Co-Branded Credit Cards: How They Work and Their Benefits
Co-branded credit cards are created through a partnership between a credit card issuer and a specific merchant. These cards feature the merchant's logo and provide benefits to customers who are loyal to that brand. By using a co-branded card, you can earn rewards and discounts from the brands you love.
Once you understand how co-branded cards work, they can be a useful and cost-effective option. However, it's important to note that the rewards offered by these cards are tailored to the services provided by the affiliated merchant.
The Benefits of Co-Branded Credit Cards
Co-branded credit cards offer a range of advantages to customers who are loyal to specific brands. Here are some of the benefits that come with using a co-branded credit card:
- Worldwide Acceptance: Co-branded credit cards are international cards and are accepted worldwide. They can be used at any merchant outlet across the globe while the bill is generated in INR. This is due to their tie-up with Visa or Mastercard.
- Rewards Customer Loyalty: Co-branded cards are a unique way for both the card issuer and the affiliate merchant to reward their loyal customers. By offering rewards, they can deepen the frequency of engagement, creating a win-win situation for all.
- Freebies for Customers: Co-branded credit cards offer free merchandise to customers for spends exceeding specific amounts or redemption options, along with a frequent flyer program or a frequent buyer program.
- Customized to Lifestyle Requirements: Customers can avail of co-branded credit cards customized to their spend category and lifestyle requirements, as these cards are attached to a particular brand.
- Fee Waivers: Most co-branded credit cards do not have transaction fees and also offer surcharge waivers for customers.
It's important to note that customers receive the highest rewards from purchases made directly with the affiliated merchant. To fully benefit from co-branded credit cards, it's best to opt for a card from a brand that you know you will make regular transactions with, such as the IndianOil Citi Credit Card that offers fuel benefits.
While it may be tempting to get credit cards affiliated with all your favorite stores, using each sporadically and then stockpiling the rewards earned for future benefits is not beneficial. It's recommended to have at most two different co-branded credit cards. This enables you to maximize the benefits you receive from each without overburdening yourself.