Co-Branded Credit Cards: All You Need to Know

It seems as though a bonus card incentive is always awaiting you at the checking counter of any store you visit, regardless of where you choose to do your shopping. 

If you apply today, you could receive a number of pluses, including discounts, bonus points, and other special offers that are exclusively attainable to cardholders of the brand’s co-branded credit card. These pluses are promoted in the advertisement.

Co-branded credit cards were once only attainable to customers of hotels and airlines, but now an increasing number of other types of organizations are offering them. 

Over the years, well-known companies such as Apple, Expedia, PlayStation, and Uber have each launched their own credit card, and all of these companies want you to carry their cards and use them. But can credit cards of this type make sense for the way you spend funds?

Co-branded credit cards normally make the most logic for consumers who are already committed to a certain brand. Despite the fact that these cards come with a variety of advantages, brand devotees profit the most from utilizing them. 

Before you submit an application, you should make sure you have a solid understanding of how co-branded cards function and whether or not you would be a good candidate for one of them.

What is a Co-Branded Credit Card?

Co-branded credit cards are the result of a relationship between a card operator (such as Visa, Mastercard, or American Express), a card provider (such as a bank or other monetary institution), and a retailer or other type of brand. 

They are normally utilized as loyalty cards for customers who commonly shop at particular establishments or travel with specific firms. Nevertheless, they can also be affiliated with charitable organizations and other organizations.

Cards that are co-branded with another brand will normally bear both that brand’s emblem and name. Cardholders who use these cards are eligible for a variety of pluses, including those that are limited to the brand, as well as those that are network- or issuer-specific. 

One example of the latter is the Visa Signature program, which extends protections for travel and procurements beyond those provided by the issuer and the store. 

Cardholders are able to use the vast majority of co-branded cards anywhere they choose because these cards are acknowledged not just at the particular shop that is offering the card but also by any vendor that is willing to accept cards on the network.

How Do Co-Branded Credit Cards Work?

Co-branded credit cards function in the same manner as traditional credit cards, meaning that cardholders are able to use these cards everywhere that the card’s network is accepted. 

In contrast to store cards, which can only be utilized to make purchases at that particular store and the stores that the store collaborates with, co-branded cards can be utilized in a far wider range of establishments.

Cardholders with co-branded cards generally receive special benefits and offer that are exclusive to the respective merchant or airline. You will be able to take advantage of lower rates and other travel privileges provided that you keep your account in good standing. 

One of the benefits may be the opportunity to advance to a greater membership tier, which is particularly useful for hotels and airlines that operate on a tiered membership structure.

Each account associated with a co-branded credit card is managed and reported to a credit agency by a financial institution or card issuer that is directly responsible for the card. 

It is likely that you will be required to check in to your internet portal on the website of the card issuer. Once you are logged in, you will be able to examine your procurement history, make payments, and control other parts of your account.

The approval of new cardholders and the production of special goods and services are both handled through a partnership between the store and a financial institution or card issuer.

In return, the shop receives a percentage of the handling fee that is levied by the network as well as the issuer. Applying for a co-branded credit card can typically be done either in-person at a retail or utility location or online.

The approval of new cardholders and the funding of the purchases made by customers are handled by retailers in conjunction with banks. 

On the other hand, the retailer provides branding and marketing services and assists customers in applying for credit cards either in-store, online, or both. The retailer, on the other hand, is entitled to a cut of the earnings that are made through the use of the credit card.

How to Get Co-Branded Credit Cards

The application process for standard credit cards and the application process for co-branded credit cards are often very similar to one another. You can apply for a credit card in a number of different ways, including online via the issuer’s website, in a store, or even on a plane.

Due to the fact that issuers handle co-branded credit cards, a rigorous credit check will be performed upon application. Before applying for a credit card, it is wise to find out what credit rating is required.

Find out if the card issuer has any online pre-approval forms. Your credit rating won’t take a hit from a pre-approval application, and you’ll find out if you have a good chance of getting approved for a credit card.

Co-Branded Credit Cards: Pros and Cons

The promise of recurring pluses that may be redeemed for things like cash back, free flights, or upgraded vacations is the primary factor that draws consumers to co-branded credit cards. Is it wise, though, to start flashing around cards with the emblems of your preferred brands, no matter how slight? 

