As the holiday season approaches, many brick-and-mortar stores and online retailers have started to offer various discounts and deals on purchases made using co-branded credit cards. If you are thinking about buying an expensive item that will be significantly cheaper for a co-branded credit card, it’s natural to feel tempted to apply for that credit card. However, before you make a choice, it is essential to understand the co-branded credit card’s specifics, advantages, disadvantages, and drawbacks.
What are co-branded credit cards?
A company such as an airline, hotel, or retail outlet, will collaborate with a bank to offer credit cards with their name or loyalty program on them. The bank will then provide those credit cards to people, with the added benefit of earning rewards each time they use them.
Co-branded cards were initially developed as loyalty programs by significant airlines. There are countless companies today that offer benefits in exchange for applying for the right credit card. Many companies offer their co-branded credit cards and offer a variety of advantages and rewards for using them.
How does a Co-branded Credit Card work?
Co-branded credit cards work similarly to other credit cards, cardholders can use them anywhere that accepts credit cards. Co-branded cards can be used much more widely than store cards, which are only valid for purchases at the particular store and its partners.
Every co-branded card is directly managed by a bank or issuer, which also informs a credit bureau of your activity.
You’ll probably need to sign in to your online account on the card issuer’s website to access your purchase history, make payments, and manage other account-related functions.
The co-branded credit card of a specific brand may benefit you in many ways if you are a regular consumer of that brand. The main advantages of co-branded credit cards over standard credit cards are as follows:
Loyalty Benefits
The main benefit of using a co-branded credit card is the benefits it provides for loyalty. It is a special way for businesses and credit card companies to praise devoted customers. Every purchase you make using the co-branded credit card earns you loyalty points. These reward points can be redeemed for discounts on subsequent purchases, or you can save up points to get larger discounts. For example, it is a good idea to choose an Air Miles Credit Card from that airline if you are a frequent traveler and prefer that airline. By using it to make your flight reservations, you can acquire Miles that can be exchanged for a discount on your subsequent flight.
Customized Cards
Credit cards with co-branding are customizable as you can select the card that best suits your needs and way of life. You can also set regular and international spending limits, activate or deactivate international usage, etc. to customize the card you need.
Cost-effective Cards
The majority of co-branded credit cards have low or average joining fees, making them accessible to all those who want them. Therefore, if you frequently buy from a particular brand, you don’t have to worry about the fees and should choose a co-branded credit card. Even the best co-branded cards like the Amazon Pay ICICI Credit Card and the Flipkart Axis Bank Credit Card have no annual fees.
Conclusion
Co-branded credit cards provide a simple way to earn rewards for shopping, traveling, or even getting free coffee and video games. However, the value of the points miles or cashback you earn depends on how well you can use them. Make sure you have a strategy before applying for a credit card so that you can use the rewards and eventually accumulate enough rewards to pay off an annual fee.
Read More: What are the Risks of Using a Credit Card?
