What is a Co-Branded Credit Card? A Guide to Loyalty-Based Rewards Cards 

Half the credit cards in my wallet are co-branded. They include cards for a hotel chain, a gas station, and a brokerage. While my regular credit cards are perfectly fine for most uses, these co-branders provide extra perks that make them worth the real estate they occupy in my pocket (and the annual fees).

A co-branded credit card is the result of a partnership between a card issuer and a brand — like an airline, hotel, or retailer — that offers exclusive rewards and perks tied to that brand.

Owning these cards may seem like a no-brainer, but there are subtle factors at play for you to consider. Read on for all the details.

Companies create co-branded credit cards to reward brand loyalty by offering special perks, discounts, and reward points. They operate like traditional credit cards but feature plenty of brand-specific goodies.

Brands Partnering with Banks

A co-branded credit card is the love child of a financial institution and a company, such as a retail giant, a travel company, or even a brokerage. The bank takes care of the standard card stuff, such as approvals, interest rates, and fraud protection.

Brands dole out cards with exclusive perks that cause folks to sign up based on its name and reputation.

What you end up with is a credit card that helps both co-issuers: the bank makes money from interest and fees, and the brand builds loyalty with enticing rewards. This partnership lets businesses offer cards that reward repeat customers, travelers, or service consumers, all while giving you plenty of reasons to keep coming back. 

The rewards differ by industry, but the goal is always the same — to keep you buying the brand’s offerings.

Typical Rewards and Benefits

The main draw of co-branded credit cards is the stack of rewards they shower on you. Most of these cards bestow bonus points or cash back for shopping with the partner brand, giving you a tidy little rebate on purchases you were going to make anyway. 

But the gravy train doesn’t stop there — many of them throw in perks like free hotel stays, priority boarding on airlines, or exclusive discounts to keep you coming back for more.

Some co-branded cards offer cardholders early access to sales, exclusive financing opportunities, deals, and even VIP status at events. Frequent travelers can snag free checked bags, hotel room upgrades, or car rental discounts. 

Retail-branded cards, on the other hand, may offer you a direct discount on purchases and extra rewards that pile up fast. Either way, use these cards to your best advantage when you’re loyal to the brand — otherwise, all those expensive perks may not do you much good.

Co-branded cards aren’t all equal — industries put their name on them to attract loyal buyers. If you are a shop-’til-you-drop consumer, road warrior, or avid traveler – there is a co-branded card suited to your habits.

Retail Co-Branded Credit Cards

Retailers love handing out co-branded credit cards, and these cards can be a real bargain if you spend a pile of money on the brand. They usually offer super rewards or outright discounts on purchases, so you’ll rack up savings every time you swipe. 

Some even offer promotional financing terms, letting you make big-ticket purchases with deferred interest. But always make sure to read the fine print because deferred interest can come back to bite if you don’t pay off the balance on time.

The perks don’t stop there. Retail-branded cards may offer you advance access to sales, exclusive member-only promotions, and the occasional free item. There is a catch, however — these cards tend to have high interest rates, which means you should always pay the full balance each month. 

Moreover, the rewards you earn are essentially worthless elsewhere. If you aren’t shopping with the brand regularly, you may be better served with a standard cash back or rewards card that’s more flexible.

Airline and Hotel Co-Branded Cards

Transportation-oriented cards attract travelers who fly a lot and those who stay in a preferred hotel chain. You earn travel miles or hotel points with every dollar you spend, and the best ones are full of extra perks. I’ve earned several free nights at my favorite hotel chain thanks to the points I accumulated.

These cards can make travel a lot cushier If you remain loyal to the airline or hotel chain. However, you might be better off with a generic travel rewards card if you don’t favor a particular hotel or airline.

Airline cards offer cardholders benefits like priority boarding, free checked bags, and access to airport lounges, where travelers can stretch their legs and sip on something more interesting than airplane coffee. 

Hotel cards roll out the welcome mat with free night stays, late checkouts, and room upgrades — it’s enough to make you feel like a VIP. 

Co-branded credit cards can be an excellent tool if they fit in with your current spending patterns, but they aren’t all rainbow-colored unicorns. You should weigh the positives against the negatives before hitching your wagon to one.

