Co-branded credit cards: All you need to know about benefits, drawbacks, and more | Mint

Credit cards are a great way to earn rewards, exclusive deals and offers on your favorite brands as well as on every transaction you make through the card. These cards are a kind of a credit in which the lender does the transactions on your behalf and you are required to repay the bill every month.

Credit cards provide you with great offers on flight and hotel bookings and offer you cashbacks on your credit card. These cards are also designed for specific purposes like travel, fuel, cashback, rewards and many more.

Credit cards are offered to you by banks and NBFCs which also offer co-branded credit cards in many categories which are designed specifically to cater to your lifestyle.

What are co-branded credit cards?

A co-branded credit card is a specific type of credit card that is jointly developed by the credit card issuer in collaboration with another company, for instance, airlines, or hotel company or even a lifestyle brand.

These cards as an additional bonus provide privileges such as discounted rates on products, bonus points and priority access to special sales or promotional offers. Besides the regular card rewards, these offer specific brand rewards, which makes them a great deal if you are a regular customer of the brand in collaboration.

How to choose the best co-branded credit card?

Shortlist and compare cards: Compare different credit card offers and make a list of those that align with your needs. Evaluate these options on the basis of rewards programs and their frequency, cash back, co-branded privileges, fees on an annual basis, and other factors including free airport lounge access or insurance.

Choose the right brand: You must analyse your usage and based on that decide on which brand do you shop the most. In case of travel related expenses, you should decide on a specific travel agency or an airline which you book the most and based on that choose the specific co-branded credit card to save the most out of your transactions.

Reward points redemption: Understand the rewards program of the credit card you have shortlisted. Some rewards can be redeemed for direct transfer to your bank account, while others can only be redeemed against vouchers, hotel bookings, flight tickets or merchandise. Select a card that aligns with your usage and requirement.

Evaluate the annual fee: Most credit cards have a joining fee or an annual fee. Before deciding on a co-branded credit card, you must consider how much you are willing to spend and whether the card aligns to your lifestyle or not. Many lenders offer an annual fee waiver based on your spending and your overall account.

Should you choose a co-branded credit card?

Co-branded credit cards can be a great option when you use your credit card frequently on a particular brand for instance; Vistara, Makemytrip, Yatra and many more. You can save a lot of money and get bonus rewards by using a co-branded credit card.

If in case you do not wish to restrict yourself to a specific brand and want to keep your options open, then using a lifestyle, travel or rewards credit card can be a much better option as these offer you with a great cashback and reward benefits through which you can save on your overall expenses on the credit card.

In conclusion, you must first have a clear idea of your needs and whether or not you really need a credit card. Excessive usage of credit cards can make you form a habit of it and even lead you to debt trap. Hence, it is important to know all the pros and cons before deciding on getting a specific credit card. However, wise usage of credit cards can help you get the maximum benefits from your credit card while spending less from your pocket.

(Note: Using a credit card carries its own set of risks)