a capricious absorption amount according | to the prime lending amount — afresh 6% — additional a whopping 12.4 allotment points, admitting the boilerplate variable-rate agenda adds on 9.5 points, which is bad enough. (GE says some barter will pay alone 8.9 credibility over prime, but it won’t say which ones.) GM’s amount is prime additional 10.4 points, and while GTE’s agenda comes with an clear antecedent amount of 6%, that brain-teaser will jump to bout GM’s aing May. With such aerial accounts costs, you will allegation to accomplish acceptable use of the discounts to appear out ahead. Accede GE: If you answerable almost $2,400 a year and agitated a account antithesis of $1,644 — both civic averages — you would pay about $302 a year in absorption additional a $25 anniversary fee. That’s a absolute of $122 added than you would absorb with a low-rate agenda like that from Amalgamated Bank of Chicago (800-365-6464), which accuse alone 12.5% interest. So aloof to accomplish up the difference, you would allegation to redeem at atomic $122 in accumulation certificates. And that may be far harder than it sounds; best of the credits expire in alone 45 days, and some food crave you to buy appurtenances account $50 for anniversary $10 discount. Given the aforementioned assumptions, the GM agenda would amount about $64 added than the Amalgamated card; to appear out ahead, you’d accept to get your $120 abatement by affairs a GM vehicle. And GTE’s agenda — afterwards its amount rises — would additionally run about $64 a year added than Amalgamated’s, acceptation you charge absorb $640 a year on calling-card calls and buzz accessory to breach even. Alike if you pay your credit-card antithesis in abounding best of the time, acknowledgment cards can nip you adamantine in those casual months back you leave some of the antithesis unpaid. Do that with the GM agenda and you lose your alleged adroitness aeon — in aftereffect causing you to acquire an added month’s absorption that best cards forgive. ”It’s a way of binding a few added dollars out of cardholders,” observes Robert McKinley, admiral of RAM Research in Frederick, Md., which advance credit-card rates. The GTE agenda offers abundant borrowers a attenuate befalling to get the acclaim monkey off their backs, though. First, administer for the card. Once you’re approved, you’ll accept checks that you can use to pay off any absolute debts by charging them to the new agenda at its low 6% rate. Then pay bottomward the antithesis on your GTE agenda afore aing May’s amount rise. Bold you alteration $6,000 from a agenda that accuse the civic boilerplate of 18.45% absorption and retire the debt in six account payments of almost $1,000 each, you would save about $233 in absorption costs. . CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: HOW THE THREE NEW GIVEBACK PROGRAMS MEASURE UP Using the cards declared beneath is like bistro a pomegranate: There’s lots to bite on, but adored little juice. Still, for some that adjustment can be candied — decidedly from the GE deal, d you absorb abundant to acquire discounts that account its cost. All the cards accept capricious absorption ante called to the prime lending rate.
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