A look at Branded Credit Cards
Originally, the idea of branded credit cards seemed far-fetched, yet once consumers realized that their favourite retailers had partnered with lenders to provide them with very attractive deals, branded credit cards became the favourites of many consumers. Many Australians who are unfamiliar with store branded credit cards are under the misconception that branded cards are only accepted at the issuing store, such as David Jones or Myers. However, with today’s technology the cards can be used at all stores. Many of these branded cards are now accepted worldwide, as long as it has a Visa or MasterCard logo embedded in it.
Branded credit cards are still issued by banks and lenders, and work just like traditional credit cards. A branded credit card is conceived when a lender partners with a retailer to issue credit financing. This business practice is called “white labelling”, which is where both the branded merchant and the bank benefit from the cross marketing. This strategy is mutually beneficial for both parties as lenders have access to an extended customer base and merchants encourage consumers to spend more at their stores while also earning a percentage of the financing fees.
Frequently, these branded credit cards have specific benefits which are ideal for cardholders to take advantage of. The idea is to build loyalty from the customer base, by keeping the company’s name along with the logo in front of the card to remind customers of the company who gave them their credit.
Store branded credit cards are highly recommended by experts, primarily for consumers who can afford the high the costs of the cards and can responsibly spend enough to recoup the perks. The applicant requirements are more lenient than with standard credit cards. There are cases where a customer may receive a pre-approved card even in the absence of any application what-so-ever. Store credit cards are considered to be fairly expensive, however, as they charge a higher interest rate and a large annual fee.
Consumers often earn instant discounts on purchases which were made at the issuing merchant. So card users do have the genuine opportunity to reap benefits which can outweigh the costs.
Security and features are the factors to consider when looking for the right branded credit card. Consumers should make sure that they read and understand the fine print of any offers presented. They should take note of the drawbacks of a particular program, specifically regarding the penalties. There are times when a discount is proposed to a customer but eventually more money is spent. There are programs which forfeit any discounts or points earned if the card holder fails to pay the balance due.