Co-branded credit cards: Make sure your annual spend justifies the fee

Check whether reward points are easy to redeem, their expiry conditions, and brand-specific limits

Co-branded credit cards (CBCCs) are fast emerging as one of India’s most powerful credit growth engines. Revenues from these partnerships are projected to triple by FY28, from ₹17,000–19,000 crore today, according to a study by Zeta. While these cards offer attractive benefits, users must stay alert about their conditions and costs. 

Reward brand loyalty 

Co-branded credit cards offer higher rewards than regular cards, especially to loyal users of specific brands or spending categories. “They provide higher reward rates, instant discounts, and complimentary memberships, turning regular purchases into valuable benefits such as free flights, lounge access, or shopping vouchers,” says Raoul Kapoor, co-chief executive officer (co-CEO), Andromeda Sales and Distribution. 

“CBCCs offer a convenient payment option with added value through exclusive deals, often at no extra cost. Unlike regular cards with broader benefits, co-branded cards feature partner-specific perks,” adds Adhil Shetty, CEO, BankBazaar.com. 

Selecting the right card 

Choose a card that aligns with your spending habits and lifestyle. “Analyse where you spend most — such as travel, dining, or shopping — and match it with the card’s reward structure. Compare reward rates, bonus categories, sign-up offers, and partner-specific perks like discounts or priority services. Check redemption options to ensure they suit your needs,” says Shetty.

  “Also weigh joining and annual fees and interest rates to ensure benefits exceed costs. Perks like insurance, lounge access, or renewal fee waivers can add value. The best card is one that fits your routine and delivers lasting benefits,” adds Kapoor.

  Do cost-benefit analysis 

Many potential users focus solely on rewards while ignoring fees and conditions. “They often sign up for attractive offers without checking if their spending justifies the annual fee or if rewards are easy to redeem. Factors like reward expiry, blackout periods (periods when card benefits cannot be used), and brand-specific limits can reduce benefits,” says Kapoor. 

Watch for expiry dates, redemption limits 

Many co-branded programmes limit how and where points can be redeemed. “To make sure your rewards don’t lapse or lose value, always check the point validity — some expire within 12-24 months or after a period of inactivity, while others remain valid indefinitely,” says Shetty. 

Also, many programmes set minimum redemption thresholds or restrict use to specific partners like airlines or stores. Travel-related rewards may block popular dates or charge fees, while point values and benefits can change without notice. Read the fine print and redeem strategically. 

When partnerships end 

In most cases, when a co-branded partnership ends, the bank usually replaces the card with another from its portfolio and informs customers via SMS or email. “Cardholders may be given time to redeem their reward points or have them transferred to the new card, while brand-specific benefits are gradually phased out,” says Rohit Chhibbar, chief business officer – credit cards, Paisabazaar. 

It’s therefore important to redeem or transfer points in time and stay updated to ensure a smooth transition without affecting credit history or rewards. 

Avoid impulsive spending 

Many studies have shown that people tend to spend more when using credit cards, and co-branded card rewards can amplify this effect by conditioning users to chase points or cashback. “Credit card users should spend only on planned necessities within their budget, pay the full bill before the due date to avoid interest charges, keep credit utilisation below 30 per cent, and steer clear of purchases made solely to earn rewards,” says Abhishek Kumar, Securities and Exchange Board of India-registered investment adviser (RIA) and founder, SahajMoney.com. 

How many cards are too many?

• Limit co-branded cards to two or three serving distinct needs
• Multiple cards complicate billing, reward tracking, and repayments
• Keep only so many cards whose bills can be paid off fully each month
• Maintain credit utilisation below 30 per cent on each

 

The writer is a Delhi-based independent journalist