Premium Credit Cards: Pros and Cons
Understanding Premium Credit Cards
Premium Credit Cards may be what you need if you are looking for credit cards that offer high credit limits and additional perks such as cash back, frequent-flier miles, product warranties, travel insurance, or emergency services. Though premium credit cards are seen as status cards, they actually come with great mouth-watering benefits. But I need to quickly mention it here that premium credit cards are not for everyone. It doesn’t matter how strongly you may desire to have one, if you don’t meet the requirements which may be stiffer than when applying for regular cards, you may not get it.
Requirements for Premium Credit Cards
For you to be desiring to have a premium credit card, I assume that you already know and meet the basic requirements for getting a regular credit cards. So, in addition to meeting those basic requirements, credit card companies will expect that you have a very high credit score and earn very high income. So, if you come across anybody with a black or purple credit card (premium credit cards are usually in black or purple colours), you should understand that the card holder may likely be high-earning big spenders.
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Do You Really Need Premium Credit Cards?
Meeting the requirements for the premium credit cards is just one aspect. The fact that you have a very high credit score and that you earn very fat income does not necessarily mean that you should apply for one. Even if you are approached by credit card companies, you should be able to assess your situation so as to determine whether you actually need a premium credit card or not.
For instance, if you know that you may not be able to utilize all or most of the benefits that your premium credit card offers, there is no point applying for one. Of what benefits is it to you to accumulate points on airlines that you don’t fly regularly or on the route that you don’t take very often? On the other hand, if you assess your situation very well, you may realize that some of the benefits are already covered by your other credit cards or insurance policy.
For you to decide whether you actually need a premium credit card, you may need to weigh both its pros and cons
Pros and Cons of Premium Credit Cards
The benefits of having a Premium Credit Card may include the following:
High Credit Limit: For high spenders, premium credit cards can help you make large purchase without the fear of likelihood to exceed your credit limit. Of course, the credit card companies target individuals with high income with this type of card. In fact, they encourage you to spend as they usually entice the cardholders with attractive rewards on the purchases made.
Rewards: Premium credit cards can offer value for users through immediate discounts or credits each year or month for certain purchases. If you are a high spenders, your accumulated rewards for the year can be very substantial. Some of the cards offer sign-up bonus. Premium credit cards offer you the opportunity to earn better-than-average rewards. If you know how to maximize your rewards, premium credit cards can actual serve as an investment. But you need to be aware of what perks are available to you, and ensure that you use the card appropriately. The card can really save you a lot of money in the long run.
Travel Perks: You can enjoy different travel perks such as booking travel reservations, hotels, flights and airport transfers, airport lounges, worldwide travel insurance and car breakdown cover. You can also enjoy reimbursement for Global Entry or TSA PreCheck.
Other perks include concierge or personal assistant that can provide a personal shopping service, locate hard-to-find gifts and send flowers and gifts on your behalf.
Cons of Premium Credit Cards
Annual fee: Premium Credit Cards usually come with high annual fee. The fee can range from $500 – $700 per annum. This is not a small amount. Except you are prepared to maximize the benefits you enjoy on the card, holding the card may not be worthwhile.
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High Interest: If you don’t always pay your balance off every month, the interest amount you will pay on the revolving balance can be huge. The interest rate is very high when compared with regular credit cards.
Nature of rewards: Even though premium credit cards come with a lot of rewards, some people may not be able to enjoy the rewards in real sense. Even if you utilize the benefits, you may discover that some of the services you enjoy on the card can actually be gotten at cheaper rate elsewhere. Before you sign up for a premium credit card, it is important you ascertain that your points will not expire as long as you keep the card active. You should find out if there are limits on how many points you can earn. It will also be good if you can transfer your points to a variety of hotel and airline partners.