Table Of Content
What Is A Co-Branded Credit Card?
A Co-branded credit card is when a card issuer, card network, or bank establishes a joint partnership with a specific brand. These cards bear the name or logo of both the issuer and the retailer, acting as loyalty cards for users.
As purchases are made at the retailer’s point of business via the co-branded card, the user gains points, miles, or cash back. This allows users to build rewards while shopping with the brands they love.
Unlike store cards that can be used at the retailer alone, co-branded cards can be used anywhere that major credit cards are accepted. This means that a co-branded card can be used as a regular credit card, though rewards may not apply outside of the retailer on the card.
The three major differences between traditional credit cards and co-branded credit cards are as follows:
- Co-branded cards offer retailer-specific perks and benefits; much like store cards.
- Co-branded cards reward you for brand loyalty, whereas traditional credit cards encourage a wider range of spending.
- The prerequisites for a co-branded card are stricter than when applying for a traditional credit card.
How Do Co-Branded Cards Work?
Co-branded credit cards are the result of a partnership between a retailer and a card issuer, meaning that a user can make purchases at their favorite stores with the incentive of merchant-specific benefits:
- American Airlines cards offer rewards and benefits for AA flyers and hotel cards offer free nights and upgrades at a variety of hotels.
- The Hilton Honors Card from American Express points can be redeemed at any of the 6,800 Hilton hotels.
- In the case of Hyatt, for example, you can use your Hyatt points to pay for airline tickets if you have them but can't find a hotel bargain that fits your needs.
Co-Branded cardholders will receive exclusive offers and rewards for shopping at their chosen retailer. These rewards can be anything from discounts or points for future purchases to miles and travel benefits. You can also redeem points on partner flights.
When a purchase is made, the retailer earns a portion of the transactional fee charged by the card issuer. This, in turn, gives the retailer incentive to partner with an issuer, and the issuer grows in revenue. The rewards earned and how you can use them depending on the chosen card.
Here are some examples of popular co-branded credit cards:
Marriott Bonvoy Boundless® Credit Card
1x – 6X 6X points per $1 spent at over 7,000 hotels participating in Marriott Bonvoy® with the Marriott Bonvoy Boundless® Card, 3X on the first $6,000 spent in combined purchases each year on grocery stores, gas stations, and dining and 2X Bonvoy points for every $1 spent on all other purchases
5 Free Nights 5 Free Nights (each night valued up to 50,000 points) after qualifying purchases
The World of Hyatt Credit Card
1X – 4X 4 bonus points per $1 spent for Hyatt stays and experiences including restaurants and spas, 2x for flights purchased directly from the airline, local transit, commuting, restaurants, fitness club, gym memberships and 1 bonus point per $1 spent on all other purchases
30,000 points 30,000 points after you spend $3,000 on purchases within the first 3 months of account opening
American Airlines AAdvantage MileUp℠ Card
1X – 2X 2 AAdvantage miles per dollar on grocery stores and eligible American Airlines purchases, and 1 mile per dollar on other purchases
10,000 miles 10,000 miles and $50 statement credit if you spend $500 in first 3 months
Delta SkyMiles® Reserve American Express Card
1X – 3X 3X miles per dollar on eligible Delta flights and Delta Vacations® with 1X miles on all other purchases
60,000 miles 60,000 bonus miles after you spend $5,000 in purchases on your new Card in your first 6 months
Hilton Honors Card from American Express
3X – 7X 7X Hilton Honors Bonus Points for each dollar of eligible purchases charged directly with hotels and resorts within the Hilton portfolio, 5x points at U.S. restaurants (including takeout and delivery) U.S.supermarkets, U.S. gas stations and 3x points for each dollar on other eligible purchases
100,000 points 100,000 Hilton Honors Bonus Points after you spend $2,000 in purchases on the Card in the first 6 months of Card Membership
Benefits And Drawbacks Of Co-Branded Cards
Just like with any major credit card, co-branded cards have both positives and negatives.
All credit cards have the potential to be great credit-building tools, but there is always a risk when it comes to credit. Making payments on time and in full is key to avoiding accruing interest.
If you find yourself to be brand loyal, or habitually making purchases with the same companies, a co-branded card may be just what you need. In fact, it could be beneficial. If you are going to be making a purchase, you might as well be earning rewards. Below you will find the pros and cons list already put together to make your decision easier.
Excludive Rewards And Perks
Restrictions When Redeeming Rewards
Benefits Towards Your Preferred Way Of Life
Subject To Changes By Retailers
For example, say you travel a lot for business and Mariott is your preferred hotel. The benefits of the Mariott Bonvoy Brilliant American Express card would make sense for you, but you need to make sure your earn outweigh the annual costs. A co-branded card should enhance your lifestyle and shopping experience.
