If you’re a Wal-Mart or Sam’s Club co-branded credit card holder, you’re about to get a new credit card — and with it comes a new reason to check up on the benefits of holding a co-branded card.
Wal-Mart and Sam’s Club, like many other retailers, offer two types of credit cards: store-only credit cards and co-branded credit cards. Co-branded credit cards are the result of partnerships between retailers and banks or credit card payment networks such as Visa, Discover, American Express and MasterCard, identified by the network logo in the corner of the plastic card.
Wal-Mart Stores Inc. is making a co-branding partnership change later this year, switching from the Discover Financial Services payment network to MasterCard, according to an April 7 announcement made by the card program’s financing bank, GE Capital.
As a result more than 4 million cardholders will have access to a broader acceptance network and a different package of rewards and benefits. The changeover starts in late June for Sam’s Club cardholders and late August for Wal-Mart cardholders.
Whether you are a Wal-Mart Stores Inc. cardholder or not, understanding the benefits of a co-branded credit card program can help up get most out of your card’s program and open your eyes to new credit options.
Unlike single-store credit card holders, co-branded credit card holders don’t have to spend their credit all in one place.
While store credit cards can be used only at the sponsoring merchant or merchant group, co-branded retail credit cards are accepted wherever the credit card payment network is accepted.
Wal-Mart Stores Inc. cardholders have had this kind of spending flexibility through the Discover co-branded credit card but the new agreement with MasterCard will give Wal-Mart and Sam’s Club card holder’s access to MasterCard’s larger global network of 30 million merchants.
Retail store credit card holders have access to merchant-specific perks such as sales, items or even prices that noncardholders don’t. However, those who hold a co-branded store card have access to those benefits and more.
For example, right now co-branded Wal-Mart credit card holders receive Wal-Mart benefits and also those available to all Discover cardholders. Once the partnership changes, cardholders lose the perks specific to Discover, but gain the ones that come with MasterCard.
Discover and MasterCard both offer cardholders some type of emergency roadside assistance, extended product warranties and fraud protection, but those benefits details vary between networks. For example, Discover offers customers who’ve had their checked baggage delayed three hours or more up to $500 of Baggage Delay Insurance to replace their travel essentials. MasterCard does not offer anything to customers experiencing a baggage delay, but will help those who have their luggage stolen or lost. Discover credit card holders also have access to 24/7 travel assistance for sticky situations emergency medical care or sudden travel changes but MasterCard cardholders may get more travel discounts and opportunities overall through a specific travel benefit program.
“If you’re a MasterCard holder you also have access to programs like Priceless Cities, which provide exclusive access and experiences to the most traveled-to cities around the world,” MasterCard’s Vice President of U.S. Markets Communications Sarah Ely said.
Beginning June 23, Sam’s Club co-branded MasterCard holders also have access to a new cash back program that could earn them as much as $5,000 cash back annually. The program, Sam’s Club 5-3-1, allows qualifying Sam’s Savings, Sam’s Business and Sam’s Plus members to earn 5 percent cash back on fuel, 3 percent cash back on dining and travel and 1 percent cash back on all other purchases.
Sam’s Plus cardholders will also be automatically enrolled on June 12 to receive $10 cash rewards for every $500 spent on qualifying pre-tax Sam’s Club purchases.
The well-established major credit card payment networks also have well-established consumer protection measures in place, such as extended warranties and limits on fraud liability.
Similar to how network rewards programs apply to co-branded store cards, those network’s terms and conditions do as well. For example, once Wal-Mart Stores Inc. makes the switch to the MasterCard network cardholders will have access to MasterCard’s extended product warranty coverage, price protection claims, and identity theft resolution services if they become victims of fraud, according to Ely.
Consumers who want to compare the benefits need to look to their “terms and conditions” document, which are typically mailed with the card, but also may be available online.
Comparing either set of these major payment network benefits to the terms and conditions of Wal-Mart’s store-only credit card, which come solely from the issuing bank, the information from the big payment networks are much more detailed. This is not to say that consumers who hold store-only credit cards are unprotected, they would just likely have more options as a co-branded cardholder, such as chip-enabled security.
Sam’s Club says it is the first mass retailer to actively implement embedded chip technology in their new cards giving co-branded cardholders even more protection against fraud.
So, if certain card benefits are more important to you than others, examine the differences see if the card is still right for you.
See related: Rewards programs move toward flexible, immediate spending, Travel rewards vs. cash back: Do you really want to be practical?, Should I ditch my checking account to earn credit card rewards?