New rewards credit card offers at least 4X points back on every purchase

General Motors, Goldman Sachs and Mastercard recently unveiled the My GM Rewards Card™, which gives cardholders an unlimited 7 points for every dollar they spend at GM and 4 points for every dollar they spend elsewhere.

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The catch, you ask?

The only way to get the 4X points payout on most of your buys (7X total points at GM) is to apply your points toward purchasing or leasing a new GM vehicle. In that case, each point is worth 1 cent apiece. If you redeem them for gift cards, they’re worth only 0.25 cents apiece, and you can redeem only 100,000 points (worth $250) for gift cards each calendar year.

I still think this card can be a great deal – provided, of course, that you’re interested in buying a new car or truck from GM. It doesn’t need to be right away, since points earned on this card do not expire as long as your account is open and in good standing. More than half of GM customers go on to buy another GM vehicle, John Lazzati, managing director for consumer cards at Marcus by Goldman Sachs told members of the media.

Running the numbers

Consider this: If you were to spend $2,000 per month in the card’s standard 4x categories, you’d earn 96,000 points each year, which would be worth $960 toward a new Chevrolet, Buick, GMC or Cadillac.

That’s an impressive discount – assuming there aren’t any changes to the rewards program. There is a risk to holding your points for many years because GM and Goldman could potentially change how points are valued over time.

Also note that if you end up buying a Certified Pre-Owned car or truck from GM, you can redeem only up to 100,000 points (worth $1,000) per calendar year. Unlimited points redemptions are available only when buying or leasing a new GM vehicle.

Other benefits of the My GM Rewards Card

• A $100 statement credit each calendar year after spending $1,500 on fuel or (if you have a registered electric vehicle) paying six months of electric bills
• Up to $50 per year for vehicle detailing from participating dealers
• World Elite Mastercard benefits

The competition

Normally, a strong cash back card gives 2% cash back on every purchase. Examples include the Wells Fargo Active Cash® Card and the Citi® Double Cash Card (which gives 1% cash back when cardholders make a purchase and another 1% when they pay it off). Provided you redeem for a new GM car or truck, you’ll double your return by opting for the My GM Rewards Card.

It reminds me of certain retail-branded credit cards because the rewards are compelling but only if you redeem them to buy something from that brand. For example, the Key Rewards Visa gives 5% cash back when cardholders buy from Pottery Barn, Williams Sonoma, West Elm and a few other affiliated companies, plus a very generous 4% cash back at grocery stores and restaurants (excluding fast food). Other purchases earn 1% cash back.

It’s hard to top 4% cash back on groceries and dining with other cards – but since Key Rewards cardholders can put their rewards only toward purchases at a very select group of retailers, it’s much more limiting than the statement credits and bank account deposits offered by most general-purpose cash back cards. It’s great if you’re loyal to the brand, though.

Amazon.com, Costco, Verizon, Walgreens and Wayfair are other retailers associated with generous co-branded credit card rewards that encompass a wide variety of purchases but have additional hoops to jump through – namely, an annual membership fee and/or restrictions on when, where and how you can use your rewards.

Bottom line

If you’re interested in buying or leasing a new GM vehicle, the My GM Rewards Card could be a powerful money-saving tool. Its earning structure is very straightforward and potentially quite lucrative. The main downside is that its rewards redemption opportunities aren’t very flexible. Your best bet is to save your points until you’re ready to buy or lease a new car or truck from GM.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.