PERSONAL FINANCE BLOG

Money shouldn´t stop making your plans come true. Learn how personal loans can help you!
Capital One Powercard Review
1 Jul 2018

Capital One Powercard Review

Did you know that each year, credit card companies send out over 3 billion credit card offers to consumers?

Many of these cards tout their benefits, such as cash back, travel rewards, or discounts on tickets and other items. One unique card, the Capital One Powercard, actually gives you rewards toward the purchase of a new car.

Keep reading for everything you need to know about the Powercard and how it can work for you.

The Basics

We are inundated with credit card offers regularly. In the mail, on TV, and online. It’s hard to know what card is best for you when there are so many options out there.

Most rewards cards offer rewards for restaurants, travel, cash back, or discounts on tickets and other items. The Capital One Powercard is a little different. It offers consumers rewards on their purchases that can be used towards the purchase of a new GM vehicle.

Cardholders receive 5% back on their first $5000 in purchases each year, and then 2% back on all purchases beyond $5000. The rewards can then be used towards the purchase of a car.

What Makes the Capital One Powercard Unique?

The Powercard is unique in that it gives you rewards that you can use to purchase a new car. There are few cards like this on the market, making it a unique way for consumers to use credit card rewards towards a new vehicle (keep reading, as this will be discussed again as one of the drawbacks of this card).

There is also no annual fee, which you often have with rewards cards. The lack of annual fee, combined with the high rewards earning, can result in a consumer earning a decent amount of rewards during their first year of purchases.

The Pros

The Powercard is certainly unique among rewards cards, and has some other perks as well:

  • The rewards are generous. The 5% rewards on the first $5000 worth of purchases equate to $250 back during the first year, plus any additional spending earns 2% back. There is also no limit on how much you can earn.
  • With the Powercard, you get all the benefits of a World Elite Mastercard, including price protection, extended warranties on purchases, identity theft monitoring and resolution services, travel concierge service, travel insurance, global service, for help anywhere in the world, and free two-day shipping through ShopRunner.
  • There is a 0% introductory interest rate for the first 12 months that you have the card. You can take advantage of this low rate if you have a big purchase and want to take some time to pay it off without accruing interest.
  • Unlike many reward cards that come with an annual fee, the Powercard has no fees associated with simply having the card.

Despite all of the positives of the Powercard, it is worth noting that there are some negatives associated with it.

The Cons

While there are some perks of the Powercard that make it very appealing, there are some cons that consumers also need to be aware of.

  • It will likely take a long time to make enough to have a sizable amount to put towards a car. If you earn 5% on your $5000 in purchases during the first year, that’s only $250. A drop in the bucket when you’re talking about a brand new car.
  • On average, Americans charge about $28,500 to their credit cards each year. If you charged all of that to this card, you would get about $720 back in rewards. Certainly not a small amount, but not a large amount either when considering the price of a vehicle.
  • The rewards can only be redeemed for a new GM car. No exceptions. You aren’t able to use them on a different brand of car or a used car.
  • Car reward cards are becoming few and far between. A number of them have been discontinued or restructured in recent years. While your rewards will never expire, a discontinuation of this card or a change in the reward structure could impact your ability to maximize your rewards.
  • Other than the 0% interest rate for the first year you have the card, there is no real sign-on incentive for consumers.
  • The standard interest rate is higher than a non-rewards card. Of course, this is only an issue if you carry a balance month to month, but is worth noting if you expect that there will be months you won’t be able to pay your bill in full.

If you’ve decided that the pros of this card outweigh the cons, your next question likely is whether this is a good fit for you.

Is This A Good Card For Me?

This card is a good option for you if:

  • have good or excellent credit (most credit reporting bureaus agree that anything about 700 is considered good)
  • are positive you’ll be purchasing a new GM vehicle in the future
  • want to avoid an annual fee, but still want the perks associated with cards that typically have annual fees

Now that you have a good idea of what the Powercard can offer you, and where it falls short, you can make an informed decision of whether this is a good option for you.

Capital One Powercard: The Verdict

On the surface, a credit card that helps you buy a new car sounds like a great idea. However, because this card requires the rewards go to a GM vehicle, it will only be a good option for a select group of people.

For the Capital One Powercard to really benefit you, you’ll need to be sure you’re going to buy a GM vehicle, or all of the rewards you earn will be for nothing. If you know you’ll be buying a GM vehicle though, this card is a great option for you.

Put the rewards towards a down payment or towards an extra options or equipment you want for your vehicle. The choice is yours!

Before you decide on the Powercard, though, you should review and compare your choices to see if there are other cards that might offer better benefits to you. Check out our comparisons of rewards cards to see what might be a good fit for your needs.