WASHINGTON—Co-branded cards are stepping up their rewards offerings, a new report indicates.
Credit cards that are affiliated with brands such as American Airlines, Uber, L.L. Bean and Ikea are ramping up rewards for everyday purchases at restaurants, gas stations and grocery stores, reports NerdWallet.
“These rewards cards, co-branded by the issuer and a retail brand, were formerly one-trick ponies that were best for purchases at a single merchant only,” NerdWallet said in its analysis. “But with better rewards, the cards are now becoming more useful for consumers. Now, co-branded card issuers might offer double or triple points every time you swipe at the pump or hand your card to a waiter or store clerk.”
Traditionally, co-branded credit cards offered a “mundane” 1% back on purchases made outside the brand. Now, Uber’s card, for example, offers a huge 4% back on restaurant purchases.
An Arms Race
“This is a golden age of rewards for consumers,” John Grund, managing director at Accenture Payments, told NerdWallet. “The arms race right now is very much centered on the relevance of the rewards.”
“This is a highly competitive time in the consumer card business, with many value propositions being pushed to the max,” Eric Marks, senior director with the banking practice of consultant West Monroe Partners, told NerdWallet. “Consumers are much more sophisticated about their financial services product options today than they were just a few years ago. That’s mainly because they’re able to easily comparison-shop, even via smartphone.”