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Private Label vs Co-Branded Credit Cards: What’s the Difference?

There are many different types of credit cards out there, so it’s not uncommon to confuse one type with another. Private-label credit cards and co-branded credit cards are two that people commonly mix up. 

While there are some similarities between the two, some significant differences are worth noting. Before you sign up for either type of credit card, knowing the benefits and disadvantages of each can help you make the right decision for yourself.

This, in turn, will help you purchase what you need, build your credit, and even save you some money.

What Are Private Label Credit Cards? 

Holding a Credit Card

If you’ve ever been shopping in a store and asked about signing up for their store card, that’s a private-label credit card. They’re store-brand card that you can exclusively use at that particular store and their other retailers. You can use it in person or online. 

Businesses such as clothing stores, banks, or restaurants, use private label credit cards to try and create customer loyalty. When you have a credit card that you can only use at certain stores, you’ll be more inclined to return your service there. 

These credit cards offer you incentives for using the card at their retailers. You may get cashback deals, coupons in the mail or via email, a certain percentage off items, and other deals by simply using that one credit card

Private-label credit cards are great for people who frequent certain stores. For example, the Red Card at Target is great for habitual Target shoppers to take advantage of savings. 

The application process for these credit cards is simple. Most retailers who offer a private label or store card can apply right there in the store.

You can also do it online via your computer or phone, and you’ll know within minutes whether you’re approved or not. Once you’re approved, you can start using that card in that store right away.

How Does Private Label Processing Work?

Just because your private label credit card is only used at one company or one institution, you’ll still need to pay it off, and there’s a processing system. Most private-label credit cards use a third-party financial institution to help with payment collection and issuing.

These credit cards may have a store name on them, but a reliable and secure banking institution still operates them. This helps reduce any hidden fees or shady practices by the company offering the credit card. 

Private-label credit cards are just like other credit cards. You’ll need to stay up to date on your payments to stay in good standing and keep your credit score up. While the money isn’t coming directly from your bank account when you swipe these cards, you’ll still owe whatever you’ve spent at the end of the month. 

If you keep up to date with monthly payments and don’t go into consistent debt, you don’t have a thing to worry about. A private-label credit card is a smart move for those who don’t want to pay directly out of pocket for a business’s products or services. 

Lastly, private-label credit cards offer promotional financing; a type of deferred interest. The ability to yaw off your debts and fees on the card on a relaxed schedule increases the benefits of using a private-label credit card for a consumer. 

During the promotional financing periods, the retailer pays the card issuer for the debts incurred by the customers. Consumers who are using promotional financing can pay off large purchases at a retail shop with very little or no interest. 

Benefits of Private Label Credit Cards

While having a credit card that you can only use at one retailer compared to a universal card may not seem beneficial, these cards have some pros. There are several benefits of a private-label credit card for both individuals and businesses.  

They Have More Leniency

Since these companies are trying to incentivize customers to use their stores, they are going to be more lenient when it comes to spending money, renewing the card, and making purchases.

You Can Earn Loyalty Points

Loyalty points encourage them to continue using one store specifically, but it can make customers happier to use the business’ services.

If you get money back or points by spending money, you are more likely to keep going back to the same retailer. It’s great for you if you frequent the establishment and regularly make purchases there. 

They Have VIP Features

Many private-label credit cards offer VIP features that encourage customer retention. This makes the shopping experience more accessible for consumers. 

They’re Generally Easy to Qualify for 

Most major credit card companies like Visa, Mastercard, and Capital One aren’t the easiest to qualify for if you have a poor credit rating.

Private-label credit cards are often much easier to be eligible for despite your credit score. This is a major benefit for those who don’t have a very high credit score.

Cons of Private Label Credit Cards

Although there are numerous benefits of using private-label credit cards, there are some downsides to these credit cards as well.

They Tend to Have a High APR

APR is a credit card interest rate or the consumer’s price to pay for ‘borrowing’ money on a credit card. Typically, this annual percentage rate is lower for those who pay their monthly dues and have a higher credit rating. 

If you make your payments in full and on time, this may not affect you. If you cannot make the payments, this will end up hurting you.  

