What are branded credit cards?

Branded credit cards, rather than having a bank or other financial services provider prominently mentioned on the plastic, instead carry a brand name linked to a consumer item. Particularly active in this area are airlines and consumer stores, but others are offered by providers such as car brands.

These credit cards are promoted by the consumer brand but processed by a financial provider; this is known as a white label arrangement. The bank will run services such as billing, credit checks, and settlement of payments. In effect, the credit card itself is not actually provided by the brand on the card, but by the bank behind it. Some banks specialise in providing such cards.

The branding companies share profits from the cards with the processing banks, and as part of the arrangement, the companies provide better rewards to the banks’ customers. They can also provide their customer lists to the banks’ marketers, providing access to a group of people who already trust the brand and are likely to value the rewards offerred. These cards can have a very large take-up as a result.

One popular type of branded credit card is a store card, which is offered by a merchant such as a chain or department store. These are often the first credit cards applied for by many people, because they carry less chance of refusal as the credit checks are quicker and less thorough. Store cards tend to carry higher interest rates than other credit cards, though.

Store cards were in many ways the original credit cards. They were the revolving credit accounts offerred by many merchants, which credit cards sought to replace. At that earlier point in time, store cards could only be used within the store or perhaps its branches, which gave credit cards the advantage as they could be used in many more places. Now almost all store cards process their credit card transactions through Visa or MasterCard networks, allowing their store cards to be used in other outlets as well.

Airlines are also big issuers of credit cards, often integrated with their frequent flyer reward programs. These cards can offer more generous rewards than most other credit cards through their association with the airlines, even if they are limited to one particular airline.