The benefits of co-branded credit cards

Co-branded credit cards are one of the biggest trends in the credit-card industry in the last several years.

For banks they offer a way to distinguish their products from their competitors now that everyone offers basic credit cards. For consumers they offer attractive deals in different product niches as well as a good reason to get multiple cards.

What are co-branded cards?

They are credit cards, which are associated with a particular firm like an airlines or retail outlet. These cards can be used just like regular credit cards but they also offer benefits to users of the relevant product like frequent travel points and special discounts.

Today co-branded cards are available for a large number of sectors including travel, telecom, retail, entertainment and so on. There are new products coming every year: for instance just recently Yatra Online and Barclays announced a co-branded card tailor-made for consumers in the fast-growing online travel segment.

Here are some examples of co-branded cards from a number of banks across various sectors:

~ ICICI Big Bazaar Gold Credit Card

Benefits include zero finance charges on EMI purchases at Big Bazaar; you can pay off a purchase of Rs 1,500 and above in three equal monthly installments, EMIs, without any finance charges.

• How to benefit from your ATM card

Other benefits include 6 reward points for every Rs 100 of purchases at Big Bazaar.

~ ICICI Bank Xbox 360 Credit Card

Aimed at fans of Microsoft's popular gaming console the card offers discounts on certain Xbox and Microsoft products and also provides zero per cent financing when purchasing an Xbox 360.

The card also provides offers from other electronics brands like Samsung and Kodak.

~ Jet Airways Citibank Gold Card

Every Rs. 100 spent earns you 4 Jet Privilege Miles. You can also win upgrade vouchers when you earn 4,500 miles on your card. This card is free for life.

~ ABN Amro Adlabs Credit Card

In addition to reward points on ticket purchases you get benefits like exclusive ticket counters at Adlabs Cinemas, reserved seats for new movies and special invitations for premiere shows.

~ SBI Railway Card

You earn railway points from your ticket purchases. Other benefits include zero transactions charges for online railway booking and accident insurance worth Rs 10 lakhs in case of loss of life in a railway accident while travelling on a valid ticket.

• Getting a credit card? Beware 

Thing to watch out for with co-branded cards

• Annual fees: Today plain-vanilla credit cards with zero annual fees are quite common but co-branded cards are more likely to carry significant fees. Make sure that the benefits they provide outweigh the costs.
• Read the fine print and ask questions when it comes to benefits. The descriptions provided are often rather vague and you need to clarify the details to make sure that the benefits you get are worth the annual costs. For example when it comes to reward points, find out what time limit or other restrictions are imposed on their use.
• The usual warnings about credit cards apply to these cards as well. Credit cards are best used as a means of payment not as a source of credit. You should ideally pay off your full balance every month before the payment due date. Remember that interest charges are steep and if you keep borrowing every month you could get caught in a debt trap.
• Don't get too many cards. Aside from the annual fees, the more cards you have the more likely you are to miss payments and pay penalties and interest. Only get a co-branded card if the benefits fit your lifestyle and purchasing habits really well.

Conclusion

Co-branded cards provide you with additional benefits tailored to your consumption habits. However, as always with credit cards, it's wise to be moderate and not carried away with your new spending power.