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TIME: Almanac 1993
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TIME Almanac 1993.iso
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092192
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09219931.000
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1993-04-08
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THE WEEK BUSINESS, Page 17Muscle Card
GM rolls out a fancy new credit card to help rebuild its auto
sales
AT&T has done it for years. General Electric began doing it
two weeks ago. Now General Motors is offering its own
high-powered credit card to boost sales of its products and grab
a share of the $485 billion market for plastic money. The auto
giant said holders of its new GM MasterCard would earn 5% rebates
on purchases made with the card, up to a maximum of $500 a year
or $3,500 over seven years. Card-holders could apply the rebates
toward the lease or purchase of new GM cars and trucks --
except for the hot-selling Saturn, which has never offered price
incentives. GM hopes the rebates will help it rebuild its once
commanding but now eroded share of the U.S. car and truck
market, which has slipped to 35% today, compared with 43% a
decade ago.
The rebate plan demonstrates the muscle that companies
must now exert to break into the credit-card field. "To get
people to switch to a new card, you've got to add value," says
David Robertson, president of the Nilson Report, a
California-based industry newsletter. "Just dropping the price
is no longer enough." The new GM card will carry a low price as
well. It will have no annual fee and will charge interest at a
rate of 10.4% above the prime rate, which now stands at 6%. That
adds up to a current annual interest rate of 16.4% vs. an
industry average of about 18%. Robertson estimates that the
card's features will attract 2 million holders over the next 18
months.