What is a Co-Branded Card?

A co-branded card is a type of credit card that exists as a partnership between a major credit card provider and a business such as a retail establishment or service provider. This type of card is typically issued by a bank, not the credit card company, but includes the logo of the credit card company to make it usable at any location that accepts that type of card. The major element of the card’s design, however, is the name and logo of the business that has partnered to create the card. A co-branded card can typically be used at different locations, but provides benefits on or toward purchases made at the partner business.

Also called a co-branded credit card, a co-branded card is typically issued by a bank but has the logo of a major credit card company and the name of the business that has partnered with the company. Many large retail stores will establish this type of card to provide benefits for customers who continue to shop at that store. These benefits often include regular discounts on purchases, waivers of interest and payments over a set period of time, and coupons or discount cards sent to the homes of customers with a co-branded card.

A co-branded card typically serves to further the interests of three specific groups. The bank that issues the credit card makes money off of the investment in the form of interest on purchases made using the card, as well as potential customers that may open an account with the bank after using the card it has issued. Whichever major credit card company has partnered with the business to issue the card will also benefit through future relationships with customers interested in receiving another card from that company. And the business that acts as a partner on the co-branded card often generates greater customer loyalty through those who have such a card.

While there is nothing inherently dishonest or unethical about the issuing and use of a co-branded card by a company, the details of such a card should be clearly understood by consumers. These cards often have extremely high interest rates that can be far greater than most standard credit cards have. The offers associated with these types of cards may also be somewhat deceptive if not properly understood by those taking advantage of such offers.

Purchases made on a co-branded card may have no interest or payments for six months or one year after the purchase. While this may initially seem beneficial, most of these types of offers will have a stipulation that states that if the full amount is not paid off within that period, the full interest that would have accrued is charged to the card. This is clearly stated in these types of offers, but many people do not fully understand how it works and are then surprised six months after the purchase with a massive increase to the amount on the card. Like any other type of credit card, care should be taken when using a co-branded credit card to avoid excessive debt.