Since private-label credit cards are for individuals who may have a poor or bad credit rating, the APR is much higher for these private-label credit cards.

You Can Only Use Them at Specific Stores

Unlike typical credit cards that you can use for any retail store or location, private-label credit cards are only usable for one retailer. 

Only using it at specific places reduces the card’s versatility since retail stores want to encourage consumers only to use their products and services.

They Have Deferred Interest

Although this can help users save money off the bat, it can lead to hundreds of dollars if you end up spending more than you can pay off. 

For consumers who aren’t responsible with their money, the deferred interest of private-label credit cards may do more harm than good. 

Examples of Private Label Credit Cards

It’s probably safe to say that the most well-known private-label credit card is the Red Card from Target. Many people love this credit card because you can use it in their major retail store that sells everything you could need. They have clothes, groceries, entertainment, and more. 

The Target Red Card offers customers 5% back on all purchases, whether they’re in person or online. The loyalty perks are great, such as free shipping and a 30-day return policy. 

Nordstrom is another popular private-label credit card. Their store card has fantastic perks like coupons which you earn via loyalty points on every purchase. 

Lastly, Amazon offers an Amazon store card that is a great deal for Amazon Prime shoppers. This card is designed for Amazon Prime members who want to earn rewards and access unique financing options.

Should I Purchase a Private Label Credit Card?

Whether you should get a private label credit card will vary depending on your situation and what you’re looking to use a credit card for. If you’re an avid shopper at a specific retailer, then yes. Getting a store card for that retailer will only benefit you. 

You’ll be able to earn points, coupons and save money on purchases you would initially be making anyway. They’re also an excellent way to raise their credit ratings for people with lower credit scores since you can only spend money in one place.

However, if you’re looking for a credit card that you can use anywhere, then a private-label credit card isn’t for you. Since you can only use them at one retailer or maybe a handful, you may not find them as beneficial as a traditional credit card from Visa or another company. 

Terms and Conditions

According to the ‘Internet Posting of Credit Card Agreements’ on the Consumer Finance Gov, a private label credit card account is an account with a credit card that can only be used by a single merchant or group of merchants. 

You can only use all of the private label credit card accounts issued by one retailer at affiliated merchants.

Customer Support

Almost every company in the world offers some sort of customer service. Private-label credit cards provide customer service to anyone who has a credit card with them.

They’re able to assist you with payments and questions regarding your account status. 

Compared to other credit cards, where the financial institution or bank is in charge of dealing with customer complaints and questions regarding their account, the specific retailer provides a particular customer support department to help with questions and solve any credit card-related issues.

See Related: Amex Points vs Chase Points: What is Better?

What are Co-Branded Credit Cards?

A Co-branded credit card is a credit card that a retailer issues within a specific network.

Unlike a private label credit card that can only be used by one retailer consumer, you can use the co-branded credit card at any location as long as they’re within the network of affiliates. 

Therefore, users can use the co-branded credit card to earn loyalty discounts, points, perks, and deals with the sponsoring retailer and other places within the network. 

Co-branded credit cards can provide additional versatility that you may not find with the private label credit card.

Since customers are typically more flexible than always visiting one retail location or store for their products and services, a co-branded credit card can increase customer loyalty and retention by offering discounts at more than one store. 

How Do Co-Branded Credit Cards Work?

A co-branded credit card is affiliated with and sponsored by the retailer and the bank or financial institution. The retailer, such as a gas station, clothing store, or restaurant, will partner with a bank or card network, like Mastercard, Discover, or Visa.

You’ll be able to use this co-branded credit card almost anywhere as long as they accept the type of card it is. For example, you can use the Ann Taylor LOFT Mastercard anywhere that accepts Mastercard. 

When you use these types of credit cards, you’ll still be able to earn points or other perks. Many still offer loyalty points which can lead to more savings.

Often, you’ll earn and save more when you use these cards compared to a standard private-label credit card. Depending on which co-branded credit card you choose, you’ll be able to pay via a banking app or website.

Since they’re connected to a major banking institute like Visa, Mastercard, or Capital One, you’ll pay these like you would a traditional credit card.  

