Why You Can Trust CNET Advertiser Disclosure
CNET Money's mission is to help you maximize your financial potential. Our recommendations are based on our editors' independent research and analysis, and we continuously update our content to reflect current partner offers. How we rate credit cards

Co-Branded Credit Cards: What They Are and How They Work

Credit cards for airline, hotel and retail brand loyalists.

A woman sitting in an airplane seat smiles while handing a credit card toward the aisle.
martin-dm/Getty Images

Though Target, Costco and United aren't banks, they all offer credit cards to customers that provide special benefits and rewards on purchases. Co-branded credit cards are usually offered by a bank or financial institution in partnership with a brand. Co-branded credit cards may offer worthwhile perks to hardcore brand loyalists -- but they don't always hold up when compared with traditional credit cards. Read on to learn everything you need to know about the pros and cons of co-branded credit cards.

What is a co-branded credit card?

A co-branded credit card works just like a typical rewards credit card but often provides special perks. You may be eligible for a better cash-back rate or extra frequent flyer miles when you use a co-branded credit card. Some co-branded cards also offer the types of benefits you'd get from a travel credit card, like travel insurance and emergency trip assistance. 

As with any credit card, if you don't pay your monthly statement in full, you'll be on the hook for credit card interest. That will almost always undercut the potential of any rewards or benefits. 

Benefits of co-branded credit cards

Before you apply for a co-branded credit card, you'll want to weigh your options and consider your financial situation. Taking advantage of any benefits will depend on your spending habits and financial discipline. Here's an overview of the pros and cons of using a co-branded credit card:

Pros:

  • Shopping at a store with that store's co-branded card may offer superior rewards and discounts than a typical credit card.
  • Co-branded credit cards often come with additional perks, like upgrades during your flight, not included with other card types.
  • Some brands offer a variety including no-annual-fee cards and premium cards with higher-end benefits.

Cons:

  • A co-branded credit card may not offer the best value for the money across all spending categories.
  • If you are using a co-branded credit card for a specific airline or hotel, you may not be able to redeem rewards when spending money with other companies (for example, if you have a United credit card but prefer to fly Delta).
  • Finding award options can be more difficult than with a typical rewards credit card.

Co-branded credit cards' perks make them popular with brand loyalists but there are drawbacks, and you may want to have a more general cash-back credit card as well.

Types of co-branded credit cards

Store credit cards

Store credit cards can be co-branded or branded by the store itself. These cards typically offer rewards when cardholders spend money at that store or within a specific store. Store credit cards may be more limited than other co-branded credit cards, as some of them can't be used outside of the store's ecosystem. On the other hand, many store credit cards offer special interest-free financing options. 

Airline credit cards

As their name implies, airline credit cards offer benefits for spending with a specific airline. These benefits can include a large welcome bonus, bonus earning categories, priority boarding and free checked bags. Some airline credit cards offer additional perks, such as companion tickets or discounts on flight purchases.

Hotel credit cards

Hotel credit cards offer the ability to earn points for free stays, hotel elite status and free night awards. Some benefits of hotel credit cards include an anniversary free night certificate, complimentary elite status (that may score you free breakfast), bonus points and potentially even on-property credits. Hotel credit cards may also offer increased welcome bonuses, making this a great opportunity to rack up points and perks for future getaways.

The bottom line

Co-branded credit cards offer many benefits, including rewards and discounts at specific brands, but there are also some drawbacks to using them. Store, airline, and hotel credit cards are the most common types of co-branded credit cards. Most people will reap the most benefit if they keep one or two other credit cards for everyday spending.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.