have structured a unique but complicated credit card rebate program that may be confusing and costly for consumers. The program is designed to enhance customer loyalty and promote usage of the Citgo Plus proprietary gas card by offering a 5% rebate on purchases made with a specially issued bank card, the Companion Visa. The Companion Visa will be issued to as many of the 4.7 million Citgo Plus proprietary cardholders as possible and new Citgo cardmembers, the company said. This is not a cobranded program. Consumers will keep their Citgo Plus card to use at Citgo stations. They can use the Companion card for general purchases, such as stereos or clothing, and earn a 5% rebate, but only if a portion of the balance is revolved each month. The rebates can be redeemed in $5 increments at any of the 13,700 Citgo locations across the country when customers pay for purchases with the proprietary card. No rebate is earned for using the Citgo Plus card. The no-fee Companion card comes with an introductory 6.9% over prime interest rate, which jumps to 10.9% over prime after six months. Because revolving some portion of the balance is necessary to earn rebates, there is no grace period, with interest charged from the date of purchase. The consumer also must charge gasoline and other Citgo purchases on the proprietary card to gain the rebate, building balances on both cards. When the customer earns rebates from the Companion Visa, it is accrued to the proprietary program. If she purchases $500 in merchandise, $25 is credited to her Citgo account. When that customer visits a Citgo location and uses her Citgo Plus card to pay for the purchase, she will be issued a $5 coupon that can be redeemed for cash. To get the full rebate she will have to make purchases at Citgo locations five times. "We want the repeat business and brand-loyal customers," said William C. McCollough, Citgo's general manager, credit cards. He said that cobranded programs have cannibalized proprietary card businesses throughout the oil industry, while Citgo's proprietary card usage increased 16% in 1994. He added that a majority of cobranded oil card owners use their cards at competitors' locations. He said the Citgo program eliminates that possibility by doling out the rebates in small parcels. And, he said, getting $5 cash would be "more fun" for consumers than getting a rebate on their statement. Mr. McCollough added that Associates is "the big driver behind allowing us to do this rebate." Carl Novotny, a managing partner at Affinity Partners Inc., the Wellesley, Mass., firm that designs affinity programs for First USA Inc., called the Companion Visa program "a little confusing." Mr. McCollough acknowledged the program's complexity and said customer service representatives will be standing by at a toll-free number to explain the intricacies of earning rebates and redemption. Though the rebate is generous at 5%, Mr. Novotny said the interest rate is "much too high" and will depress response rates. Citgo and Associates "are trying to devise a process that gets the consumer to buy more gasoline," said Mr. Novotny. While the concept is right, he said, "it's just priced wrong for the consumer and too confusing." Mr. McCollough said a national advertising campaign along with direct mail will launch the program in January 1996. James L. Accomando, a Fairfield, Conn., cobranding consultant, predicted the program would attract only Citgo's most loyal customers. He said the bank would make up the costs of the program through the high interest rate and slippage - when rebates are not redeemed due to the restrictive redemption policy. Mr. Novotny said the partners could get a "decent response" through direct mail, but "the program won't have long-term legs." He advised consumers to "get a low-rate card, take the savings and buy gas with it."

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