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Tops Markets and M&T Bank have teamed up to offer a Tops Visa card that gives users a 2 percent rebate toward free groceries on all purchases, they said Thursday.

The card's benefits make it one of the best co-branded credit cards in the country, they said.

Every dollar spent on the card earns two cents worth of free groceries at Tops; a consumer who spends $500 monthly on the card will get $120 worth of free groceries a year, they said.

Although their card is similar to cards offered by five other supermarket chains, Tops and M&T say this is the first to combine two locally headquartered companies.

Earlier this year Quality Markets introduced a MasterCard that offers 2 percent rebates toward grocery purchases, but used an out-of-town bank.

"Co-branded credit cards have been steadily growing in popularity since they were first offered because of the extra benefits consumers can accumulate through their use," said Alan Ellison, M&T Bank credit card product manager. "While people may be familiar with large national, or out-of-town companies sponsoring the cards, this is the first time that two strong, local companies have joined to make this kind of product available."

The new card is also a better deal than other major co-branded cards that offer rebates for autos and airline tickets, said Dan Shanahan, a Tops vice president.

Many of those rebates are never cashed in by consumers, while Tops expects all of its customers will use their rebates for groceries, he said.

The Tops card program differs from other supermarket cards by offering a gold card, which M&T thinks will account for 50 percent of cards issued, he said. Also, the low-rate introductory period on the Tops card is longer than other supermarkets have offered.

The card also fits with Tops' emphasis on electronic payment technology; last August it announced it was building its own electronic payment transfer system to handle all processing of electronic bank card, credit card and check approval transactions in its stores.

"We've been accepting all forms of payment for quite a while and although we've never had a preference, we have just noticed that credit cards have become extremely popular -- it's been the highest growth of any form of payment," Shanahan said.

Tops plans a major marketing campaign to promote the card, including television, radio and print ads, billboards, direct mail and in-store displays.

The card will have no annual fee for the first year; after that the fee will be $20 a year.

The introductory fixed interest rate will be 8.9 percent for the first six months, then will become a variable rate pegged at the prime lending rate plus 8.9 percentage points.

In order to get rebates on the card, the user has to make at least $250 worth of purchases. The maximum annual rebate that can be earned is $500. Rebates will be awarded annually in the form of certificates that can be redeemed when shopping at Tops.

Card holders get a 25-day interest-free grace period, common carrier travel insurance, auto rental insurance, and lost luggage insurance.

The gold card offers purchase replacement insurance, extended warranties and travel assistance.

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