Many people associate a premium credit card with wealth and status, but is there any truth in this? A so-called premium credit card comes with a yearly fee, but it can be used to access a variety of advantages.
Read on to learn the pros and cons of using a premium card and find out how to decide if such a card is worth the hassle.
You may hear a premium credit card being referred to as a “black card” or a “purple card,” and in order to have one, you are required to pay a yearly fee. However, with this fee comes many benefits, such as access to exclusive airport lounges, full travel insurance and generous reward schemes for shopping at certain retailers.
Since this type of credit card is usually offered to those who are on a higher income and who make larger, more expensive purchases, they often act as a status symbol.
The fees for premium credit cards vary depending on the provider. Some premium cards may have a relatively low yearly fee ($95 or less). Others, however, push the limits with fees as high as $5,000 per year and a hefty initiation fee. With that in mind, it goes without saying that you should only open a premium credit card account if the reward it offers would give you a net gain overall.
When looking at the APR on premium credit cards, you will notice that it is set substantially higher than a regular credit card. While this is alarming, it is worth remembering that the annual fee is included in the APR, pushing that percentage higher. In reality, you can expect to pay an interest rate between 16 to 19% on your purchases.
Are Premium Credit Cards Worth It?
The answer to this question is a very simple one — a premium credit card is worth it if you are going to use it to its full potential. For people who travel a lot, make large purchases and will benefit from the perks that come with these types of cards, they may be worth paying for. However, if you are going to be paying the fee and storing the card in a drawer, never taking advantage of what it has to offer, then it probably isn’t worth your time or money.