Benefits of Co-Branded Credit Cards

Like there are benefits to using a private label credit card, there are pros to using a co-branded credit card. Here are some of the significant benefits of these cards. 

The Rewards 

One of the main perks of using a co-branded card is the rewards for spending that you would do anyway.

Unlike private label cards, where you only receive discounts and rewards for one specific store, co-branded cards provide you with rewards for purchases that you make anyways during the day.

There are Bonuses with Your Top Brands

Another benefit of using co-branded cards is that you can earn bonus points, miles, and other perks for spending at your favorite retailers.

You Have Bigger Discounts

Unlike using your typical credit or debit card for airline purchases, hotel purchases, and other items, using your co-branded credit card can provide you with more significant discounts in the long run.

Cons of Co-Branded Credit Cards 

Before you rush off to apply for a co-branded credit card, you’ll want to be aware of the drawbacks. 

You Only Get One Brand of Rewards

The main drawback of using a co-branded credit card is that the rewards are limited to just one brand. Although you can spend your money on the entire network, the rewards are limited to the program’s rules and the network specifications.

For example, you can use the American Airlines Mastercard everywhere that accepts Mastercard, but you have to use any rewards to earn with American Airlines.

There’s a Point System

Although you may earn hundreds of points on every airline purchase, you can’t use your points right wavy. The typical redemption time varies, meaning you might have to wait a few months to use your discounted miles or hotel deals. 

Finding the Perfect Card Can Be Time-Consuming

If you have never used a co-brand credit card before, selecting the perfect option for you can be time-consuming and confusing. 

Examples Of Co-Branded Credit Cards

There are dozens of examples of co-branded credit cards out there for you to sign up for. Some of the biggest ones are for airlines.

A few popular co-branded credit cards that airlines have are Delta Skymiles, American Express Card, American Airlines Mastercard, and the United Airlines’ Visa.

Airlines can use these co-branded credit cards to encourage customers to purchase flights and extra perks. These perks range from discounted flights, seat upgrades, in-flight meals, and more.

Some organizations, such as Nascar or specific colleges, offer co-branded credit cards to incentivize those who want to feel like they are a part of a special group or club.

Some retailers offer various credit cards with different co-branded relationships to financial institutions, such as Amazon, which offers Visa and American Express options. Ann Taylor offers a store card and a Mastercard that you can use.

See Related: Free Travel Reward and Credit Card Spreadsheet Template

How are They Different?

Although they are similar in a few ways, co-branded and private-label credit cards have a few key differences that set them apart from one another. 


Private-label credit cards can only be used at one location or retailer, whereas you can use co-branded cards within the entire card network.

Redemption Period

Private-label credit cards offer rewards almost immediately, whereas co-branded credit cards may take longer to provide you with discounts, deals, and rewards to redeem. 

How are They Similar?

Understanding The similarities of private label vs. co-branded credit cards can provide individuals with the information necessary to make the best decision for their financial future. 

Limited Locations

Private label and co-branded credit cards can only be used at specific locations, varying from your everyday debit or credit card.

Easy to Obtain

Private-label cards are good options for people with low credit scores, and co-branded cards have a fast application process. These attributes make them both reasonably easy for people to get approved for.  

Boosts Brand Loyalty

Both cards increase brand loyalty and customer retention due to offering discounts and deals for loyal shoppers.

What is Better About Private Label Credit Cards?

While there are similarities between the credit cards, there are specific features of each that stand out. Here are some that stand out about private label credit cards. 

Instant Rewards 

The best part about a private-label credit card is that there’s no waiting period for rewards. Once you’ve earned enough points to have rewards, you can use them immediately for purchases. 

Easy Application Process

Individuals with poor credit and minimal credit card options can apply for a private-label credit card without jumping through as many hoops. The application process is easy and less stressful for people who may be worried about their credit scores. 

Increases Brand Loyalty

Since you can only use these cards at one store, you’ll have more loyalty to a store. This is great for both you and the company. 

What is Better About Co-Branded Credit Cards?

