JUNE 2004

GMAC Offers Rewards Card Tied to Mortgage

In a new twist on the popular "rewards card" concept, GMAC Mortgage will roll out a new credit card to holders of mortgage loans and home equity lines of credit serviced by the company. MBNA will underwrite, process and issue the private-label platinum cards. The card will give borrowers an automatic $25 credit toward their mortgage principal balance for each $1,000 they spend on the card. Credits are applied at the end of the quarter in which the purchases are made.

Rick Gillespie, chief marketing officer for GMAC Mortgage, told the American Banker that testing showed borrowers prefer the automatic deduction feature over rewards schemes that require extra paperwork to redeem rewards. Gillespie said "People like the ease with which it can be done." In addition, "you are getting almost immediate and automatic benefit, where with something else you're waiting over a period of time." And, they think the program has cross-sell advantages for the GMAC mortgage products. Gillespie said, "We believe that other customers—perhaps who are making decisions on their current mortgage provider, whether for a new-home purchase or a refinancing—will think this is an attractive program at the point of sale."