topic Re: What's REALLY the difference with branded and co-branded? in Credit Cards

What's REALLY the difference with branded and co-branded?

icyhot — Thu, 22 Oct 2015 01:44:16 GMT

I keep seeing people saying that ci-branded cards with some lenders are easier to get than their flagship cards. I'm really curious as to why or if anyone has insight on the reasoning. If someone defaults on a BCE or CSP, the bank will take the same hit as if it was on a Delta Amex or Marriott card. Am I missing something?

Re: What's REALLY the difference with branded and co-branded?

Anonymous — Thu, 22 Oct 2015 01:45:32 GMT

@icyhot wrote:
I keep seeing people saying that ci-branded cards with some lenders are easier to get than their flagship cards. I'm really curious as to why or if anyone has insight on the reasoning. If someone defaults on a BCE or CSP, the bank will take the same hit as if it was on a Delta Amex or Marriott card. Am I missing something?

I don't know, but maybe the Mariott, Delta etc. shares in it

Re: What's REALLY the difference with branded and co-branded?

pipeguy — Thu, 22 Oct 2015 01:51:22 GMT

Citi backs my Brooks Brothers ($2100), Wawa ($1000), Macy's ($5000) and Home Depot ($20,000) with no issues, no lates, usually PIF on all except special 0% financing through HD at times but will NOT approve me for a Branded CitiBank card - go figure

Re: What's REALLY the difference with branded and co-branded?

ddemari — Thu, 22 Oct 2015 02:34:17 GMT

cobranded cards can be easier to get with certain lenders. Delta Amex is known for being an easy amex revolver. Chase is known to be flexible on their cobranded cards from United to Marriott. but Citi and their cards, forget it on being easy.

Re: What's REALLY the difference with branded and co-branded?

Anonymous — Thu, 22 Oct 2015 02:36:42 GMT

I think, perhaps, the Company (not the CC company) expects to have a certain % approved and may be willing to relax on criteria for approval. I would think the company would have some sort of "insurance" against a default, but I could be wrong.

Re: What's REALLY the difference with branded and co-branded?

Sharingan — Thu, 22 Oct 2015 02:41:16 GMT

Well, cobranded cards generally have above average interest rates, especially those store cards; so risk has been assessed accordingly across that entire portfolio by the bank. It's also possible that the associated party has assumed some of the risk with the bank for relaxing underwriting criteria for their particular brand's credit card.

It's really hard to tell what agreements have been arranged for these products.

Re: What's REALLY the difference with branded and co-branded?

NRB525 — Thu, 22 Oct 2015 02:53:17 GMT

Let's turn the question a little bit:

Name a co-branded credit card (not a store card) that does NOT have an AF.

The co-branded points systems, except for SPG, tend to go into just one program, you are tending to be locked into one redemption option. Marriott is another example where the points can be transferred elsewhere, for something of a penalty on the way out.

Re: What's REALLY the difference with branded and co-branded?

Espresso — Thu, 22 Oct 2015 03:02:52 GMT

Capital One GMC BuyPower does not have AF.

Re: What's REALLY the difference with branded and co-branded?

Anonymous — Thu, 22 Oct 2015 03:03:30 GMT

@NRB525 wrote:
Let's turn the question a little bit:

Name a co-branded credit card (not a store card) that does NOT have an AF.

The co-branded points systems, except for SPG, tend to go into just one program, you are tending to be locked into one redemption option. Marriott is another example where the points can be transferred elsewhere, for something of a penalty on the way out.

Hilton has 2 no AF cards, 1 with Amex and 1 with Citi.

Re: What's REALLY the difference with branded and co-branded?

NRB525 — Thu, 22 Oct 2015 03:05:49 GMT

@Espresso wrote:
Capital One GMC BuyPower does not have AF.

And how does one collect on the "rewards" offered by the Buy Power card? By spending tens of thousands on a new vehicle with vague pricing structures

Re: What's REALLY the difference with branded and co-branded?

Espresso — Thu, 22 Oct 2015 03:08:36 GMT

@NRB525 wrote:
@Espresso wrote:
Capital One GMC BuyPower does not have AF.
And how does one collect on the "rewards" offered by the Buy Power card? By spending tens of thousands on a new vehicle with vague pricing structures

Pretty much. LOL I will never use the rewards. But it is free and will help me get rid of my Credit One AF card soon.

Re: What's REALLY the difference with branded and co-branded?

TekkenQQ7 — Thu, 22 Oct 2015 03:15:28 GMT

Sometimes, we use co-branded credit cards just to transfer the balance to another card, of which we can't increase the limit. Also, branded or co-branded can be treated equally when it comes to a request for CLI

Re: What's REALLY the difference with branded and co-branded?

CreditScholar — Thu, 22 Oct 2015 04:41:50 GMT

I think a lot of this has to do with cost and risk. Let's compare 2 examples.

