Discount Dining, Thanks to Card Wars

A stuffed grouse with red current sauce, soft violin music in the background - the 20 percent discount when the waiter brings you the bill.

Twenty percent off? Yes, thanks to membership in a restaurant discount club linked to a bank credit card.

Welcome to the world of "discount dining" and "automatic" cost savings, one of the latest twists in an effort by credit-card companies to woo new card users based on benefits as well as fees and interest rates.

Competition between credit-card companies has increased sharply this past year, underscored by card-company giants MasterCard and American Express stomping on each other's turf: MasterCard is launching a card with no preset credit limit - in other words, an American Express-type charge card. American Express is offering a "special purchase account" to its prime customers, allowing them to carry over a balance from month to month - a program similar to MasterCard's.

A number of card companies are offering programs with built-in cost-savings programs ranging from legal and dental services to food clubs. Sometimes the plans involve cash rebates; sometimes discounts on the bill. Often there is an annual fee. But the bottom line remains the same: Total bills may fall for many cardholders or club members.

"We're going to be seeing even more of these types of [discount] plans in the future," given advances in computer technology, says Robert McKinley, president of Ram Research, a credit-card tracking firm in Frederick, Md.

Part of the reason, says Mr. McKinley, is that credit-card companies are increasingly able to identify what types of services their cardholders buy or use. "They see the monthly activity," he says.

In the future, "smart" cards, with specially built-in encryption programs, will be highly tailored to meet tastes of individual users, he predicts.

The dining-club programs are perhaps the most recent, and in many ways, most innovative examples of credit-card discount/rebate programs.

*Wells Fargo Bank and First National Bank of Chicago, for example, now offer cardholders a service called Dining la Card, which mails you back a 20 percent discount when you eat at certain restaurants throughout the United States. The plan hopes to include selected restaurants in Canada in the next year or so, says a phone service representative.

In the case of FirstCard, from First National, you receive 50 percent off the bill, up to a maximum rebate of $120, on your first visit to a restaurant. (You also get a free watch.) On subsequent dinners, you get 20 percent off the bill, including tax, tip and beverage charges, up to a maximum of $120 per meal. That means the benefit stops for any amount more than $600 on the dinner.

Your dinner guest, or guests, by the way, are never the wiser. You use your regular credit card to pay for the service, which costs about $50 a year. Rebate checks are mailed to you monthly.

*At BankAmerica, MBNA, and NationsBank, you can hook up with a program that allows you to get a special discount dining card from Transmedia, a dining/entertainment card. You get a 20 percent saving, excluding taxes and tip, on food purchases from 7,000 participating restaurants, including restaurants in France and Britain, according to a service representative. You also receive savings of 10 percent when you order items from catalogs such as Spiegel, Hammacher Schlemmer, Lillian Vernon, and The Sharper Image. The discount appears automatically on your credit-card statement.

*In a number of major US cities, local merchants or restaurants belong to entertainment or dining clubs that offer special discounts and rebates.

Consumer advocates advise caution in using such programs.

"We encourage people to read the fine print on these types of programs," says Janice Shields, of the US Public Interest Research Group, a consumer advocacy organization in Washington. "Are you getting something free now that will cost you more months later, with an actual service charge? Are you suddenly spending more than before? Take advantage of the rebates or savings, but do so without changing your normal buying habits."

"You have to weigh" the benefits of using discount or rebate plans, McKinley says. In the case of discounts, are the restaurants or hotels "top concerns?" Have they actually increased prices, thus giving you the appearance of a savings? Could you have gotten a cheaper discount, such as at a hotel, by not using your card and instead going for a plain old-fashioned weekend rate?

In the case of a restaurant, does the eatery stay in the savings plan from month to month? "Many restaurants in such plans are new, or smaller concerns," eager to attract clients, he says. Sometimes they drop out of a plan. McKinley suggests you call ahead to check, before arriving for dinner with your dining card in hand.

The discount programs can be useful, says McKinley. But in each case, he says, understand what you are paying for.