Co-branded credit cards: the pros, cons and management of easy debt.

Buy a duck and win a free trip to Bermuda! That's the line credit card issuers have been selling for just about the last four years. Marketing partnerships between retail companies and banks are embodied in the co-branded credit card, which has turned up the volume on consumer credit.

The pitch has worked. If you're a woman between the ages of 35 and 44, you're more likely than your male counterparts to use a credit card for personal expenses (53% of women vs. 47% of men), according to industry reports.

That makes you a target of credit card companies eager to collect high interest rates and transaction fees. As a lure, many credit card issuers offer a limited-time low interest rate to new cardholders.

Co-branded cards now account for one-third of MasterCard's U.S. card base and 20% of Visa's. As the inebriant of the power of plastic wears off, sophisticated consumers need to carefully review the costs and benefits associated with these cards. Understand that credit cards serve two basic purposes: one, a means of payment, and two, a source of credit.

About one-third of credit card users use them as a method of payment and pay the balance in full each month. Those consumers able to wipe the slate clean every month are generally in the higher income brackets. With credit card interest rates going as high as 20%, the benefit to the holder is an immediate savings on interest rates.

The largest percentage of credit cardholders, however, are installment users who consider credit cards an alternative method of financing and carry a balance from month to month. Financial advisers across the board point out that these consumers are perched on the edge of a gaping pitfall.

The interest rate on the credit card frequently wipes out the perks. By the time you have made enough purchases to qualify for free flying tickets or product discounts, you probably could have paid the price straight out for what you've paid in interest charges.

On the bright side, when you add up the annual fee and typical interest rate for each card and then subtract the value of the rebate, the airfine and auto cards produce an overall better bargain than conventional cards.

For cynical consumers who acknowledge that the retailers and credit card companies are really out to get them, there is a strategy for playing one company against the other. Use the incentive card for purchases and rack up the credits you need for discounts on your heart's desire. If you can't pay the balance in full, shift the balance to a lower rate card like the GM card, which gives you an immediate 5% rebate for that kind of rollover new business.

Cruising through the growing list of available cards, the perks can cover everything from shoes at Kmart to getaways to the Cayman Islands. Supported by Visa and MasterCard, the list of co-branded cards is growing. For a comprehensive list of "perk-cards," call RAM Research Corp. at [phone].

TOP TIP

Job-hopping may enhance your income, but it pummels your pension plans. Habitual job-hoppers amass few, if any, vested pension benefits since they don't stay long enough one company. Before quitting, it may be worth the 50 cents on the dollar to wait until you are fully vested. Many pension plans offer either a seven-years, graduated schedule (20% after three years of service, 20% each year thereafter) or 100% after five years of service. When changing jobs, offset the loss of benefits with greater personal savings. Roll over whatever benefits you have into an IRA within 60 days of leaving an employer.