Pros

• Accelerated Rewards: If you’re loyal to a specific brand, you’ll earn points or cash back faster than with a regular credit card. Airlines, hotels, and retailers love to offer additional rewards when you spend money with them, so it’s easier to rack up travel miles, store discounts, or free nights and flights.
  
• Exclusive Perks: Co-branded cards are brimming with brand-specific perks, like free checked bags, priority boarding, late hotel checkout, or large discounts at your favorite store. These perks can pile up quickly If you’re spending money with that brand.
• Signup Bonuses: Many co-branded cards get off to a good start with large welcome bonuses. Meet the minimum spending threshold, and you could be looking at a bonanza of bonus miles, points, or statement credit. For the better cards, these bonuses may earn you a free flight or a high-end hotel stay right off the bat.

Before you rush in, check out the downsides because these cards aren’t all windfall.

Cons

• Limited Reward Flexibility: Unlike general rewards cards that let you redeem points wherever you please, co-branded cards tie you down to a single brand. If you aren’t planning on being loyal, those points might not do you much good.
  
• Higher Interest Rates: These cards aren’t very generous when it comes to APRs. If you typically carry a balance, you may find yourself paying more in interest than you’re earning in rewards, and that’s not a formula for success.

• Annual Fees: Some co-branded cards charge a lot of money for the privilege of owning them. If you’re not using the perks enough to offset that cost, you’re better off with a no-fee rewards card that won’t take a chunk out of your wallet.

Put on your thinking cap before picking the right co-branded card. The best one for you comes down to where you spend your money and whether the perks are worth any fees or restrictions. If you’re not careful, you might end up with a shiny new piece of plastic that doesn’t earn its keep.

Assess Your Brand Loyalty

Before signing up for a co-branded card, take a hard look at where you spend most of your money. A co-branded card can help you rack up rewards quickly if you always book flights with the same airline or fill up your gas tank at a particular station. 

A general rewards card might give you more bang for your buck if you like to spread your spending around.

You also should consider how often you’ll use the perks you collect. Free checked bags and priority boarding can be amazing if you’re traveling with the same airline enough to take advantage of them.

The same is true for retail discounts — if you’re only shopping there once or twice a year, those rewards may not add up fast enough to make the card worthwhile.

Compare Reward Structures

Get out your reading glasses and peruse the fine print because the reward rules vary by card. Check out how you earn points or cash back. Some cards offer elevated rewards only on the brand’s offerings, but others also have bonus categories for day-to-day spending on items such as groceries and gas. 

If a card only rewards spending at the partner brand, make sure that works in your routine, or you may miss out on a bunch of points.

Redemption options matter, too. Some co-branded cards let you redeem points for travel, statement credits, or gift cards, but others limit you to the brand’s rewards program. I’ve found that most travel cards don’t offer direct cash back. 

Don’t ignore those annoying expiration dates or blackout dates that can keep you from cashing in your hard-earned perks when you actually want to. Travelers should look for a card with no foreign transaction fees and easy point transfers. Retail cards should offer easy-to-use discounts and promotions that don’t require you to jump through hoops.

Finally, think about signup bonuses and long-term rewards. Certain cards shower you with points early on when you spend a specific amount in the first few months. But you might be better off with a general cash back or travel card if the long-term rewards are skimpy. 

A good co-branded card should give you generous up-front bonuses with plenty of long-term benefits that keep rewarding you over time.

If you tend to be loyal to particular brands, then a co-branded credit card will help you rack up rewards and harvest special perks that you’ll enjoy. 

From free flights to hotel stays to shopping discounts, these cards will have you reaping rewards. However, a co-branded card is only valuable if it actually matches your lifestyle and spending.

Compare the rewards, fees, and limitations to ensure the benefits are worth the fees and interest. A card that keeps you locked to one brand with limited redemption options won’t be the best option if you crave diversity. 

But if you already spend considerably with one airline company, hotel chain, or retailer, then a co-branded card will make each dollar stretch further. The ideal co-branded card enhances your lifestyle. If you find the right one, then ride off into the sunset with it — but if not, then there are plenty of other horses you can choose.