Co-Branded Credit Card Space Heats Up

Friday, October 16th, 2015

A recent report shows that co-branded credit cards accounted for $809 billion in purchases last year. The most common type of co-branded card was a Visa, with a 47% share of the market, and the second-most common was MasterCard, with 30% of the market. American Express had a 23% share of the market.

Competition among co-branded credit cards is fierce, with card issuers chasing consumers with rewards, features, and benefits, in hopes of attracting the most desirable, and in many cases most affluent, cardholders. Still, there are co-branded credit cards that cater to applicants with less-than-stellar credit history, or limited credit history. People with no credit, limited credit, or bad credit may be shut out of the luxury co-branded card market, but there are certainly cards made for them.

Millennials are the hottest property

Perhaps the most-courted demographic is the Millennial generation, who card issuers are eager to bring on board. Banks and credit cards are trying to win the loyalty of this younger generation by offering bigger and more meaningful benefits to cardholders.

The report, Co-Branded and Affinity Cards in the U.S., looks at trends in the co-branded credit card space, including:

• Co-branded airline credit card trends
• Co-branded hotel credit card trends
• Analysis of airline guests, frequent flyers, and hotel guests
• Affluence of hotel visitors
• Frequent flyer program trends

They look at cards including:

• Rewards Visa Card
• BuyPower MasterCard
• Carnival World MasterCard
• Citi Hilton HHonors Visa Signature Card
• Ritz-Carlton Rewards Credit Card
• Southwest Airlines Rapid Rewards Plus and Rapid Rewards Premiere Visa Cards
• Virgin Atlantic World Elite MasterCard
• Walmart MasterCard

The advantages of co-branded cards

One of the things consumers like about co-branded cards is that they can earn rewards from the places they most want to frequent. If they have a preferred airline, they can get the card for that specific airline and earn more rewards for flying that airline than any other. They can also enjoy things like priority boarding, complimentary baggage check, discounts on board the flight, seat upgrades, and points they can transfer to partner airlines.

Rewards credit cards that aren’t tied to a particular retailer or company—in other words, credit cards that are not co-branded—tend to offer less valuable rewards. At the same time, the rewards points offered by such cards may be more flexible to redeem. It is really up to each consumer to decide which type of card is best for him or her. And keep in mind, there is nothing wrong with having both kinds.

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