Co-branded Credit Cards

Credit card applications for frequent shoppers

Like many of us do, I love to shop. Whether it is clothes, consumer electronics or gadgets, shopping gives me great amount of satisfaction. And I'm sure I'm not the only one out there. There are millions of frequent shoppers who like to treat themselves with something new every now and then. Just like others, I've been taking advantage of most of the reward programs and discounts that retailers were offering.

I have also been feeling excited every time one of my favorite stores offered a store card service. I always thought "Why would I use cash or regular credit cards and miss out on great promotions?" Eventually, after using store cards for a couple of years, I have started to experience certain financial constraints. I found it hard to pay monthly bills. I thought that seemed strange since my income hasn't decreased nor have I started purchasing more commodities.

It was only after I have contacted my financial counselor that I realized what the source of the problem was. According to him, a lot of people have been aggressively taking advantage of store cards without understanding all the consequences. Each year, retail outlets earn millions in profits from interest on store cards.

Turns out he was right. I took some time and browsed through some of my latest monthly statements. After calculating all the excess interest that I have been paying, I have no more concerns about the damage that store cards have done to my wallet.

This wouldn't have happened if I would've been paying all my bills in full and on time. However, that was impossible due to the amount of purchases I have been making. My salary wouldn't allow me that. Therefore, retailers have been making money on the high interest that I had to pay after grace period.

I was advised to take drastic actions. The first thing that got into my mind was the fact that I had to get rid of most of my store cards or cut down on purchases. But with the level of addiction to shopping, that seemed hardly possible. This is when I started to look for alternatives, and luckily, found one.

My financial counselor has recommended so-called co-branded credit cards. Basically, these cards are connected with both, credit card companies as well as stores. Moreover, such cards can be used at any place where a credit card is accepted. And here's something many of us will like: you can earn points by making purchases with the card outside of a particular store!

Besides, after comparing rates on store cards and co-branded cards I was surprised to find out that the latter have lower interest rates. However, I've been also told that co-branded cards are harder to get. Since they are issued by companies such as Visa and American Express, a credit history check is required. Besides, like most of the reward cards, co-branded ones have certain restrictions and limitations. (i.e. 5 gift certificates per year).

Well, now that I'm aware of all the consequences of frequently shopping with store cards, I am planning to switch to co-branded credit cards. In addition, I've also promised myself to constantly keep track of my card's account. Of course, I might have to give up shopping at some stores that offer no reward programs for co-branded cardholders, but at least I will be able to save up some money for bigger purchases at other outlets.

Jennifer Brown

Jennifer Brown, an external business consultant working with a Fortune 500 company, has years of experience to her credit. Despite having a busy schedule through the day, she takes time out to write articles dealing with credit cards, payday loans and other financial aspects. She has completed her Bachelor degree in Financial Services from Columbia University and has been actively involved in various activities for the betterment of society.