The TOP 5 co-branded cards: How they fare

He travels at least six times a year, often with his family. He earns at least 1,00,000 air miles a year, and uses his credit card to buy his air tickets. He shops regularly, and almost always on credit. He's a credit card issuer's dream customer. Meet Ravinder Kohli, 39, owner of Legend Inn in South Delhi, and regular user of his Citibank-Jet Airways Gold Card. Kohli is delighted with his co-branded card. "I avoid the serpentine queues at the security check-in, get invited to the J-Class lounge and keep benefiting from upgrades," he says.

In fact, Kohli uses only his co-branded card these days, as he feels that the range of benefits he gets - discounted airfares, upgrade vouchers, airport lounge access, excess baggage allowance, insurance - cannot be matched by an ordinary card. Is Kohli right? Do co-branded airline cards really offer you so much more than ordinary cards or are these just another marketing gimmick? We take a look.

Ticket to ride. The main selling point of co-branded airline cards is the discounts you get on airfares across classes and schemes–on full fares, easy or apex fares, and even on coupons. For instance, the American Express Indian Airlines Gold Card offers a 25 per cent discount on any IA (now Indian) business class ticket. Yes, you pay a hefty Rs 5,900 as annual fee, but if you're a frequent flyer, it may just be worth it. The Citibank Jet Airways Gold Card comes at an annual fee of Rs 2,000 but offers only a 3.5 per cent waiver on business class fares.

Though annual fees on co-branded airline cards are pegged higher than the regular credit cards, the freebies on offer generally outweigh the extra charge.

Vijay S. Mehta, chief consultant, Credit Card Management Consultancy, says: "If your flight is delayed, you'll know the worth of lounge access and J-Class check-in, where you can use the extra time more productively by either browsing online or simply networking, even when you don't have a business class ticket."

Rewards galore. Offering discounts and freebies alone may not be enough to woo customers, so these cards also offer reward schemes. The more you use your card, the more reward points you get. You get extra points if you use specific services-typically, the card issuer ties up with car rental agencies, hotels, telecom companies for this.

Once you accumulate a sufficient number of points, you can redeem them for free air tickets. Simple enough - and undoubtedly good news for those who use their credit card lavishly. But there are problems with this particular scheme. Ask Jai Vikram Bakshi, 38, who has a Citibank Jet Airways Silver Card. Bakshi is quite certain that 80 per cent of cardholders don't have a clue about how to redeem points.

"I had accumulated sufficient points on my credit card to fly my family to Kolkata but fell short of a few points, which I had to buy. Instead of an online transaction, I had to go all the way to the Jet Airways office and fill up a fax processing form, which was then sent to Mumbai for the official nod from the headquarters. The process became really tedious," complains Bakshi, who has since stopped using his card.

The card issuer will tell you that it's a simple procedure to top up if you fall a few points short of the value of a ticket. But, as Bakshi will tell you, what they say is very different from what they do.

Ashwin Samant, 29, a Mumbai-based shipping executive, owns the IA-Amex Green Card as well as Citi Jet Gold Card. The two cards serve two very different purposes for Samant. The Green Card is a charge card (where credit can't be revolved) and the Gold card is a credit card. Though Samant pays his bills on time, he keeps the Gold Card for his personal use just in case he slips. His official use of the Green Card ensures that at least officially, he can never be a defaulter.

With more people following Samant's example, it's little wonder that more and more card issuers are planning to enter the co-branded arena, in partnership with airlines. Sanjeev Patel, senior vice-president and head, marketing (cards), HSBC, says that although his bank does not offer co-branded cards with any airline, the HSBC credit card comes with a frequent flyer miles advantage on Jet Airways and Air Sahara.

According to Madhivanan B, general manager, Cards and Unsecured Loans, ICICI Bank, his bank is planning to extend the co-branded cards in its kitty. ICICI Bank issues co-branded cards with Kingfisher Airlines and Air Deccan, apart from the standalone ICICI Bank Travel Smart Gold Card and ICICI Bank Gold American Express Card.

With so many players in the field, competition is naturally stiff, which is why card issuers rarely do more than a cursory check before handing out cards.

"In order to ramp up the numbers, issuers encourage card usage turning a blind eye to the repayment capacity and this is when they run into bad debts," says Mehta. On average, he says, bad debts in India are as high as 5-6 per cent of the turnover of the banks, while the globally accepted norm is 2-3 per cent. "Don't hand out credit cards like biscuits," pleads Mehta.

And what about you, the cardholder? That you have a world of choice regarding your co-branded card is good news - assuming you don't end up in debt for delaying payment. Such cards attract high levels of interest, ranging from 1.9 per cent to 2.95 per cent a month. Obviously, revolving will cost you. So, don't roll over credit, pay up on time, and you'll find that the card is that much more useful to you.