Credit Card: Are co-branded credit cards a good choice? Its benefits and how to choose

Credit cards are increasingly being seen as a viable option to overcome temporary liquidity issues and fulfil one’s financial needs. In recent years co-branded credit cards have been introduced, bringing some changes to the way this payment tool is used. These tools combine the concept of a rewards card with that of credit cards. Here is everything you need to know about co-branded credit cards, and how they can be useful.

What are co-branded credit cards?

Co-branded credit cards are a payment option that a retailer or brand offers in partnership with a credit card issuer. These cards bear the logos of both companies and can offer big discounts to users.

How do co-branded credit cards work?

Co-branded credit cards have a special arrangement with particular service providers, retailers and merchants. When a person uses a co-branded credit card on an associated brand, they get special benefits like more discounts, reward points or other such perks. Many of these are open-loop credit cards, meaning they can be used in multiple places and not just a particular outlet or branch.

Advantages of co-branded credit cards:

More reward points: Co-branded credit cards give more reward points and cashback to customers than regular cards.

Fee waivers: Many of these tools come with surcharge and transaction fee waivers.

Can be customized to client’s lifestyle: Since these cards are associated with a specific brand, customers can get offers that are customized to their lifestyle and product needs. This means if there is a co-branded credit card in partnership with a clothing brand, cardholders can avail a lot of discounts that are catered to their fashion choices.

Which co-branded credit card to choose

Consumers need to take a look at their spending habits to understand if a co-branded credit card is the best option for them. The next step is to look for a card that is best suited to their expenditure patterns and demands. Prospective clients must check the benefits, cashback, hidden charges and transaction fees by different card issuers and choose which is best for them.

One thing to keep in mind is that spending too via credit cards can lead to a higher credit utilisation ratio. This will reduce a person’s eligibility for future loans or cards and increase the possibility of them being unable to keep pace with the repayments. It is necessary to follow certain basic tips while managing credit card payments to ensure that one’s credit card remains high.