What Is a Co-Branded Credit Card?

Co-Branded Credit Cards Explained in Less Than 4 Minutes

A traveler uses her co-branded card at an airport lounge.
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Co-branded credit cards are credit cards backed by a credit card network, card issuer, and a consumer brand such as Delta, Target, or Marriott.

Understanding co-branded credit cards helps you decide whether this type of card benefits you and the costs you can expect.

Definition and Examples of Co-Branded Credit Cards

Co-branded credit cards are credit cards where a brand, an issuer, and a network partner to offer a credit card for consumers and businesses. Co-branded cards tend to be popular because they offer rewards you can redeem with the brand. 

For example, retail stores, airlines, and gas retailers often offer co-branded credit cards with banks and issuers like Chase, Barclays, and American Express.

With a co-branded credit card, the merchant or brand's logo appears on the credit card while the card issuer and network do the behind-the-scenes work of processing transactions and calculating rewards.  Merchants may offer co-branded credit cards to increase sales or attract new customers.

Affinity cards are often confused with co-branded credit cards. These are cards that are associated with a charity, association, or educational institution and typically offer no rewards for consumers.

Examples of co-branded credit cards include:

How Co-Branded Credit Cards Work

Co-branded credit cards often offer specific benefits and rewards available only to cardholders. Unlike private label store credit cards which can only be used in the specific store, co-branded credit cards can be used anywhere and earn rewards on all purchases, just like non-branded rewards cards. For example, the Amazon Rewards Visa Signature Card can be used at Amazon and other retailers, while the Amazon Store Card can only be used at Amazon-owned brands.

Some co-branded credit cards allow cardholders to earn points within the retailer's loyalty program and later redeem points for a discount on future purchases. Or, with airline and hotel credit cards, you can use miles and points for free flights, hotel stays, or an upgrade.

Co-branded travel cards often award cardholders with upgraded membership status in the brand’s loyalty program, which comes with additional perks. A good example of this is the World of Hyatt card from Chase. Cardholders get complimentary Discoverist status in the World of Hyatt program. The status upgrade includes complimentary late check-out and room upgrades when available, bottled water, and premium internet.

Co-branded credit cards may charge an annual fee. To get the full benefit of the card, the value of the rewards you earn would need to equal or exceed your annual fee.

Retailers partner with a bank to approve new cardholders and fund the purchases you make. Meanwhile, the retailer offers branding and marketing and facilitates credit card applications either in-store or online, or both. The retailer, in turn, receives a portion of the profits generated from the credit card.

Do I Need a Co-Branded Credit Card?

Consumers like co-branded credit cards because they offer additional rewards and benefits for customer loyalty.

Perks are plentiful among travel-based co-branded cards. Airline cards, for example, may waive baggage fees or offer priority boarding for cardholders. Hotel cards may offer complimentary stays or upgrades. Also, many co-branded travel cards offer collision damage waiver (CDW) insurance for rental cars and emergency trip assistance.

If you use a specific brand frequently and exclusively, a co-branded credit card can offer increased convenience and the ability to maximize rewards on your purchases.

However, the downside of some co-branded credit cards is that the rewards usage is limited to the retail brand. Depending on the program, you may be able to transfer loyalty points to other programs, but it's important to watch out for conversion rates and limitations. And if you want flexible ways to use your rewards, a co-branded credit card may not be the best option for you.

Credit cards co-branded with retail stores may have higher interest rates than regular credit cards, too, which means you should do your best to pay off your entire balance each month to avoid interest payments.

Key Takeaways

  • Co-branded credit cards are a type of credit card created by a partnership between a retail brand and a credit card issuer.
  • These cards offer additional higher reward incentives for brand purchases and allow cardholders to redeem rewards within the brand.
  • Some rewards can be transferred to other programs but there may be restrictions or losses with the conversion.