Although private-label credit cards provide instant rewards, there are things that are better about co-branded credit cards. Finding the best co-branded credit cards can help individuals increase versatility and save money. 

More Versatility

You can use co-branded credit cards throughout the entire network, not just a single retail store. This allows you to use the same credit card at Target that you would use to get gas on your way home. 

Lower APR

On the other hand, branded credit cards have lower APR interest rates, making them more affordable over the long run than private-label credit cards. 

Who Should Get Private Label Credit Cards and Why?

When considering getting a private label credit card compared to a co-branded credit card, there are reasons why someone should get a private label credit card over a co-branded one. 

If you’re someone who is interested in getting a credit card but are worried about being denied due to your credit score, a private label is a better option.

Since you can only use it at one retailer, they’re not as concerned about you running up as much debt as you could with a card you could use everywhere. 

Using a store card or private label credit card allows you to build your credit score without going crazy with your spending. So, if you need to build your credit score, these are great options. 

They’re also ideal for someone who wants perks and rewards for a specific store. If you regularly shop at a store that offers a private label credit card, you can earn rewards for purchases you would typically be making.

See Related: Amex Gold vs Chase Sapphire Preferred: What’s Better?

Who Should Get Co-Branded Credit Cards and Why?

Individuals who are interested in a specific brand, but want a little more flexibility, should use brand credit cards.

If they have a higher credit line and want to use their card more freely in various locations within one network, multiple brands of credit cards can offer the desired perks with a little more freedom to spend. 

These credit cards also offer more significant discounts than private label credit cards and a lower APR.

The application process is a little more complicated since they prefer people with established and good credit scores. People with good or better credit scores will benefit from these types of credit cards.

10 Amazon Products to Purchase with Credit Cards 

Regardless of what type of credit card you go with, you can purchase hundreds of different products with them. Here are some fantastic products you can use on your new credit card to buy on Amazon. 

1. AirPods Pro

Apple AirPods Pro

AirPods are all the rage right now because they remove the need for wired headphones. If you’re tired of untangling your headphones, you can purchase the AirPods Pro on Amazon for around $190 with your new credit card. 

2. Olaplex Repairing Treatment

Hair Product

Do you straighten your hair every day? Use the Olaplex hair perfector No. 3 treatment to repair your damaged ends and add a little shine to your locks! For just $28 on Amazon, you can buy this hair repairing cream with a credit card. 

3. K-Mini Coffee Maker

Mini Coffee Maker

The K-Mini coffee maker is a small Keurig machine that makes it possible to make your morning cup of Joe From the comfort of your bed. For just $78 on Amazon, you can purchase this Keurig machine with the push of a button. 

4. Mini Fridge

Color Pink  Mini Fridge

Instead of having to walk to the kitchen when you first wake up or before you go to bed, this mini fridge is the perfect addition to your room. For just $48, this mini fridge is a great option for a studio apartment or room rental. 

5. House of Marley Waterproof Speaker


If you enjoy going to the beach or the pool on a hot summer day, this waterproof speaker is just $100 on Amazon – instead of putting this purchase on your debit card, use a credit card to pay for this high-tech speaker. 

6. Cam Spotlight

Cam Spotlight

If you live alone, security is key. This security cam from Wyze is just $50 on Amazon — and there’s no price on safety and security. 

7. Hair Dryer and Volumizer

Hair Dryer and Brush

This do-it-all tool can help you dry your hair and style it at the same time so you can sleep in a little longer in the morning. This product goes for $40 on Amazon.

8. Echo Dot

Round Smart Speaker

The Echo Dot is a versatile smart speaker that connects you with Alexa, performs tasks, and connects to your compatible Bluetooth devices. For just $60 on Amazon, this is a steal.

9. Amazon Basics Dumbbells

Pair of Dumbbell

If you love working out at home or are thinking of starting a home gym, dumbbells are necessary. You can purchase these affordable weights in various weights and colors with your new credit card. 

10. Vimtag Pet Camera


Keeping an eye on your furry friends while you’re gone can give you peace of mind for the pet parents out there. You can get this pet camera on Amazon for under $30 and take a look at your pets wherever you want via your phone.

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