Should You Really Get That Co-Branded Credit Card?
Co-branded credit cards, as the name suggests, are credit cards jointly offered by a bank and a retail company. This retail company could be a department store, an airline, or a chain of hotels.
The brand and the bank together give you, the customer, various benefits each time you use the card. More often than not, the biggest benefits are given when you use the card for transactions related to the brand.
Take, for instance, the OCBC Robinsons Group Credit Card. The card issuer is OCBC and the brand is Robinsons (now Al Futtaim Retail Asia). So, each time you use this credit card at any of the brands under the Robinsons Group, you get 5% cash rebate on all of your spends.
You also get to enjoy other benefits such as in-store privileges for cardholders, bonus discounts, and one hour of free parking at The Heeren, Raffles City, and Jem. Additionally, you earn Robs$ on your overseas spends and spends made on brands not covered by the card. You can use these Robs$ to offset your bills when you shop at Robinsons or Marks & Spencer.
This example shows that getting a co-branded credit card could be a good idea. But a good idea doesn’t necessarily mean an idea that makes financial sense, right?
So, let’s break down what a co-branded credit card offers to see if you really should get one.
Why You Should Get a Co-Branded Credit Card
If you read the OCBC Robinsons Group Credit Card example, you know that co-branded credit cards come with multiple benefits. Here are a few more reasons why (and when) you should consider getting a co-branded credit card:
- If you frequently use the brand’s products or services: As a frequent traveller, you probably use your credit card to purchase air tickets often. Wouldn’t it be great if you were rewarded each time you made that purchase?
This is where co-branded travel credit cards come in handy. They not only reward you with miles each time you buy a ticket, but you get accelerated miles if the ticket is purchased from the card’s brand partner. For instance, while the American Express Singapore Airlines KrisFlyer Credit Card does let you earn 1.1 KrisFlyer miles per S$1 you spend locally, you get 2 KrisFlyer miles for every S$1 you spend on Singapore Airlines purchases.And the fact that you earn KrisFlyer miles means that you will be redeeming these miles with Singapore Airlines and SilkAir.
The same goes for products. A cash rebate at Sheng Siong with your BOC Sheng Siong card means that you are more likely to use the card to shop at Sheng Siong than any other store.
And this leads us to the next benefit of a co-branded credit card.
- If you are looking for your loyalty being rewarded: When you use a co-branded credit card, all of your brand-related transactions are rewarded more than other transactions. For example, if you have the Citi M1 Card, you will save up to 10% on M1 recurring bills and get another 1% rebate on purchases at the M1 stores, in addition to a host of other M1-specific perks. However, on all other purchases, you only earn a rebate of 0.3%.
- If you are looking for exclusive perks: Brands and banks offer co-branded credit cards for the same reason – to strengthen customer loyalty. And brands do this not just by rewarding your spends but also by providing exclusive perks.
For instance, if you own the OCBC BEST Denki Credit Card, in addition to the cash rebate you get each time you spend at BEST Denki, you also get free delivery if you spend a minimum of S$200 in store. Additionally, you only need to pay 16% of the purchase price if you wish to buy a 5-year extended warranty for the product you have purchased.
Similarly, with DBS’s Takashimaya Visa Card, you get the 5% voucher rebate on Takashimaya spends. You also get an additional 10% off during particular in-store sales and free delivery on purchases of S$100 or more.
- If you want to shop overseas: If you are loyal to a particular brand or store in Singapore, you are going to be loyal to the brand no matter where you are in the world. Co-branded credit cards are usually accepted at any of the brand’s stores across the world.
Moreover, most co-branded credit cards use Visa or Mastercard as their payment network and are, as a result, accepted world over.
All the Reasons Not to Get a Co-Branded Credit Card
- A co-branded credit card with 10% cash rebate sounds great, doesn’t it? But when you take a closer look at the card, you will see that this 10% rebate is only applicable on co-branded spends. Any other spends earn you minimal points.
If you take the BOC Sheng Siong Card, for instance, you get 7% cash rebate on Sheng Siong spends. All other retail transactions get you a cash rebate of 0.3%. So, if you decide to shop from a grocery store other than Sheng Siong, you only earn 0.3% rebate on that transaction as opposed to the 7% you would have earned at Sheng Siong.
As such, unless you only shop at a particular store (which very few people do), there are minimal benefits of a co-branded credit card.
- If you get a co-branded card that lets you earn points which you can then redeem at the brand’s store, you should keep in mind that merchants can change the value of the points as and when they wish.So, while you may have saved up your points to redeem it for a product you have always wanted, you may find yourself in a situation wherein your points have been devalued, just because the merchant decided to change their rules.
Moreover, most co-branded cards have countless terms and conditions when it comes to redeeming points. For instance, more often than not, points can only be redeemed for merchandise from the partner brand, making the benefits quite restrictive.
- All credit cards come with an annual fee and co-branded cards are not an exception. This means that if you want to continue using the card post the annual fee waiver, you will have to cough up the annual fee amount.
While this is quite alright if you use the card regularly, it does not make financial sense if it is rarely used.
Let’s say you own the DBS Takashimaya Card. Post its one-year fee waiver, you will have to pay the S$192.60 annual fee. Now, if you hardly shop at Takashimaya, you may realise that the card is not worth the fee. You may just be spending more money than it’s worth.
So, When Does It (And Does It at All) Make Sense to Get a Co-branded Credit Card?
All things said and done, there are instances when getting a co-branded card does make sense. If you shop for your groceries on a monthly basis, then a co-branded grocery credit card really does help you save money.
In this case, using the BOC Sheng Siong Card for your monthly grocery purchases entitles you to cash rebate of 7%. While you probably won’t always have Sheng Siong close by for emergency grocery purchases, the card will always be handy for regular purchases.
This doesn’t always work the same way with co-branded credit cards for fashion brands, though. If the card is for one brand only, it doesn’t make sense to get one since there is only a limited number of times you can shop for clothes from a store before you run out of needing more clothes – or closet space – for that matter.If, however, you can use the card to shop at multiple brands or the card can be used for all products available at a department store, go ahead and get yourself that card!
At the end of the day, if you are a brand loyalist (so much so you can’t even think of shopping from a different brand), then a co-branded credit card makes perfect sense for you. Or, if you make large recurring transactions or purchases from a particular brand every month, go ahead and get that co-branded credit card.Just make sure you use it only at the brand outlet, and use another cashback, travel, or rewards credit card for all non-brand transactions.
Now that you know all you need to know about co-branded cards, take a look at your wallet and see whether the valuable wallet space should go to a co-branded credit card or not!
This article was written by BankBazaar.sg.
BankBazaar.sg is a leading online marketplace in Singapore that helps consumers compare and apply for financial products such as credit cards and personal loans.