Sure, the perks are pretty sweet, but they come at a cost.
In the realm of credit cards, premium credit cards offer a plethora of enticing benefits. From airport lounge access to extensive insurance coverage and round-the-clock concierge service, these cards provide a wide array of perks to their holders. Additionally, many premium credit cards in Canada boast accelerated earn rates for cash back or rewards, empowering cardholders with enhanced purchasing power.
However, these premium privileges come at a cost. Cardholders typically incur annual fees ranging from $99 to $139 or even higher for super premium cards, which may command fees as steep as $699 per year. Given these expenses, it’s natural to question whether the bells and whistles associated with premium credit cards justify the investment. To assist you in making an informed decision about whether to opt for premium plastic, we delve into everything you need to know about premium credit cards.
Premium credit cards indeed abound with an impressive array of extras, each tailored by credit card issuers in Canada to cater to their clientele. While the specific offerings may vary, there are some standard premium perks commonly found across many top credit cards.
While basic no-fee cards in Canada typically offer free extended warranty and purchase protection, premium cards elevate the insurance game with a plethora of complimentary coverages. Comprehensive insurance packages often encompass various types of travel insurance such as medical, trip interruption or cancellation, lost and delayed baggage, rental car coverage, hotel burglary insurance, and more. Recently, some premium cards have even introduced mobile phone insurance. These insurance benefits hold particular appeal for frequent travelers, but they still hold value for occasional travelers, potentially saving hundreds of dollars annually, even if one only travels once or twice a year.
However, it’s essential to note that not all premium credit card insurance benefits are equal. Factors such as the duration of coverage vary significantly among cards, with some offering protection for as little as 10 days, while others extend coverage up to 60 days. Additionally, many premium cards provide limited or no travel medical insurance for individuals aged 65 and over.
Another coveted perk, especially for frequent travelers, is airport lounge access. While some premium cards provide membership to an airport lounge program like Priority Pass or LoungeKey, not all include free visits. It’s essential to choose a premium card that offers complimentary lounge visits to maximize the value, as paying for lounge access each time can become expensive. Access to airport lounges can significantly enhance the airport experience, typically offering amenities such as free food and drinks, comfortable seating (some with designated napping areas), spa services, and shower facilities.
Nearly all premium cards in Canada offer a concierge service, providing cardholders with access to 24/7 assistance from professional concierges. This benefit extends to a wide range of tasks, including making restaurant reservations, securing hard-to-get tickets to events, providing recommendations on local attractions, and even offering assistance with emergencies such as finding a plumber. A reliable concierge service essentially functions as a personal assistant, enhancing the overall convenience and luxury associated with premium credit cards.
Many premium cards offer hotel-related perks, such as those affiliated with Visa Infinite. These perks often include complimentary breakfast, late checkout, and room upgrades at eligible hotels. Additionally, cardholders may enjoy hotel room discounts, complimentary nights, or credits for use at hotel spas or restaurants.
Premium credit cards often provide access to a wide range of entertainment, special offers, and exclusive experiences. These offerings can vary widely, so it’s essential to research the specific benefits of your credit card. Generally, premium cards grant access to unique experiences such as chef-led dining events, curated wine tastings at exclusive wineries, priority seating at sports or concert events, and early access to tickets for theater shows and concerts, among others.
Premium credit cards often offer enhanced earn rates, providing cardholders with more rewards for their spending. While a basic, no-fee cash back credit card might offer 2% cash back on groceries, restaurants, or recurring payments, a premium card could offer up to 4% cash back for the same categories. Similarly, instead of earning 1 or 2 reward points or miles per $1 spent on a regular reward card, premium cards can offer as many as 5 points for every $1 spent in specific categories. These higher earn rates significantly boost earning potential and can easily offset the annual fee associated with premium cards.
Some less common but equally valuable premium perks depend on your specific credit card provider. Additional perks you might receive include:
No foreign exchange fee: This relatively rare perk among premium Canadian credit cards is advantageous for frequent travelers or those who frequently make online purchases in foreign currencies. With this perk, you won’t be charged the usual additional 2.5% foreign currency conversion fee most credit cards impose for non-Canadian purchases.
Discounts on golf fees and merchandise at select golf courses.
A few premium credit cards offer NEXUS rebates for travel convenience.
Premium credit cards affiliated with airlines or airline loyalty programs may provide benefits such as free checked bags and complimentary companion passes.
Rental car discounts.
The majority of premium credit cards in Canada set a higher annual income requirement compared to basic credit cards. Typically, individual income requirements range from $60,000 to $80,000, or a household income of $100,000 to $150,000.
However, it’s worth noting that American Express doesn’t specify a minimum income requirement for many of its premium cards. While income is a consideration, American Express also evaluates an applicant’s credit score, which should ideally be at least “good,” typically 690 or above. If you’re unsure about the specific requirements for a particular card, it’s always a good idea to reach out to the credit card provider directly for clarification before applying.
Premium credit cards are tailored for proactive users who actively manage their credit card usage to maximize benefits and rewards. Passive users who prefer a set-it-and-forget-it approach may not fully leverage the perks of a premium card, potentially making the annual fee less worthwhile.
To truly benefit from a premium credit card, cardholders should regularly track their rewards, utilize perks like free checked bags and rental car discounts, and stay informed about changes in benefits or offers. By actively engaging with their credit card, users can save hundreds of dollars annually through strategic use of perks and rewards.
However, premium cards may not be suitable for individuals who frequently carry a credit card balance or rely on cash advances. These cards often come with higher interest rates and fees, which can quickly erode the value of rewards and benefits for users who carry balances.
Additionally, disorganized users who exceed their spending limit or miss payments may incur fees that offset the value of the card’s perks. Ultimately, individuals who are actively involved in credit card management and maintain responsible financial habits are best suited for premium credit cards.
Pros of Premium Credit Cards:
Cons of Premium Credit Cards:
The perks offered by premium credit cards may seem enticing, but it’s essential to evaluate whether the benefits outweigh the costs.
For frequent travelers, especially those who travel for business or leisure, the investment in a premium credit card is often justified. For instance, consider the cost of accessing airport lounges independently. A Priority Pass membership costs $132 ($99 USD) annually, with each visit priced at $32. If your credit card offers a complimentary membership with four free lounge passes per year, you could save $260, potentially covering the card’s annual fee.
Insurance benefits can also provide substantial savings, but the analysis is more complex and depends on various factors like the type of coverage needed, travel destinations, and your personal circumstances. For instance, if you frequently rent cars while traveling, the rental car insurance, trip cancellation coverage, and travel medical insurance provided by a premium credit card could save you hundreds of dollars annually compared to purchasing separate insurance policies.
However, if your travel frequency is limited, spending $500 annually on a premium credit card for insurance benefits you rarely use may not be cost-effective. In such cases, purchasing standalone insurance for around $100 or less could be a more economical choice, allowing you to avoid the hefty annual fee of the credit card.
Ultimately, the value of a premium credit card depends on your individual spending habits, travel frequency, and how effectively you can utilize the card’s benefits to offset its annual fee.
I firmly believe that premium credit cards are worth the annual fee, provided they are utilized to their full potential. To fully leverage the advantages offered by premium cards, cardholders must actively capitalize on accelerated earn rates and benefits such as insurance coverage and airport lounge access. While managing a premium card may require more attention compared to a basic no-fee card, the potential rewards for those willing to invest the effort can be substantial.
The content provided on Myfinancesguru.com is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.
