When it comes to credit cards, selecting the right one can significantly impact how you manage your finances. Co-branded credit cards stand out as a distinctive and increasingly popular choice for consumers. One of the biggest advantages for cardholders is the exclusive rewards and discounts. These features are fine-tuned to align with your specific preferences, enabling you to maximise the value of your regular expenditures, whether they are related to travel, shopping, dining, or entertainment. The key is to choose a co-branded credit card that seamlessly complements your interests and spending habits.

Selecting the right co-branded card

Co-branded credit cards are available in various categories, each with their distinct benefits. For instance, NBFCs collaborate with credit card issuers to provide rewards, EMI options, and additional perks on partner products or services. Similarly, co-branded cards issued in partnership with retailers can help you earn cashback, discounts, exclusive access to sales, and loyalty points, making them ideal for shoppers. The accumulated points can even be used for future purchases. Frequent travellers benefit from 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 at restaurants.

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

Application and approval process

Over the years, the application and verification process for co-branded credit cards has been streamlined. You can apply online, visit a bank branch, or use self-service kiosks located at airports or cinemas. In some cases, you might even receive instant approval.

Unlocking benefits and rewards

Upon receiving your co-branded credit card, you gain access to an array of unique features and benefits. These include a welcome bonus, typically offered by most co-branded cards, providing an excellent starting point for your new card. These cards also enable you to access discounts on memberships or subscriptions, health plans, and tele-consultations with physicians. Furthermore, by using a co-branded card, you can accumulate loyalty points when you spend on products or services offered by network partners. Consistent and strategic card usage, combined with reaching monthly and annual spending milestones, can result in multiplied cash reward points.

Effective credit card management

Co-branded credit cards also provide the inherent advantages of traditional credit cards, including flexible payments, cashbacks, 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 discipline. This helps cardholders to stay on top of their credit card bills and make timely payments.

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

While standard credit cards offer rewards and incentives across various categories, co-branded credit cards encourage purchases that align with your lifestyle and preferences, maximising the value of your spending. Whether you are a frequent traveller or an avid shopper, a co-branded credit card could be the perfect tool to help you achieve your financial goals. It can also complement your existing credit card. However, it is important to exercise fiscal prudence when selecting a credit card, such as making timely payments and keeping your credit utilisation low.

It is also important to adopt protective measures to enhance the security of your credit card and minimise the risk of falling victim to fraud or unauthorised financial account access. Refrain from sharing sensitive information like card details or OTP during phone calls and be cautious with SMS messages, especially those with clickable links that may lead to fraudulent sites or phishing.

Sajish Pillai is Managing Director, Head of Assets and Strategic Alliances- Consumer Banking Group, DBS Bank India

As featured in Mint