I have one of those General Motors MasterCards that credits me with 5% on every charge I make toward the purchase of a new GM car. Which means — sort of — that everything I charge on the card costs me 5% less.
I say “sort of” because there’s a limit of $1,000 credit a year for a maximum of $7,000 over seven years . . . but if you do wait seven years to use your credits, then, because of the time-value of money, those earned in the early years are worth somewhat less. You “earned” $1,000 rebate in year one, but it sits fallow and is still only worth $1,000 seven years later. Which means that in today’s dollars, that $1,000 is really only worth $547 (if you think if you think you can compound your money at 9% after tax — few can) or $759 (at a more realistic 4%).
So maybe the nominal 5% discount for using the card is more like 4% when you take this time factor into account. (It all depends on what you think you could earn on your money, but also on how long you wait to cash in those rebates.)
It’s also only “sort of,” because the assumption is you’ll be buying a new car (until recently, I always bought used cars — a great way to save money), and that it will be a GM car or truck. What if you’d rather buy a Taurus or a Honda? Or even a Saturn — the rebate doesn’t apply to a Saturn (nor to a Saab or Lotus, which are also GM products). It’s hard to quantify, but for most people there is a “cost” in this lack of flexibility.
So it can be a good deal — a lot of people DO buy new GM cars! — but it’s only sort of 5%.
But that’s not what’s got me exercised. For that, please tune in tomorrow.
Tomorrow: The GM MasterCard: Don’t Do Me Any Favors
Quote of the Day
I went to St. Mary's Hall, an Episcopal girls' high school. I was one of six Jewish girls, and what I really wanted to do was to play the Virgin Mary in the school play. They wouldn't let me because I was Jewish. I wanted to say, Excuse me! Hello! She was Jewish!~actress Judith Light
Request email delivery
- Sep 18:
So? What’s BOREF Worth?
- Sep 16:
Test Drive Succeeded Yesterday
- Sep 15:
The Inside Story
- Sep 14:
- Sep 11:
The Dean of Republican Election Lawyers
- Sep 10:
Not Invented Here
- Sep 9:
My Pal Chester and “The Princess Bride”
- Sep 8:
Surgery By My Pillow Guy
- Sep 6:
How Would Jesus Vote?
- Sep 4:
Everything but . . .
- Sep 18: