Why Brand Names Are Seen On Credit Cards

Information verified correct on September 24th, 2016

Companies that offer credit cards with their names branded on them are numerous. These offers can be seen on television, in print ads, and even get invitations through email. When you go to the mall and enter shops or boutiques, you see cards being offered to give special credit or discount for purchases within those shops.

This partnership of credit cards with names is a marketing strategy called co-branding. Also known as brand partnership, it is when two companies come together to create a stronger brand. Companies combine resources to boost their individual core strengths to promote their products and services.

Those credit cards are not actually operated by the company that bears their names. The credit cards are still operated by the bank that has a partnership with the brand. Their goal is to increase the volume of merchant transactions by offering rewards and other benefits on the credit card. This partnership is a win-win situation for both brands: the shops increase their sales and profit, while the revenue of the banks grow thanks to the merchant fees charged when processing credit card transactions. This partnership is also known as white labeling. Example credit cards in Australia include: Virgin Money, Woolworths and Jetstar.

This partnership of credit cards with names is a marketing strategy called co-branding. Also known as brand partnership, it is when two companies come together to create a stronger brand. Companies combine resources to boost their individual core strengths to promote their products and services.

Those credit cards are not actually operated by the company that bears their names. The credit cards are still operated by the bank that has a partnership with the brand. Their goal is to increase the volume of merchant transactions by offering rewards and other benefits on the credit card. This partnership is a win-win situation for both brands: the shops increase their sales and profit by cutting back on their fixed costs, while the revenue of the banks grow, thanks to the merchant fees charged when processing credit card transactions. This partnership is also known as white labeling.

Brand Credit Card History

Brand credit cards can trace their history back to the history of credit cards in general. The first credit card was used back in the 1920s to sell fuel to automobile owners. Later on, establishments and companies started accepting each other’s credit cards that paved way for a networking system that many modern credit cards have adapted this day.

These banks also recognised that the revenue potential of the store brands and developed a product to put together a large number of store cards into a single credit account. The banks would handle the accounts, while the stores will put their brand on the credit card. With this partnership, banks will handle the accounts, while the stores would be able to lower the cost of their overhead on handling these accounts.

To increase revenue, credit card companies needed to attract customers in using their credit cards more often. Since it does not seem proper to ask people to use their cards, such moves are designed to make sure customers find using their cards more appealing.

Bonuses and Perks

Store brand credit cards can offer a little more than the average credit card when used in their particular shop. While generic credit cards offer alternative options when it comes to payment, store brand credit cards offer extras that are available every time its used.

It is common for these cards to offer significant discounts when you purchase with it, even if there is no sale or extra offers involved. For some cards, they have a rewards program that give you something in return when you reach a certain purchased amount. Others have a system that lets you accumulate points which you can then exchange for items within the shop.

Differences with other cards

Most credit cards that carry store brands feature a higher rate than regular credit cards. Stores are more flexible when accepting and approving applications. As the cards are offered in the store, not much proper credit check is done. In this regard, store brand credit cards are great options for people who want to build up or improve their credit history.

Special Cards with Rewards Programs

Some of the most popular brand credit cards are those that are offered by airlines. These cards are popular thanks to the reward schemes where travellers can earn free air tickets. They also have a wide range of travel-related benefits, including travel insurance, hotel booking discounts, car rentals, among others.

The bottom-line is, credit cards work with brand names to increase the revenue for both. Benefits are offered to entice customers to sign up and make use of the cards. Still, no matter how great they sound and how much they offer in perks and discounts, it is worthwhile to practice wise spending with credit cards.

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Rates last updated September 24th, 2016
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