NEW YORK (
(SLM), the nation's leading college financing provider, has changed dance partners on its credit card program, and consumers may want to an answer to that age-old question:
"What's in it for me?"
| Sallie Mae is hoping college students will get on board with its new program.
On Wednesday, Sallie Mae
announced it had turned away from its old bank provider,
Bank of America
(BAC - Get Report) and has turned toward
(BCS) for its new Upromise World
(MA - Get Report).
The program is billed as a
college savings plan with credit card cash rewards as its centerpiece. Consumer use the card for payments and earn cash-back payments of up to 10% in some cases, although the deal with Barclays changes the payout levels customers of the Bank of America were accustomed to.
The payout system:
- 5% cash back for college on eligible online purchases at hundreds of major online retailers through Upromise.com
- 4% cash back at Upromise Dining restaurants
- 3% cash back on eligible gas purchases at Exxon or Mobil
- 2% cash back at eligible movie theaters
- 1% on everything else
But according to
data from Upromise
, some of the new cash back levels provide weaker rewards for cardholders.
For example, under the Bank of America card's "extra grocery cash back" and "extra dining cash back" programs, cardholders earned an extra 10% in rewards under select conditions. With the Barclays card, those extra rewards are off the table, although the Barclays card makes up for it adding cash back percentages for things like gasoline, movie theaters and online purchases.
Sallie Mae is selling the card as a user-friendly way for college-aged Americans to
save for school
with no annual fee, no cap on rewards and no minimum spending requirements. "By using the card every day for household purchases, families can accelerate their savings and really see the benefit accumulate," says Surinder Singh, a general manager at Barclaycard US.
To date, Upromise members have saved a total of $675 million since the program was rolled out in 2001, the company says.
Any cash back earned from the card can be used in several ways: investing it back in a college 529 plan, popped into a Sallie Mae investment account, used to pay down a student loan or simply redeemed for a check.
Every customer may not be thrilled with the changeover from Bank of America for Barclays, especially if they don't drive and use gasoline a lot, or dine out frequently. But Sallie Mae is betting that change is good, and that college students will get on board with the new program.
Consumers using the old credit card will be given the new card by fall with no loss of cash back rewards accrued, Sallie Mae says.