Cashback, discounts and rewards: The benefits of co-branded credit cards

When it comes to credit cards, choosing the right one can have a big impact on the way you manage your finances. Co-branded credit cards stand out as a unique and increasingly popular choice for consumers. One of the biggest benefits for cardholders is the exclusive rewards and discounts. These features are fine-tuned to align with your preferences, enabling you to maximize the value of your regular spend, whether it’s travel, shopping, dining or entertainment. The key is to choose a co-branded credit card that seamlessly complements your interests and spending habits.

Co-branded credit cards are available in different categories, each with its own benefits. For example, non-banking financial companies (NBFCs) collaborate with credit card issuers to provide rewards, options on IEA (equitable monthly installments) and additional benefits on partner products or services. Similarly, co-branded cards issued in partnership with retailers can help you earn cashback, discounts, exclusive access to points of sale and loyalty, making them ideal for shoppers. The accumulated points can even be used for future purchases. Travelers often take advantage of co-branded airline or travel credit cards that offer bonus miles, free flights, priority boarding and lounge access, while cards designed for dining come with exclusive experiences and deals in restaurants.

Before choosing a co-branded credit card, start by understanding your spending habits. Identify where you spend the most, as this can help you choose a co-branded card that aligns with your lifestyle and specific needs. It is important to review and compare factors such as membership fees, initial sign-up bonuses, interest rates, discounts and the reward points or miles you will earn for spending in different categories.

When you get your co-branded credit card, you get access to a range of unique features and benefits. These include a welcome bonus, usually offered by most co-branded cards, which provides a great starting point for your new card. These cards also enable you to access discounts on membership or subscriptions, health plans and teleconsultations with physicians. In addition, by using a co-branded card, you can accumulate loyalty points when you spend on products or services offered by network partners. Using cards consistently and strategically, along with meeting monthly and annual spending milestones can result in multiple cash reward points.

Co-branded credit cards also provide the basic benefits of traditional credit cards, including flexible payments, refunds and EMI options for purchases made with their partner brands and merchant establishments. They simplify financial management by consolidating expenses in one place, which can lead to improved financial control. This helps cardholders stay on top of their credit card bills and make timely payments.

These cards offer the opportunity to achieve higher credit limits and can be particularly beneficial if you are trying to establish or rebuild your credit history. Credit card issuers assess your creditworthiness based on your spending patterns and payment history, which can lead to increased credit limits, providing greater flexibility. Higher credit limits can benefit individuals with significant expenses or those with various monthly financial obligations. They act as a financial safety net during emergencies and help simplify payments for substantial purchases by allowing them to be divided into convenient, interest-free installments.

While standard credit cards offer rewards and incentives across multiple categories, co-branded credit cards encourage purchases that match your lifestyle and preferences, maximizing the value of your spending. Whether you’re a frequent traveler or an avid shopper, a co-branded credit card can be a great tool to help you reach your financial goals. It can also top up your existing credit card. However, it is important to exercise fiscal prudence when using a credit card, such as making timely payments and keeping your credit utilization low.

Sajish Pillai is managing director & head assets and strategic alliances, consumer banking group, DBS Bank India

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Updated: 16 November 2023, 11:39 PM IST

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