United is one of the founding Star Alliance members, which is a network of 26 airlines. So, you can use United miles to book a flight not only with United but Hawaiian Airlines, Air Canada and Lufthansa, and many more.
You may find that the limitations or restrictions of reward usage deemed by your retailer are not worth it. Though not always as generous, traditional credit cards are far more flexible in what qualifies as a rewardable purchase.
If your priority in shopping or travel is to find the best deal, or you shop at several stores to get what you need- a co-branded card may not be in your best interest.
How to Choose a Co-Branded Credit Card?
There are many factors to take into consideration when choosing a credit card, co-branded or traditional. As stated above, a co-branded card should elevate your lifestyle.
1. Are You Brand Loyal?
If you travel a lot, choosing a credit card that has partnered with an airline or hotel may be in your best interest. Over time the rewards you earn may cover the cost of a flight or hotel stay.
However, being a loyal customer doesn't mean it's the right card for you. If you regularly spend on everyday purchases, you may want to look for a general cashback or travel rewards card.
Analyze your spending habits to understand which type of card is best for you. Then, drill down to the different options in the category.
2. Check Annual Fee or Club Membership Requirements
Many retailers require membership at their store before approving you for their co-branded credit card.
Some co-branded cards require high annual fees such as the United Club℠ Infinite Card ($525). Sometimes, in spite of the high fee, they are worth it. However, make sure you can maximize your rewards and cover the annual fee when choosing a card.
When shopping at a store such as Costco, membership is required when applying for a co-branded credit card. If you're a loyal Costco member, the Costco Anywhere Visa Card by Citi may be a great option for you.
For example, here are some store card require membership fee:
5% 5% off at Target and target.com, 2% on dining and gas purchases and 1% everywhere else outside of Target
1-4% 4% cash back on on eligible gas and EV charging purchases for the first $7,000 per year and then 1% thereafter, 3% cash back on restaurants and most travel purchases, 2% cash back at Costco and Costco.com, 1% cash back on all other purchases
$0 ($60 Costco membership fee required) $60 Costco membership fee required
1-5% 5% at Amazon.com, Amazon Fresh , Whole Foods Market and on Chase Travel purchases, 2% cash back on gas stations, restaurants and on local transit and commuting, 1% cash back on all other purchases
$0 ($139 Amazon Prime subscription required) $139 Amazon Prime subscription required
1-5% 5% cash back at Walmart.com (including pickup and delivery), 2% cash back in Walmart stores and gas stations, at restaurants and on travel plus 1% cash back everywhere else Mastercard is accepted
5% 5% cash back for the first 12 months when you use your card with Walmart Pay for in-store purchases, upon approval
3. What Is Your Credit Score?
Many co-branded credit cards require good to excellent credit, meaning that if you are working to build or rebuild credit, a co-branded card may not be an option for you.
However, many co-branded cards have tiers, or levels, of card type. You may get approved for a lower-tiered card with your retailer of choice, understanding that over time, as you remain in good standing, you will be able to work your way up to a better card.
4. How Much Credit Limit?
This point coincides with your credit score. A credit limit is how much credit you are allowed to spend using your credit card. This can complicate your decision to get a co-branded card, or it could be a motivation.
Many sources encourage credit card holders to use no more than 30% of their approved credit line. Consider how much you spend at your retailer of choice per month compared to your card’s credit line.
If you are making frequent purchases at the same retailer that are lower than your credit line and can be paid off on time each month, you may consider a co-branded card with that retailer.
How To Get a Co-Branded Credit Card
To get a co-branded credit card you will follow the steps of applying for a traditional credit card.
- Check for pre-approval: Some card issuers will allow you to check for pre-approval, which will not impact your credit score, to avoid the hard credit check that comes with applying. You can check the credit score required for your preferred card online if you have any concerns.
- Join a membership (optionally): the major difference is that you may need to join a membership with your preferred retailer first, to be approved for the credit card. For example, the Amazon Prime Rewards Visa Signature Card requires an Amazon Prime membership.
- Apply: You will apply online at the card issuer’s website, or possibly have the chance to apply in-store with the retailer.
- Activate: Once you have filled out your application and been approved, you will receive your co-branded card in the mail. You can call or activate your card online, and create an account by website or app.
If you are worried about what card is right for you, talking to a financial professional is always a great option when looking to get a credit card. You can also discuss co-branded benefits and a step-by-step process with your desired card’s issuer to answer additional questions about the process.
How to Maximize Benefits of Co-Branded Credit Cards
Maximizing your card can save you money and increase the rewards you can earn. Here are the main things to do in order to maximize your c-branded card:
Every co-branded credit card has perks and benefits, depending on the retailer. In addition, cards that have tiers may offer even better rewards as you upgrade to a higher-level card.
