GM MasterCard holders in Detroit will be able to earn an extra 1% rebate when they shop at Kroger Co. stores on top of the 5% they would otherwise earn.

Last week, General Motors' credit card operation announced a yearlong test with Kroger, the nation's largest supermarket chain.

The pilot, which begins today, expands GM's affinity partner program into a $286 billion industry that has become a growth area for credit card use.

"Supermarkets as a category are ones that have begun to adopt credit card acceptance," noted Bill Anderson, director of U.S. consumer marketing for the GM card.

MasterCard International projects supermarket volume on its cards will reach $3.5 billion this year and could go as high as $7 billion by 1998.

MasterCard is accepted at more than 15,000 supermarkets nationwide, including all 1,059 Kroger supermarkets in 17 states and 960 convenience stores in the South and Midwest.

Kroger has been one of the most aggressive supermarket chains in terms of increasing credit card acceptance.

In fact, the Cincinnati-based company has partnered with a hometown bank, Fifth Third Bancorp, to issue a cobranded MasterCard to customers in Texas, Ohio, and Kentucky.

In this year-old pilot, Kroger cardholders can earn up to $500 in store rebates.

The card comes in two versions: gold at 2.9% over the prime rate and silver at 8.9% over prime.

Neither has an annual fee.

GM and Kroger said they will explore the possibility of introducing the 1% rebate program in other key markets across the country.

"Our objective is to provide the same value to all our card members throughout the country," Mr. Anderson said.

Because of "razor thin" margins in the supermarket industry, GM and Kroger opted for a 1% rebate, rather than 5%, he said.

Research shows consumers spend $4,000 to $5,000 a year on groceries, he said.

If customers used their GM cards to pay at Kroger, they would receive $40 to $50 in rebates. This compares to the 5% rebate GM cardholders get at Mobil gas stations, he added, given that consumers spend $800 to $1,000 a year at the pump.

"Just by doing the things you do every day you can get several hundred dollars from our affinity partners," Mr. Anderson said.

The two companies will announce the pilot through a series of local marketing initiatives, including a sweepstakes. By using the GM card at Kroger through Dec. 31, cardholders are eligible to win a one-year lease of a 1995 Buick Riviera.

In addition, GM will begin a direct mail campaign to Detroit-area cardholders, and will launch print and spot radio advertising.

There is no cap on earnings affinity partners in the GM program can earn, but cardholders can earn up to $500 per account a year, or $3,500 over seven years, from their core 5% rebate.

Companies GM has added to its program so far allow cardholders to double their 5% rebate to 10%.

GM's Accelerated Earning Network includes GM dealers, Mobil Oil, MCI, Continental Airlines, Alamo Rent a Car, Marriott Hotels, Suites and Resorts, Courtyard by Marriott, Fairfield Inns and Marriott Ownership Resorts.

The GM card is carried by nearly 11 million Americans. To date, 300,000-plus card members have redeemed their earnings toward new GM cars and trucks.

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