Perks multiply in latest generation of elite cards
By Kelly Dilworth | Published: July 14, 2015
Why shell out $400 a year or more just to carry a super premium credit card? It's all about the perks, say some elite credit card and charge card holders.
"It's more than just a credit card," says Nessa Feddis, a senior vice president at the American Bankers Association. Many high-end cards come with exclusive perks -- such as VIP airport lounge access and round-the-clock concierge services -- that make life easier and more comfortable for cardholders, says Feddis. Elite cards also tend to be stocked with richer side benefits than lower fee cards, such as preferred VIP concert seating, access to ticket sales before they go public, luxury gifts and assistance with private jet rentals.
As competition heats up for high-spending cardholders, issuers are upping their game and supplementing traditional elite card benefits with a bevy of exclusive freebies that, in some cases, are so generous they're worth more than the card's annual fee. (See chart below.)
"My annual fee is $450 per card, and the travel perks that the card offers more than make up for the $450 that I pay," says Jane Delo, an insurance executive who owns an American Express Platinum card. "I get a $200 per year airline credit on any airline that I choose. So that is good for baggage fees, upgrades, food and beverages." American Express also foots the $100 bill for U.S. Customs' Global Entry Program, she says, which lets her zip through airport security and skip the U.S. customs line when she travels internationally.
In addition, Delo's Platinum card has saved her money on numerous luxury hotel stays, she says. "If I book through American Express through their fine hotel and resorts program, I can get anywhere between a $50 and $200 resort credit per reservation. I also get a free breakfast, early check in, late check out and a free room upgrade if available," she says. "I would say that seven out of 10 times that I travel, I am eligible."
Meanwhile, blogger Ben Schlappig of the travel blog One Mile at a Time recently paid a $450 annual fee for a Citi Prestige card in order to take advantage of the card's $250 airline credit. Unlike other premium card programs, Citi's airline credit doesn't restrict cardholders to incidental fees and in-flight purchases. "With Citi, you can use that just toward the cost of an airline ticket," says Schlappig. Citi also awards the $250 credit every calendar year, rather than every 12 months. So, in practice, new cardholders could wind up getting $500 in their card's first year. "So right off the bat, I made $50, basically, with the card."
There are a few no-fee cards that give you a pretty good amount of awards, but to really get the big numbers sometimes you just have to suck up the annual fee.
Schlappig also saved money on travel by taking advantage of Citi's new hotel benefit, which awards Prestige cardholders a free night's stay if they book a room for four or more nights. According to Schlappig, those savings can add up quickly if, like him, you spend much of your life on the road. "I've only had the card for two months, and I've saved over $1,000 on hotels just using this card."
A good value?
According to blogger and optometrist Kim Parr of the blog Eyes on the Dollar, a high fee card can be a practical option if you have money to spare and can earn enough points to help make up for the cost. Parr says that she and her husband applied for a Platinum card after receiving a targeted offer for 75,000 membership rewards points. Like Citi, American Express also awards the airline credit every calendar year rather than every 12 months, so "that makes the fee a wash," she says -- at least for the first year. "We have several rental properties. My husband travels a lot. We just kind of felt like if we have to spend money on those things anyway, we might as well just try to get as many points as we can," says Parr, who also owns a Citi Prestige card. "There are a few no-fee cards that give you a pretty good amount of awards, but to really get the big numbers sometimes you just have to suck up the annual fee."
Parr says that complimentary access to airport lounges has also been fun to take advantage of -- especially now that American Express is building its own high-end lounges. "The Centurion lounges with the Platinum card are awesome. I've been to the one in Dallas/Fort Worth and the one in Las Vegas. I felt like high society sitting in those. They have full meals, very modern décor. They have a kids' room so you can sit your kids in there and let them play video games or watch a movie." Some airlines are also competing with one another by upgrading their airport lounges, which has helped boost the value of complimentary access.
For Parr, the allure of high fee cards isn't the prestige. "I don't get really caught up with status. We live in a rural area where most people wouldn't know a Platinum card from a debit card." Instead, she says, it's the practical benefits and indulgent perks that make the cards worthwhile.
Fierce competition means better
perks for cardholders
According to Zoot Enterprise's Eric Lindeen, many elite cardholders feel the same and want more from their exclusive cards than just to show them off. That, in turn, is making it harder for issuers to keep new cardholders happy. "There's a lot more pressure these days," he says.
In the past, people often applied for elite cards for "the glamour effect," says Lindeen. When you showed up to a store or restaurant with a prestigious card, you could flash it around and get treated differently because the staff recognized your wealth. "What we're seeing now is that there are a lot more mass affluent consumers who are looking for more tangible benefits," he says.
They're great products in terms of the value they're providing. You're really getting that white glove concierge service.
CCG Catalyst Consulting
Issuers, in turn, are trying to keep up by offering better, more distinctive rewards and, in some cases, more customized programs for affluent cardholders who want benefits that match their interests, says Lindeen.
"The credit card market in the U.S. is getting pretty mature," says Madeline Aufseeser, a senior analyst with Aite Group. "There's a lot more competition than there was previously. It's not just about stealing cardholders from one company to another," she says. Issuers now have to do a better job of attracting cardholders by differentiating themselves from the pack.
Premium cards with similar rewards but lower annual fees also pose a threat, says Andrew Davidson, senior vice president at Mintel Comperemedia, especially since "a lot of those cards have been adding benefits and enhancements over the years and are a really great value." Because premium cards with $100 to $200 annual fees have become so perk-heavy in recent years, it's making it harder for super premium cards to justify their higher annual fees, he says.
To stay competitive, issuers are loading super premium card offers with even more benefits, says Davidson. For example, Citi recently began offering Citi Prestige cardholders free rounds of golf three times a year. Some issuers are also offering richer incentives to get people to apply, he says, such as bigger sign-on bonuses and more attractive supplementary cardholder policies.
Exclusive cards for the ultra
According to Ali Raza, a principal at CCG Catalyst Consulting, cardholders who want even more luxurious benefits may be able to get them through higher fee cards, such as the J.P. Morgan Palladium card or the world-famous American Express Centurion card (better known simply as "the black card.") But they'll have to wait for an invitation to get it. "The chances of getting direct mail for the Palladium card are slim to none," he says.
These cards don't advertise their benefits to the general public and so they are shrouded in rumors and mystery. But according to Raza, they offer personalized benefits and carefully curated, experienced-based rewards that are hard to beat. "They're great products in terms of the value they're providing," says Raza. "You're really getting that white glove concierge service."
American Express spokeswoman Elizabeth Crosta says that cardholders who qualify for the Centurion card -- which charges a $7,500 initiation fee and a $2,500 membership fee -- enjoy the best of what American Express can offer, including personally tailored service that's similar to what you'd get from a personal assistant. "Anything you can think of, you can call up and your concierge can help you," says Crosta. "It's really tailored to what a card member desires."
Premium cards not for everyone
Deciding whether to apply for a super premium card comes down to what perks you think you'll use, says Crosta. "Some people are highly rational and just want cash back," she says. "If you're not going to use the perks, why get the card?" But if you're a frequent traveler and have a taste for high-end hotel stays, a super premium card could be a good option.
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