While co-branded cards allow users to build points and offer special discounts at the retailer’s business, many cards also offer freebies and insider rewards. For example, retailers may provide early access to new products or sneak peeks at new products.
Airline cards may offer a free checked bag or discounted rates at specific hotels. These are additional incentives to owning co-branded credit cards; unless you’ve done the research, you may be missing out on those extra perks.
It’s necessary to understand that retailers can change reward redemption whenever they want. This could devalue your purchases and impact your accumulated rewards by restricting how or when you can use your rewards. Therefore, staying in the know of how your co-branded card works are key to reward optimization.
Remember, your card should enhance your lifestyle. However, if the changes made by the retailer or the card issuer mean that the benefits no longer outweigh the annual fee, it may be time to reevaluate.
Many co-branded cards are tiered, offering upgraded versions of their cards. These upgrades may offer faster rewards accumulation and even the chance to earn rewards on purchases outside the retailer’s business.
This, in turn, allows for double the points when purchases are made at the retailer’s business. So as you find yourself maxing out on the rewards of your current card, it may be time to look into an upgraded version of your current card.
Cards like the Uber Pro Card have partnered with other retailers, such as restaurants, gas stations, and even travel companies, to allow users the highest optimization of rewards through purchases beyond their business.
Though the Uber card is a debit card with responsible usage, cardholders can opt for a credit version that allows for cash back on purchases.
Knowing what other retailers your card is partnered with, if any, is pertinent for maximizing your exclusive benefits. If you spend 2 hours on the road daily, finding a card that combines gas rewards can be a good idea.
Which Co-Branded Card is Best?
Choosing the best co-branded credit card isn’t a matter of which retailer or card issuer is the best, but rather which card will benefit you and your lifestyle.
From travel to shopping, your card should serve you. Examples of card types and their benefits are listed below:
- Alaska Airlines Visa Signature credit card – The Alaska Airlines Visa card allows for one free checked bag for up to six people on a flight reservation. Card users also earn 2x back on eligible Alaska Air purchases, and 1x back on all other purchases. If you travel often, whether for business or pleasure, a travel card may be the best card for you.
- Capital One Walmart Rewards card – Walmart is known to be a store of many types. Ranging from neighborhood markets to superstores, products like groceries, gifts, and even school supplies can be purchased at various Walmart stores. The Capital One Walmart Rewards card offers high cashback on all walmart.com purchases. Grocery and superstore cards are great if you find yourself shopping for a wide variety of products for yourself or your family.
- Amazon Prime Rewards Visa Card – With the Amazon Prime Rewards Visa Card, cardholders can earn rewards on every purchase. These rewards can be redeemed on amazon.com, and more. An amazon or card optimizes home delivery and online purchases for the avid online shopper. If you are someone who doesn’t have time to shop in-store, or you tend to wait until the last minute to place online orders, the amazon or prime card can have products delivered to your door in a matter of days, or sooner, while earning rewards.
Rather than trying to figure out which co-branded card is the best, figure out which co-branded card is right for you.
Card issuers and retailers of co-branded credit cards make money through customer saturation and transaction fees. Card issuers charge transaction fees that retailers receive a portion of every time a purchase is made at their place of business.
The more brand-loyal customers that are approved for co-branded credit cards, the more money retailers and card issuers make with every purchase.
Chase offers exclusive benefits for travel with their partners at Southwest with the Southwest Rapids Rewards Plus Credit Card with additional earnings through everyday purchases.
Chase also offers unique rewards through purchases at DisneyPlus.com, Hulu.com, and ESPNPlus.com with the Disney Premier Visa Card that can be redeemed at most Disney locations in the US.
American Express offers tiered versions of both their Hilton and Delta co-branded cards.
Through the Hilton Honors American Express Card users can earn rewards towards Hilton hotels and resorts, while users of the Delta SkyMiles Blue Card, and various Delta cards, can redeem rewards towards Delta flights and travel
Citi offers a CitiBusiness AAdvantage Platinum Select Mastercard that offers rewards and benefits with American Airlines.
The AAdvantage cards by Citi are partnered with American Airlines and offer exclusive rewards and benefits depending on which version of these cards you choose.
Capital One offers exciting rewards through co-branded cards such as the CLUB Business Mastercard that can be used at Bass Pro Shops and Cabella’s for all of your outdoor needs, and the William’s Sanoma Key Rewards Visa to be used across seven William’s Sanoma Inc brands for all of your indoor needs.
Discover offers top-tier benefits to card users while allowing them to support the sports teams they love through the NHL credit cards.
There are no annual fees and you can apply for a card with almost every sports team