Before submitting an application, make sure you have a firm grasp on the circumstances under which doing so makes the most sense, as well as the circumstances under which you ought to exercise caution.

Pros

• Rewards for the normal spending of one’s income. You can rack up points or miles with airlines or hotels even if you never set foot in an airport or hotel lobby or make a single purchase through their websites.

• Freebies and discounts at some of your favorite brands. You are going to spend funds at the brands you like to shop at anyhow, so why not maximize the incentives you receive? 
  
  When you make procurements at your preferred retailers utilizing a credit card that shares the store’s name with the card, you may be eligible to receive extra points, miles, or even cash back on your procurements.

• Enhanced value for completed tasks and missions. The annual membership price is normally easily outweighed by the pluses obtained through the accumulation of points and miles over time, which can result in substantially reduced airline tickets or complimentary hotel rooms. 
  
  And that doesn’t even take into account the pluses and credits that come with the travel-focused credit cards offered by many different issuers.

Cons

• There is only room for one brand of points. Your ability to use the points you earn with the majority of co-branded credit cards is restricted to use exclusively with the firm that shares the card’s name. 
  
  A good illustration is the Costco Anywhere Visa, which offers cash back but requires redemption at a Costco location. Even with airline credit cards, your options are limited by the regulations of the airline’s program.

• You shouldn’t anticipate utilizing your points right away. Even while co-branded credit cards normally come with sizable sign-up bonuses, it’s possible that you won’t really be able to use the card for several months or even longer. 
  
  Because the typical minimum required to redeem incentives differs from program to program, it is possible that it will take considerable time (and additional spending) before sufficient points are accumulated to redeem them.

• It can be challenging to find attainable award alternatives. Finding airline and hotel award alternatives might be difficult for people without prior expertise. If you are not confident in your ability to decipher award charts, getting a co-branded credit card might not be the greatest choice for you if you are looking to rack up significant returns.

Are Co-Branded Credit Cards Worth It?

Co-branded credit cards are popular among consumers because they provide additional incentives for brand loyalty.

Co-branded cards that focus on the travel industry normally have numerous pluses. Some airline credit cards, for instance, let cardholders check their bags for free or provide them with early boarding. 

You can get free nights or upgrades when you use a hotel loyalty card. Many co-branded credit cards also include rental car collision damage waivers and roadside assistance plans. A co-branded credit card can be useful if you buy a lot of one particular brand and want to get the most out of the pluses you earn.

On the other hand, some retail-branded co-branded credit cards restrict cardholders from utilizing their points only at that store. Nevertheless, be wary of conversion rates and other restrictions when transferring points from one program to another. 

If you want a credit card that gives you a variety of options for how you may put your points to use, you might not find that a co-branded credit card is an ideal choice for you.

Credit cards that are a partnership between a retailer and a credit card company may carry interest rates that are greater than those of standard credit cards; therefore, it is important to pay off your monthly debt in full to avoid incurring interest charges.

Alternatives to Co-Branded Credit Cards

You don’t have to carry a credit card with a co-branded logo (or several of them) if you don’t feel comfortable doing so. There are other solutions that might be more useful to you. Many travel credit cards, for instance, come with flexible point systems that can be moved to other partners’ loyalty programs, such as those offered by airlines and hotels. 

When you transfer your points to high-value airline or lodging partners, you may frequently receive extra value out of them this way as well. Relying on the credit card bonus program, point transfers can be worth as much as 4 cents per point or even more.

There is also no problem with making use of credit cards that offer cash back in order to accumulate flexible points that may be put toward anything the cardholder desires. 

Just use the card for procurements in the same manner as you normally would, and when it comes time to pay off your balance, you can deduct the sum of cashback that you’ve accumulated. Despite this, there are frequently other methods attainable to you for redeeming your points, such as making procurements from merchant partners.

Final Thoughts

The use of co-branded credit cards is a convenient way to gain pluses, such as discounts on travel and shopping, as well as other pluses, such as free coffee and video games. Nevertheless, the value of the points, miles, or cash back that you earn depends entirely on how effectively you are able to spend them. 

Prior to applying for a credit card, you should make sure that you have a strategy for how you will use the pluses and subsequently earn enough pluses to cover any annual fees that may be linked with the card. In addition, make it a habit to spend funds in a prudent manner in order to raise your credit rating and maintain low balances.