How Co-branded Credit Cards Compare With Regular Credit Cards

By Adhil Shetty | March 9, 2017

How Co-branded Credit Cards Compare With Regular Credit Cards

Credit Cards have found a spot in our everyday lives and they’ve become all the more important in the post-demonetisation era. They don’t just provide us with convenience and the option to make instant payments but also increase the purchasing power of the user through cashback, reward points, etc.

Credit Cards are generally one of the following two types: basic Credit Cards or co-branded Credit Cards. Basic Credit Cards are regular cards issued by banks in affiliation with VISA, MasterCard, and other financial institutions. Co-branded cards, on the other hand, are jointly offered by retail companies and banks, routed through Credit Card companies.

While regular Credit Cards offer uniform benefits on every transaction, co-branded Credit Cards offer additional benefits apart from regular benefits, at specific stores.

Additional Reading: How Late Credit Card Payments Affect You

Let’s look at some points of contention when it comes to differentiating between basic cards and co-branded cards.

  • Co-branded cards offer a wide range of discounts and upgrades on repeated use of the card for purchasing a specific brand. So if you are loyal to a particular brand, co-branded cards have a lot to offer. For example, if you shop at a particular store, co-branded cards give you an edge over other customers as you can earn reward point multipliers, enjoy exclusive sale reviews and even get the purchases delivered at home. Regular Credit Cards, on the other hand, provide uniform reward points on purchases and cashback on certain purchases such as fuel or movie tickets through tie-ups with merchants. If your purchases are not limited to a single merchant, co-branded cards do not have anything additional to offer.
  • Co-branded cards often come with reduced reward points, compared to regular cards, at merchant outlets they do not have tie-ups with. This reward point structure is built keeping the business partner’s interests in mind. Most merchants enter into such partnerships with banks to offer co-branded Credit Cards to promote their sales, thus discouraging cardholders from going to competitors. Regular Credit Cards do not have a differentiated structure.
  • You may need to pay an annual fee to hold a co-branded Credit Card. So make sure you weigh the cost against the benefits before you get yourself a co-branded Credit Card. Also, do consider that your shopping and lifestyle taste might change after a point in time and you may not want to stick to your usual brand in the long run.
  • Co-branded cards have gained popularity among frequent flyers as the airline Credit Cards come with exclusive offers. These cards can even win you free travel tickets if you enroll for the frequent flyers programme of an airline. Points get added up to your account every time you fly with that airline, which can be converted into air miles on redemption. So, if you love travelling or your job entails it, co-branded cards are worth the money.

Co-branded Credit Cards may seem attractive to brand-loyal customers. However, before you get one, you must weigh their benefits, carefully check for charges and minimum spending requirements.

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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of BankBazaar.com. Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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