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What are cobranded credit cards and should I get one?
Earn accelerated points and additional perks and benefits.
Cobranded credit cards are a great way to earn higher rewards at your preferred retailer, airline or hotel. In addition, you can get discounts and benefits that bank credit cards usually refrain from offering. However, make sure to pay your balance on time to avoid high interest rates.
What are cobranded credit cards and how do they work?
Cobranded credit cards are issued jointly by a financial institution and a retailer. Companies that participate in cobranded credit cards are:
- Cruise liners
- Gas retailers
- Department stores
- Online stores
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Benefits of cobranded credit cards
Cobranded credit cards are meant to reward brand loyalty by giving you such benefits as:
- Higher rewards rate. Earn accelerated points making purchases with a retailer.
- Signup bonus. Get bonus offers after meeting set criteria. Depending on your card, this could be worth a round trip flight across the US, or several hotel night stays.
- Brand benefits. Get brand-specific benefits. For example, you could get a first checked bag free, priority boarding, lounge access and in-flight purchases using an airline cobranded card.
- Elite status. Upgrade to elite status tiers with hotel and airline credit cards after meeting certain criteria. This comes with additional perks and benefits, such as free seat and room upgrades, accelerated points earning and more.
- Complimentary flights and hotel stays. Earn a companion certificate with an airline cobranded card. Earn free hotel nights with a hotel cobranded card.
- Additional rewards. Earn accelerated points on other categories unrelated to the brand. For example, you could get accelerated points on dining, fuel, groceries and more.
Drawbacks of cobranded credit cards
Cobranded credit cards have many benefits. However, there are some drawbacks to consider.
- Higher interest rate. You could offset any rewards by having to pay higher-than-average interest rates if you fail to pay your balance on time.
- Limited points spending. Some credit cards let you only redeem points at the retailer. However, most hotel and airline credit cards let you transfer or redeem points for partner airlines, hotels and car rentals.
Is a general travel or cobranded airline credit card better?
Use a general travel card to earn points, with a typically higher redemption value, on travel purchases such as airfare, hotel stays and dining. Some credit cards even allow you to transfer points to partner airlines and hotels.
- A general travel credit card could be a good choice if you fly with multiple airlines, stay at different hotels and dine at restaurants.
Use a cobranded airline credit card to earn accelerated points on selected airlines and their partners and get additional perks and benefits. This might include a first checked bag free, priority boarding, complimentary lounge access and more. You could also earn more points at restaurants and gas stations.
- An airline credit card could be a good choice if you frequently fly with a single airline and their partners. In addition to earning points, you could save money on checked bags, priority boarding, lounge access or in-flight purchases.
Cobranded credit cards can be a great addition to your wallet if you’re loyal to a brand of retail stores, gas stations, hotels or airlines. You will earn accelerated points on your purchases and you’ll get brand-specific benefits.
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