What Are Co-Branded Credit Cards?

Many global airlines, hotel chains and retailers partner with banks to issue co-branded credit cards that reward customer loyalty. These types of credit cards are extremely popular, rewarding cardholders with exclusive cash back or points, discounts and benefits with their favorite brands.

In addition to co-branded cards from major travel companies, you’ll find relative newcomers like Instacart and DoorDash that also want space for their cards in your wallet. Here’s what to look for in a co-branded credit card and whether you can benefit from one or not.

What is a co-branded credit card?

Co-branded credit cards are issued by a financial institution — usually a bank, but it can also be a credit union or fintech company — along with another company, organization or brand. These credit cards usually offer specific rewards and benefits associated with the brand. For example, you might earn rewards or receive exclusive discounts, free shipping and other perks.

You can generally use co-branded credit cards anywhere credit cards are accepted. This makes co-branded cards slightly different from their closed-loop store card cousins, which can only be used for purchases from a specific chain of stores.

Pros and cons of co-branded credit cards

There are plenty of pros to getting a co-branded credit card, especially if you spend a lot of money with a specific brand. Katie Kelton, a senior credit card writer at Bankrate, flies almost exclusively with Southwest Airlines and uses the co-branded Southwest Rapid Rewards® Priority Credit Card to scoop up exclusive perks and benefits.

“What can I say? I love the free checked bags and my free snack. Plus, I’ve lived in and travel often to several Southwest hubs. I’m willing to pay the $149 fee because you get a $75 annual travel credit, which I definitely use. You also get four free upgraded boardings, which is helpful for those times I forget to check in right away and end up with a lousy boarding position.”

— Katie Kelton
Senior credit card writer, Bankrate

Kelton’s only gripe about her co-branded card is that the coveted Southwest Companion Pass is just out of reach.

To Kelton’s point, there will always be pros and cons of any credit card, even co-branded cards. Make sure your pros outweigh the cons.

Pros

• Exclusive rewards, discounts and other valuable benefits with a specific brand.
• Co-branded credit cards, like airline or hotel credit cards, can help cardmembers achieve elite status that unlocks more perks.
• It might be slightly easier to be approved for a co-branded credit card — though it’s never a guarantee.

Cons

• Where you can earn or spend rewards might be limited if it’s a brand-specific co-branded card
• You might be tempted to overspend to earn or redeem exclusive rewards
• Companies can devalue rewards at any time without a warning

Best co-branded credit cards

Co-branded cards are often included as some of the best credit cards because of the extensive rewards and benefits they provide to brand loyalists. Here are some of the best co-branded credit cards this year.

Should you get a co-branded credit card?

It depends. If you have a favorite store (or three), a preferred hotel chain or an airline you always fly with, then a co-branded credit card with your preferred brand could save you money, provide you with valuable perks and get you closer to your next goal — whether it’s a big-ticket purchase or pampering yourself at a five-star resort.

Getting the most out of your co-branded card

From picking the best rewards card for your lifestyle to squeezing the most value out of it, here’s how to maximize your next co-branded credit card.

• Be picky. Carefully consider a co-branded credit card’s benefits to find the best fit with your spending, budget and goals. Some issuers offer several cards with different terms and tiered benefits. For example, American Express offers several credit cards in partnership with Marriott Bonvoy.
• Pay off your bills in full and on time. Make sure to pay off your balances in full every billing cycle. Many co-branded credit cards come with higher APRs than traditional credit cards, and paying interest on balances you carry over month to month will eat into any rewards, benefits and savings you’re hoping to gain from the card. Strictly speaking, this rule applies to all types of credit cards, co-branded or otherwise.
• Combine it with other cards. For more experienced cardholders, you may find it more useful to use your co-branded card alongside another card. Ideally this would be a credit card that earns more on the rewards categories that your co-branded card doesn’t cover.
• Don’t feel obligated to spend on the card. In addition to interest, consider other potential costs. Having a co-branded credit card may sometimes nudge you into spending more to get the most rewards, even if you don’t have the budget for it. For example, you might find a cheaper flight with an airline that isn’t covered by your card, but feel pressure to earn miles with your chosen airline despite the price difference. It’s not a big deal when you have this dilemma only now and then, but if you face a choice like this fairly often, then a flexible travel rewards credit card might be a better option.

The bottom line

Co-branded credit cards can offer a great way to save money and earn rewards and perks, but only if you’re loyal to a particular retailer, airline or hotel chain. Even then, it’s important to carefully consider annual fees, interest rates and other associated costs with a co-branded card before applying. If you decide to get a co-branded credit card, prioritize paying off the balance in full each month to avoid fees and interest that can eat into your savings.

FAQs

• What is the difference between a store credit card and a co-branded credit card?
  

  You typically can only use a store credit card at that particular store or chain of stores, and whatever rewards and benefits you get are available only within the brand. But an open-loop co-branded credit card can be used anywhere credit cards are accepted and may offer rewards and benefits beyond its associated brand or company.

• Are co-branded cards easier to get approved for?
  

  Not necessarily. Some co-branded credit cards may be easier to get approved for, but approval is never guaranteed. Whether you apply for a regular credit card or a co-branded credit card, the issuer will take your credit score and credit history into account. That said, each issuer has its own application requirements and approval process, so make sure you’re aware of requirements for the card you’re applying for ahead of time.

• Do co-branded cards offer any special benefits?
  

  Yes, co-branded credit cards offer a range of special benefits and rewards associated with a particular company or brand. These benefits can include cash back, higher earning rates, discounts on purchases, loyalty status or other exclusive perks. Co-branded travel cards may also offer benefits like travel insurance, elite status, airport lounge access or concierge services.

• How do co-branded credit cards affect your credit score?
  

  Co-branded credit cards have the same effect on your credit score that standard credit cards. When you apply for the card, you’ll see a few points drop from your score due to the hard inquiry the same way you would for any other credit card application. And it will continue to impact your credit score depending on the way you use it just like any other credit card does. With responsible use, your credit score may rise, but if you consistently overspend or repeatedly fail to pay on time, then your credit score will reflect that.

*Information about the Hilton Honors American Express Aspire Card and Citi® / AAdvantage® Platinum Select® World Elite Mastercard® has been collected independently by Bankrate and has not been reviewed or approved by the issuer.