Premium credit cards are the same as any other card type in terms of how they work. You get a certain amount of credit, and you need to pay a fixed portion of it back every month for a specified time period while also paying for all the cardholder fees.
Regardless of the issuer, these cards come with the following basic features:
- High credit limit
- Hefty annual fees (not always)
- Steep interest rates
- Attractive perks and rewards
Depending on the issuer, these cards’ special features can differ somewhat, but they typically come down to the same perks, mainly travel-related.
Some of the perks you can get with a premium card include:
- Concierge or personal assistant services for travel bookings or personal shopping
- Access to exclusive airport lounges
- Discounts at airport lounges and on travel purchases (flights, hotels, airport transfers, etc.)
- Discounts at selected high-end merchants
- Rewards on travel purchases, such as air miles
- Rewards or ride-hailing services
- Free checked baggage
- Checked baggage insurance
- Insurance for delayed and cancelled flights
- Worldwide travel insurance
- Rental car insurance
- Roadside assistance for vehicle breakdowns
- Home emergency cover
Consider a premium card only if you’re a big spender and regularly use all the features. If you don’t travel frequently, you would only waste a lot of money on the fees, without enjoying the cardholder perks.
Premium Cards Pros
By now, you must have realized that there are plenty of benefits to using a premium card, as long as you can afford one, and you use it responsibly. Let’s dig deeper into the most important advantages that you can enjoy.
High Credit Limit
This type of card offers a massive credit limit, which is precisely why it is seen as a status symbol. Minimum and maximum credit limits vary from one issuer to the next, but they’re very flexible.
You can borrow several thousands of dollars or even hundreds of thousands of dollars. That can come in handy if you regularly purchase various expensive and luxury items that you may not be able to buy with a standard credit card.
Excellent Value for Money
These cards may come with huge fees, but they can actually save you a lot of money in the long run.
That’s because you can get excellent discounts on purchases that would cost you much more with any basic credit card. You can also collect enticing rewards, without which you would need to spend much more money on various purchases and services.
If you regularly use all the features and perks, you can get great value for money.
Perfect for Frequent Travellers
If you’re a frequent traveller, who’s also a big spender, applying for this type of card can be a great decision.
That’s because almost all the perks you get are designed for travel-related purchases. Exclusive access to airport lounges where you can get food and beverages for free, discounted flights and hotel stays, and travel insurance worldwide are only some of the fantastic travel perks you can enjoy.
One of the best perks is having your own concierge to arrange all your travel bookings. They’re usually available 24/7 and can book your flights, airport transfers, hotel accommodation, high-end restaurants, theatre tickets, and much more.
They can even buy gifts for your loved ones, send flowers, and provide assistance with any other kind of personal shopping.
Premium Cards Cons
Not every credit card is perfect, and the premium type is not an exception. For many people, the following disadvantages might be an instant deal-breaker. However, you may consider them a small price to pay for all the benefits you would receive.
Hefty Annual Fees
Every card in this exclusive category comes with high annual fees. They vary from issuer to issuer, but they go as high as several hundreds of dollars for Platinum cards.
That’s a really steep price tag, but remember that you’re getting all those exclusive perks. You also get a very high credit limit, so the amount you have to pay annually as a premium cardholder shouldn’t come as much of a surprise.
Given the fact that you can get a massive credit line, it goes without saying that interest rates can get pretty high too.
If you can’t afford to clear your balance every month, carrying a premium credit card can quickly become incredibly expensive. You could potentially get into huge debt and hurt your credit score and financial future. The value you get from all the rewards wouldn’t be nearly as high as the steep interest.
Available Only to Wealthy Consumers with Good-to-Excellent Credit
One of the criteria for being eligible for this card type is a high annual income. The other is an excellent credit score.
If you don’t meet those criteria, you simply can’t get approved.
If you can’t afford to pay off the high balance on time and in full each month, a premium card may not be a wise choice for you. That’s the rule with any card, but this one is quite expensive to hold, so don’t make the decision to apply lightly.
Should You Use a Premium Credit Card?
This type of card is designed for people who regularly spend a lot of money on luxurious or otherwise expensive items. If you’re a big spender who needs a high credit limit, then these cards might be a good choice for you.
Most of the benefits are travel perks and reward points that can save you a lot of money in the long run. However, you need to be a frequent traveller and make full use of those perks if you are to earn enough value. Otherwise, borrowing all the money could get quite expensive.
The annual fees and interest rates are steep and can diminish your earned rewards if you’re not a responsible cardholder.
If you’re absolutely certain that you can afford it and use it regularly and meet the application requirements, then this card type may be a good fit for your lifestyle.
The Bottom Line
Premium credit cards can be fantastic for anyone who leads an expensive lifestyle and travels often. Due to high-interest rates and annual fees, they’re expensive to hold, but they come with very attractive perks that offer great value for money.
Before making any commitments, think long and hard about your spending and make the necessary calculations. If you decide to apply, make sure you compare different issuers to find the right fit for your needs.