GIANT LAUNCHES CO-BRANDED CARD FEATURING 3% REBATE

CAROL EMERT Additional reporting: CHRIS O'LEARY

WASHINGTON (FNS) -- Giant Food, Landover, Md., is the latest chain to offer a co-branded credit card featuring substantial rebates for customers using the card.

With the co-branded card, customers earn rebates of 3% on purchases made at any Giant Food store and 1% on purchases made elsewhere. The rebates, up to $500 per year, will be issued in the form of quarterly certificates that can be redeemed for free groceries at Giant Food outlets.

The desire to persuade customers to stop shopping at competing outlets is one of the primary reasons for launching the card, said Terry Gans, vice president of advertising and sales promotion at Giant. "It's one more reason for customers to do the majority, if not all, of their food and drug shopping at Giant."

Giant also expects to cut down substantially on transaction fees and other expenses by offering the card. "More than 20% of Giant's sales now are on credit cards. If 20% were on the Giant card, it would save the company millions of dollars per year in expenses," he said.

The retailer is offering the co-branded card with Visa USA, San Francisco, and M&T Bank, a subsidiary of the First Empire State Co., both based in Buffalo, N.Y.

Giant Food's move into the co-branding arena follows closely on the heels of the recent credit card introduction by Seaway Food Town, Maumee, Ohio.

Seaway's co-branded card, introduced earlier this month, consolidates benefits earned via the chain's frequent shopper program with discounts based on card usage.

Consumers using the co-branded card earn a 2% rebate that can be used for purchasing merchandise at Seaway outlets. The rebates are also issued in the form of quarterly discount certificates, and the card is sponsored by M&T Bank and Visa.

"The card enables us to directly reward our most loyal customers through the 2% rebate feature," said Rich Iott, president and chief executive officer of Seaway, in a statement.

With the Giant Food co-branded card, there is no annual fee and cardholders receive an introductory interest rate of 9.9%, which rises after six months to the prime rate plus 8.9% for a Giant gold card and the prime rate plus 9.9% for a Giant classic card. Transferred balances from other credit cards earn a one-time 3% rebate.

Advertising for the Giant Food card started Sunday, March 17, and about 2,000 applications for the card were received that day, said Alan Ellison, vice president and credit card business manager for M&T Bank. "I think we're off to a very strong start," he said.

The card is being issued under the Giant Food name here and in Maryland and Virginia, and under the Super G name in Delaware and New Jersey.

Buffalo-based M&T will pay for the rebate and will receive all revenues from finance charges. M&T will also charge Giant significantly lower fees than other banks charge when their cards are used at a retailer, officials said.

M&T is helping pay for the launch of the card by sponsoring a minimum of four weeks of television commercials, radio advertisements and full-page newspaper ads, direct mail, store signs and signs on delivery trucks.

Giant is the fourth supermarket chain M&T has partnered with to offer co-branded credit cards. The others are Tops Markets, which operate in New York and Pennsylvania; Price Chopper, with stores in New York, Pennsylvania, Massachusetts and Vermont, and Seaway Food Town, which does business in Ohio and Michigan.