Co-Branded Cards vs. General Travel Rewards Credit Cards

Editorial Note:

When selecting a travel rewards credit card, you can choose one of two types. There are general travel rewards credit cards and co-branded cards that are airline or hotel specific. Which card you should apply for is dependent on your purchasing habits and your goals for travel rewards. This article serves as a guide that will help you determine the best card for your situation. We’ll review the key points of each card, and factors to consider when selecting a card.

Co-Branded Credit Cards

A co-branded card is a partnership between a retail brand and a credit card network processor, like Visa or Mastercard. Network processors are what allow you to use the credit cards at merchants within a card network. The Visa logo on the Southwest Rapid Rewards Premier Credit Card lets you make purchases wherever Visa is accepted. You can do the same for the Hilton Honors Card on the American Express Network because of the Amex logo.

Main Advantages Of Co-Branded Travel Cards

  • Travel rewards cards have some of the best benefits available. They can include travel specific perks, such as a free checked bag, free lounge passes, or upgraded seats. Other travel perks may be reimbursement for federal traveler programs such as Global Entry. Even the insurance offers with a travel rewards credit card are better than with other cards. You may be eligible for travel accident, travel delay, and lost luggage insurance for trips paid for on the credit card.
  • The valuable rewards program. Your card will help you accumulate air miles with every use. There may be chances to earn more miles on branded purchases, like airline tickets and in-flight services. Travel rewards credit cards also come with some of the most valuable sign-up bonuses in the industry. Meet the requirements, and you’ll earn a round trip domestic or international ticket, depending on the number of points offered.

Things To Consider

  1. You should understand the rewards program’s restrictions to ensure that you get the most use from the program. For example, programs with variable rewards rates may increase or lower the value of miles based on the time of year. Using your miles at the right time may boost them to two or three times their value. Some airline rewards programs have blackout dates and other limitations on how you can redeem your points. You will want to make sure that reasonably access your benefits and rewards.
  2. Verify the point expiration policy of the program: points may expire if there is no account activity for 12 months.
  3. An airline alliance is a perk that will let you redeem your miles with partner airlines brands. You can arrange international travel using airlines within the partnership. In that case, look for a card with a large airline alliance. Be aware that your points may not be exchanged at a one-to-one ratio with partner airlines.
  • Elite Status Accelerators. Having an airline-branded credit card can boost the perks you currently receive from the brand’s loyalty program. You may use your card to fast-track to the elite status of the program.

When You Should Choose a Co-Branded Travel Card

You should consider an airline credit card if you fly often with the same airline brand. The airline’s loyalty program will be boosted by the miles from your co-branded card’s purchases. The card’s benefits will go further if you travel often and need to use the perks. You may find the card unlocks priority boarding, restrictions on fares, free upgrades and other benefits. Finally, if you always check your bags, an airlines reward card can save you at least $50 per round trip.

General Travel Rewards Credit Cards

When your credit card has a financial institution’s name on the front, it is a general travel rewards credit card. You get these cards by applying to the credit card issuer, which may be a financial institution like a bank or credit union. The card will have the logos of the credit card issuer and network. (Discover and American Express act as both issuer and network for most of their cards. Therefore, there may be only one logo on the card.) Such credit cards can be used anywhere that the credit card network is accepted.

Benefits and Considerations

The beauty of general travel rewards cards is that you are not limited to one airline brand or alliance. You earn points, redeemable for a statement credit to pay for your travel costs on whichever airline you choose. Unfortunately, this also means that you won’t get bonuses with as a member of the airline’s loyalty programs. You also have the flexibility in the number of points you can use. There is no minimum redemption threshold when using your points for a statement credit. Some popular cards are The Platinum Card from American Express, Chase Sapphire Preferred, and Bank of America Travel Rewards card. They all earn more than 1 point for every dollar spent on some or all of your purchases.

When You Should Choose a General Rewards Travel Card

The general rewards travel credit card may be best for you if you’re a budget-conscious traveler. You want to fly with the airline that will give you the cheapest fare. You plan to book the flight and use the points to pay for it later. If you researched the credit card terms and know how to use your points strategically, choose this card.

Make the Right Choice

Travel Rewards

Whether you choose co-branded cards or general travel rewards credit cards, you should make sure the card works for you. Spend the time to match your goals and spending habits to the right card and rewards program. Read the credit card agreement, and understand the concepts like rewards redemption and expiration. Remember that there is no inherently “wrong” card. Both cards have distinct advantages, so select the one that fits your lifestyle.

Further Reading

If you’re looking for ways to maximize your flight experience on a small travel budget, consider this article. It talks about inexpensive ways to upgrade to business class. You should also read our article on the best travel apps for your phone, iPad, or tablet.

Roman Zelvenschi

I started a digital marketing agency Romanz Media Group Inc. 12 years ago. Running my own business quickly taught me the importance of cash flow. Making sales was not enough, I had to have money in the bank to pay the vendors, staff and personal bills.

During those early stages of the company I learned how to get creative with debt and to save on interest cost. I paid for everything I could with a credit card to both get more points and to extend the payment date by 25 days (credit card grace period). I then utilized a 0% balance transfer offers to rotate this debt.

I learned a lot during this process and made a lot of mistakes. My key lesson is that the most important part of being financially independent is how much I managed to save, rather than how much I earned. Staying disciplined with savings and tracking spending is not easy and I tried many different methods to stay on track.

FinancialFreedom.Guru is a side project where I and my staff are trying to share the practical knowledge on how to understand finances and to build wealth.

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