Card holders should go through the charges schedule of various premium credit cards during the selection process
Most credit card issuers offer premium credit cards to meet the unique lifestyle requirement of high-income groups. These cards come with higher credit limit, complimentary access to airport lounges and golf courses, lower mark-up fee on foreign currency transactions, higher reward points on card transactions, etc. However, premium cards also levy higher annual charges and income eligibility criterion, with some of them being strictly ‘invite only’.
Here are some checkpoints to consider while selecting a premium credit card:
Spending Pattern
As with other credit cards, the reward points and benefits available on premium cards may vary. Some of the premium cards extend higher benefit for specific transaction than others. Similarly, a certain card may offer higher number of complimentary access to airport lounge or golf course than others.
Different premium credit cards would also have tie-ups with different luxury hotel chains. Hence, analyse your spending pattern and lifestyle preferences before opting for a particular card. Opt for one that suits your lifestyle the most and earn maximum benefits on frequent card spends.
Annual and Joining Fee
Choose a card whose monetary equivalent of various benefits exceeds its joining/ annual fee. This can be in the form of discounts, cash backs, reward points, free vouchers, welcome benefits and renewal benefits etc.
As most of the premium cards waive off annual fee on making card spends beyond a threshold limit, factor in the expected annual spends while selecting a card. Qualifying for fee reversal can neutralise the cost of availing premium card(s) and thereby, increase the net monetary benefit of availing such cards.
Joining/Welcome Benefits
Credit card issuers offer joining or welcome benefits on premium credit cards. These benefits can be availed in the form of discount vouchers, gift cards, complimentary club memberships and additional bonus reward points. Some cards also offer renewal benefits on the renewal of premium credit cards. This can help recover joining or renewal fee either in part or in entirety. However, as most of these benefits can only be redeemed with the partner brand of the card issuers, those planning to avail premium credit cards should also take their brand preference into consideration while comparing premium cards.
Terms and Conditions Related to Rewards Point Expiry and Redemption
As with other credit card types, the reward points of most premium credit cards expire within 2-3 years from the date of their credit. However, there are some premium credit cards whose reward points never expire. Similarly, most credit card issuers allow the accumulated reward points to be redeemed only on select merchandises of partner brands whereas a few may allow the accumulated reward points to be adjusted for repaying card transactions. Hence, read the terms and conditions regarding the reward redemption, accumulation and validity period before zeroing in on a premium card.
Finance Charges and Other Fees
While one should always aim toward paying his credit card dues in full by the due date, there is always a possibility of incurring finance charges due to sheer negligence or any financial emergency. The finance charge of premium credit cards can range anywhere between 23%-45% p.a. depending on the card and its issuer. Similarly, the mark-up fees on foreign currency transactions too can vary across various premium credit cards. Hence, card holders should go through the charges schedule of various premium credit cards during the selection process.
The author is Director, Paisabazaar.com
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.