Co-Branded Credit Cards: How They Work And Who Should Consider Them

Credit cards are now more than just an instrument of payment. Nowadays, they come with a range of features and rewards, often through partnership with top brands to suit different lifestyles, and reward cardholders with exclusive benefits.

However, co-branded are still credit cards and often come with extra charges because of the enhanced partnership benefits. So, here are a few things you should consider before getting one for yourself.

What Are Co- Branded Credit Cards

Co-branded credit card are issued through partnerships between banks and well-known companies, shops and service providers. These cards have both the bank's and the brand's logos.

Banks such as HDFC Bank, ICICI Bank, and SBI Card often partner with brands such as Amazon, IRCTC, and airlines, such as Air India and so on to provide co-branded cards.

So, it's essential to determine whether the rewards actually complement your shopping habits and lifestyle.

Benefits Of Co-Branded Credit Cards

1. Faster Reward Earning: If you have a co-branded credit card, you can earn points or cashback quickly, particularly when you shop from the partner brand.

2. Special Discounts and Offers: These cards often provide their users first access on special offers, discounts and promotions that are only available to co-branded cardholders.

3. Brand-Specific Rewards: Using these cards to make purchases enhances brand loyalty and brands typically reward buyers or cardholders with additional benefits sidh as cashback or additional reward points for shopping from the partner brand.

4. Exclusive Invitations: Some co-branded credit cards provide cardmembers with VIP privileges that consumers wouldn't have access to. These could be in the form of exclusive invitations to activities like product launches, pre-movie screening or brand-sponsored events.

Drawbacks Of Co- Branded Credit Cards

1. Annual Fees: Co-branded credit cards usually have annual fees which may not be justified unless you frequently shop or travel with the partner brand.

2. Restricted Rewards: As these cards are associated with the partner brand, they usually have a limited range for general purchases across multiple brands.

3. Higher Interest Rates: Compared to standard credit cards, co-branded cards may come with steeper interest rates, and other charges.

4. Impulse Spending Risk: Sometimes, cardholders may be tempted to spend more than they had originally planned for in order to earn bonus points or access exclusive offers.

Who Should Consider Co-Branded Credit Cards

Co-branded credit cards are suitable for those who frequently buy or use a specific brand’s products or services. If you are a frequent consumer of the partner brand, the incentives and perks might be beneficial to you. It's crucial to confirm that your purchases align with the rewards structure, since these cards may not offer the same flexibility as traditional credit cards. To make the most of the card, consider if the partner brand's product suits your lifestyle preference.