Auto rewards credit cards: Are the perks worth it?

Whether you’re saving up for your dream car or you already have it, a credit card from your favorite automaker can get you perks regular rewards cards can’t: extra cash back at dealerships and service centers, discounts on merchandise, freebies on your lease and, of course, the chance to show off your affiliation every time you take out your card to pay.

Thinking about getting a card that matches your wheels (or the wheels you want)? Read on for five popular options – and some common-sense tips that will cut through the intoxicating power of new car smell.

1. GM BuyPower card (no annual fee)

This card lets you accumulate cash back toward a new GM (Chevrolet, Buick, GMC or Cadillac) vehicle. You’ll earn:

5 percent back on the first $5,000 you spend on the card every year. That’s hard to beat. Cash-back cards that give you 5 percent often require you to shop within certain categories (that change each quarter). This card gives you 5 percent on the first $5,000 spent each year, no matter what you buy.

2 percent back on the rest of your purchases each year. This is also a relatively high cash-back rate, since 2 percent cash-back cards are pretty rare.

Your rewards don’t expire and, when you cash them in, there are no redemption limits. This means that all the rewards can be applied toward a new car.

The card is a World Elite MasterCard (and a no-annual-fee one, at that), meaning it offers robust travel benefits (including upgrades at some hotel properties), VIP experiences via MasterCard’s “Priceless Cities” program and insurance and purchase protections (including extended warranty, trip cancellation insurance and travel accident insurance).

2. American Express Mercedes-Benz credit cards

mercedes benz american expressYou have two options if you want an AmEx that sports the Mercedes-Benz logo. Both allow you to earn points for the American Express Membership Rewards program, as well as some unique rewards if you are buying or leasing Mercedes-Benz vehicles. American Express is a CreditCardForum advertising partner.

1. Mercedes-Benz credit card from American Express ($95 annual fee):

  • $500 certificate toward the purchase or lease of a new Mercedes-Benz every year you charge $5,000 on the card
  • If you are leasing a car through Mercedes-Benz Financial Services, you get 1,000 excess miles waived at lease end. Generally, if you exceed the mileage on your lease, you get stuck paying a per-mile fee. In the case of Mercedes-Benz, that per-mile cost is $0.25. So this benefit could save you $250.
  • $50 certificate after account renewal, usable for Genuine Mercedes-Benz Accessories

2. Mercedes-Benz Platinum Card ($475 annual fee): This is a version of the American Express Platinum card. It costs $25 more than the regular platinum, and that small extra cost gets you:

  • $1,000 certificate toward the purchase or lease of a new Mercedes-Benz every year you charge $5,000 on the card
  • Up to 2,000 excess miles waived at the end of your lease, which could save you $500
  • $100 certificate after account renewal, usable for Genuine Mercedes-Benz Accessories

These cards come with the standard suite of American Express benefits, including extended warranty, car rental loss and damage insurance and purchase protection. The Platinum Mercedes-Benz card has the same extras the regular Platinum does, including Premium Roadside Assistance, which lets you get towing up to 10 miles, winching, jump starts, flat tire changes (if you have spare), lockout services and fuel delivery up to 2 gallons four times per calendar year.

3. Toyota Rewards Visa (no annual fee)

Toyota rewards cardThis card rewards you more for Toyota-related purchases. You will earn:

  • 5 points for each $1 spent at participating Toyota dealers
  • 1 point for every $1 spent elsewhere

Your points are redeemable toward Toyota service, parts and accessories; toward the purchase or lease of an eligible Toyota vehicle; and toward rentals from Toyota Rent a Car. When it comes to redeeming for a vehicle, the vehicle must be new or Toyota Certified Used (those are cars that have gone through Toyota’s certification process and are no more than six years old with 85,000 miles or fewer).

Points are worth 1 cent each at redemption. That means 5,000 points is worth $50.

There is a rewards cap of 200,000 points per year earned at Toyota dealers and a cap of 5,000 points per billing cycle earned elsewhere. Points expire five years from the billing cycle in which you earned them. There is no limit to the points you can redeem.

4. Chrysler MasterCard (no annual fee)

chrysler-rewards-cardThe Chrysler MasterCard lets you use your rewards toward Chrysler purchases (the purchase or lease of a new car, new tires, service — including oil changes — and parts). You can also redeem for gift cards, merchandise via an online catalog, charitable donations, travel experiences and cash back.

Here’s how you earn points:

  • 3 points per $1 on qualifying purchases (parts, repairs, maintenance and accessories) made at Chrysler dealerships
  • 2 points per $1 on travel (including airfare, cruises, travel agencies and lodging)
  • 1 point per $1 everywhere else

When you redeem for Chrysler purchases, your points are worth 1 cent each. Among the other redemption options, the value of your points varies.

While there are no limits to the number of points you can earn or redeem, your points do expire seven years after you earned them.

5. BMW Visa credit cards

BMW VisaBMW offers three rewards card options. For all three, your points are good toward a variety of BMW-related rewards (more on that in a moment).

1. BMW Card (no annual fee): This is the most basic option, offering 3 BMW points for every dollar spent at BMW centers and 1 BMW point for every dollar spent elsewhere.

2. BMW Signature Card ($75 annual fee): You’ll earn 4 BMW points for every dollar spent at BMW centers, 2 points for every dollar spent on gas and 1 point for every dollar spent elsewhere.

3. BMW Ultimate Card ($75 annual fee): You’ll earn 5 points for every dollar spent at BMW centers, 3 points per dollar on gas and 1 point per dollar spent elsewhere.

Points earned with your BMW card expire after five years — and they’ll be lost if you ever become three months past due on your card.

Here’s what you can redeem for

  • Leases and loans: Redeem 10,000 BMW points for $100 off a lease or a loan (up to $5,000).
  • Extra lease miles and excess wear and use: Redeem 20,000 points for 1,000 additional miles on your lease (up to 5,000 miles). Or, use your points to pay for extra wear and use charges at the end of your lease. You can get up to $200 off (for 20,000 points).
  • Service and accessories: Use your points for a check good towards service at BMW centers and BMW accessories. For services, every 10,000 points gets you $100 check (up to $300). Same goes for merchandise (up to $200).

Should I get an automaker’s reward card?

Comparing vehicle-related rewards cards is a bit different from comparing other rewards cards. It’s not about picking a card that gets you the most cash back on groceries and mundane everyday purchases. Choosing the car you drive (and, by extension, its affinity card) can boil down to nostalgia, quality, history, advertising, personal preference, lifestyle, brand loyalty and innumerable other factors.

That said, here are some common-sense tips:

  • Be careful of expiration dates: Otherwise, your spending could all be for nothing – a waste, considering you could have been putting your spending on other rewards cards that don’t allow rewards to expire (for the record, that’s most cash-back cards on the market).
  • Be wary of dealership service prices: Auto manufacturer credit cards often give accelerated rewards for service and repairs – but only if you visit the dealership. Because dealership services tend to be pricier than the same services at other mechanics, this incentive may cause you to spend more.
  • Check the annual fee: Make sure the perks you get (or at last the privilege of displaying your affinity for the brand) are worth the annual fee, if your card has one.
  • Weigh your other options: If you can set your brand loyalty aside, (at least when it comes to your credit cards), there are a plenty of cash-back cards on the market that can get you a bigger return on every-day spending than some of the cards listed above. You could save those earnings and put them toward a car. You’d have more flexibility too, since you wouldn’t be tied to a certain make, or be limited to new or certified used.

Written August 14, 2014

 
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