Amex's Delta Gold card gives (on most purchases) 1 mile per dollar spent. Delta miles have previously been referred to as SkyPesos due to them having the lowest value out of all of the legacy airlines (UA, AA, AS, etc.). Currently I would say they sit around 1.0 - 1.2 cpm. Given the quantity of miles Amex would be purchasing as one of their largest partners, they might be paying Delta a fraction of that (say 0.5 cpm). Since they don't cost much to give out, then they can afford to have looser criteria. This is why Delta's gold card is the easiest revolver to be approved for.

Compare this with Amex's MR cards. Since you can transfer your MR points to one of 17 (I believe?) airlines, you could in theory transfer your points to the most valuable one of the group. To account for this, Amex would need to assume a cost that is higher to them than the 0.5 cpm that they are purchasing from Delta. In reality MR points (when averaged out) might cost them closer to 1 cpm or more.

The same could be said about Chase. The cost to provide 1 UR point will almost certainly be higher than the cost to provide 1 IHG or 1 MR point. Hence the CSP is more difficult to obtain than their Marriott or IHG cards.

In most cases when compared to non co-branded cash back cards (Citi Double Cash, Chase Freedom, etc.), the cost to provide co-branded points is lower. This is why they can have easier criteria when it comes to approvals. In the general sense, I would suspect that the stringentness of approval criteria is directly related to the cost of points the issuer needs to provide. The higher the cost of the points are to provide, the harder the card will be to obtain.

Re: What's REALLY the difference with branded and co-branded?

Anonymous — Thu, 22 Oct 2015 11:49:19 GMT

Re: What's REALLY the difference with branded and co-branded?

takeshi74 — Thu, 22 Oct 2015 14:44:01 GMT

@icyhot wrote:
I keep seeing people saying that ci-branded cards with some lenders are easier to get than their flagship cards. I'm really curious as to why or if anyone has insight on the reasoning. If someone defaults on a BCE or CSP, the bank will take the same hit as if it was on a Delta Amex or Marriott card. Am I missing something?

Like any other broad, sweeping generalization it fits some cases and not others. Cobranded doesn't mean anything aside from the two brands. Whether a card has easier approval critiera or not depends on the specific card and not just whether the card is cobranded or not. Some cobranded cards are easier. Some are not.

The generalization may be because some are conflating store cards and cobranding.

Re: What's REALLY the difference with branded and co-branded?

dstew201 — Thu, 22 Oct 2015 16:32:03 GMT

Costco Amex doesnt have an AF (per se)

Re: What's REALLY the difference with branded and co-branded?

Anonymous — Fri, 23 Oct 2015 23:46:32 GMT

I have absolutely nothing to back this up but I always thought that if they are co-branded they share the risk between the two companies. With that being the case it would be easier to get approved because no one company is taking a large loss if something goes wrong.

Re: What's REALLY the difference with branded and co-branded?

Anonymous — Sat, 24 Oct 2015 02:45:51 GMT

Beating a dead horse.

Captial One Playstation.

Gets points spending on playstation. Use points for playstation products. No Annual fee.

Someone mentioned, and I concur, one theory is the Co Branded has looser underwriting because of Joint Parties entering the agreement. The Lender saves some, and the restrictions on a co branded card can deem that it'll be HARDER for the consumer to rack up points rather than a standard cash back card.

Re: What's REALLY the difference with branded and co-branded?

icyhot — Sat, 24 Oct 2015 11:38:01 GMT

@takeshi74 wrote:
@icyhot wrote:
I keep seeing people saying that ci-branded cards with some lenders are easier to get than their flagship cards. I'm really curious as to why or if anyone has insight on the reasoning. If someone defaults on a BCE or CSP, the bank will take the same hit as if it was on a Delta Amex or Marriott card. Am I missing something?
Like any other broad, sweeping generalization it fits some cases and not others. Cobranded doesn't mean anything aside from the two brands. Whether a card has easier approval critiera or not depends on the specific card and not just whether the card is cobranded or not. Some cobranded cards are easier. Some are not.

The generalization may be because some are conflating store cards and cobranding.

Well it's not really a sweeping generalization when a company like Chase has a specific underwriting policy that does NOT apply to cobranded cards. There's clearly a risk assessment being used that's different for the two.

Re: What's REALLY the difference with branded and co-branded?

jsucool76 — Sat, 24 Oct 2015 12:04:07 GMT

Cobranded cards are the money makers for banks. Through the partnership with a common carrier like delta, or American, or a lodging brand like Marriott, or starwood, the bank is essentially investing in the company.

If I'm a bank and I buy 100,000, 000 American Airlines miles, then I need people to actually have AA cards to give them out. Otherwise I'm just sitting there with all those miles that I spend millions of dollars on, and they're doing nothing.

Same applies to hotel points. With a bank owned currency like UR, MR, or TYPs, the currency is basically printed as they need it, and just added to the liabilities. With hotel points, and airline miles the bank has to prepay for all the points and miles. They want to get their money back. The only way for them to do that is to open more credit cards.