Co-branded credit cards: Know the costs and benefits before signing up

Co-branded credit cards are emerging as a powerful credit growth engine in India. Revenues from these partnerships are projected to triple to ₹17,000-19,000 crore by FY2028. While these cards offer attractive benefits, users must stay alert about their conditions and costs. It is essential to check if reward points are easy to redeem, have expiry conditions, and brand-specific limits. Users must also consider whether their annual spend justifies the fee.

Co-branded credit cards (CBCCs) are gaining significant traction in India, with revenues projected to triple to ₹17,000-19,000 crore by FY2028, according to a Business Standard report. These cards, issued in partnership between banks and brands, offer attractive benefits such as higher reward rates, instant discounts, and complimentary memberships. However, users must be cautious and consider several factors before opting for a CBCC.

One of the key aspects to consider is the ease of redemption of reward points. CBCCs often provide higher rewards, but these rewards may come with expiry conditions or brand-specific limits. For instance, the MagniFi Federal Fi Credit Card, launched by Fi and Federal Bank, offers 20% instant discount on Amazon, Zomato, Zepto, and BookMyShow, along with 5% cashback on eligible weekend spends, as described in a Business Standard press release. However, users should check the redemption process and ensure it aligns with their spending habits.

Another critical factor is whether the annual spend justifies the fee. CBCCs often come with annual fees, which may seem high compared to regular credit cards. Users should calculate their potential savings and benefits against the annual fee. For example, the MagniFi card offers a lifetime-free offering, meaning there are no joining or annual fees. This makes it an attractive option for those who spend significantly on weekends.

Additionally, users should stay alert about the conditions of the co-branded partnership. In most cases, when a partnership ends, the bank replaces the card with another from its portfolio and informs customers via SMS or email, the Business Standard report notes. Users should be prepared for such changes and ensure they understand the terms and conditions of their CBCC.

In conclusion, CBCCs offer numerous benefits but come with conditions and costs that users must consider. By staying informed about the redemption process, understanding the annual spend, and being aware of partnership changes, users can make an informed decision and maximize the benefits of CBCCs.