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Free air tickets, TVs, and furniture, anyone?

Welcome to the latest credit card marketing offering – co-branding. Co-branding is essentially two major brands converging to reach the same target audience in order to increase brand consumption and loyalty. In the case of a credit card, it is a partnership between the issuer, say, CIMB Bank, and a service/goods provider such as Malaysia Airline.

To be sure, judging by the number of co-branding credit card available in the market now, co-branding credit card is still not very popular in Malaysia yet. Some has launched the card amid great fun fair but died down not long after that, a case in point is Hong Leong-MTV credit card, which is just being re-launched. The latest that joins the co-branding foray is CIMB Bank with MAS as it co-marketing partner offering free air tickets.

Same terms and conditions apply
Like any other regular credit card, co-branding credit card carries the standard terms and conditions. The main ‘point’, however, comes mainly in the form of point redemption or rebate program offered by the co-marketing partner.

Benefits
The benefits of co-branding card can be broken down to two parts: benefits offered by the co-branding partner which makes the card attaractive, and benefits offered by the issued bank which are fairly standard benefits carry by credit card (e.g. easy payment scheme)

The 4 important points you need to know about co-branding credit card

1. Point earning system – “Opened” or “closed” systems?
2. What is the card coverage?
3. How long the points are good for?
4. How much does a point really worth?

Point earning system – “Opened” or “closed” system
No all co-branding cards are created equal. There are card that only offers one single point accumulation system where points are awarded whenever wherever the card is used. Under such ‘opened’ system, it is easier and quicker to accumulate redemption points. On the other hand, the ‘closed’ system awards points only when you shop at the participating outlets, and standard bank reward points when you use it on non-participating outlets. In a simpler term, under the ‘closed’ system, the cardholder is essentially taking TWO separate reward schemes; one with the co-marketing partner, and one with the bank. Needless to say, it will take much longer time to accumulate meaningful reward points.

What is the card coverage?
After knowing the point accumulation system, it also pays to understand the card coverage i.e who are the participating merchants and how many are there? The card coverage has great impact on how fast you can accumulate those reward points. For one thing, even under the ‘open’ reward system, participating merchants tend to reward you with more points than those not. So it always help to keep an eye of the type of the participating merchants i.e. how frequent I would use their services/purchase their goods, and how many of them are there.

[CARD COVERAGE -click the image below for larger view)

How long the points are good for?
Typically all reward points are valid for 2 years. The question one has to ask is given the point reward system I am in now and the card coverage, how much point would I possibly accumulated over the 2 years period?

How much does a point really worthy?
This is probably the most important and interesting question. For one thing, you would not want a reward system that has high inflation value – a million points to exchange a torchlight, for example. So how much does a single reward point really worth? After performing some comparisons and exchange conversion, I found that typically a single point is worth in the range of RM0.005 to RM0.05. That is, in reward your loyalty and usage, the bank and the co-marketing partner pays you back anything from RM0.005 to RM0.05 for every Ringgit you charged to your card. Surprise? It will now make more sense to keep those one cent coins from the hypermarket checkout counters.

[HOW MUCH DOES A POINT REALLY WORTH? - click the image below for larger view]

Last but not least, there are two other things you need to know :
Watch up for “free-for-live” co-branding card
Regardless which cards you choose, given how competitive the market currently, the cardinal rule is to choose a card that charges no annual fee. Pay attention to the ‘free-for-life’ marketing gimmick – always check the fine prints. Most likely the free-for-life is based on meeting minimum spending amount or usage frequency.

Always pay your bill in full
‘Rewards’ are only profitable if you pay-off you balance each and every month, otherwise, you could face interest charges that exceed the value of your rewards.

Now go out to accumulate your reward points.