Black, white, titanium: Are elite credit cards worth it?

By Erica Sandberg

"When shopping for a credit card, always look for one with no annual fee."

Sound familiar? It should. Paying the bare minimum for plastic is one of the standard directives among personal finance experts, and in general it's sage advice. Elite credit cards (see chart), however, are the exception to the rule. Depending on your lifestyle and circumstances, paying extra for such accounts can make sense. Find out if these specialized products are worth the price of admission.

Elite cards, defined
Credit card issuers offer many types of accounts, each designed to match its diverse customer base. Some are for those just starting out, others are for people with poor credit and still others are for those with good, established credit histories. If you're in the latter group, you'll probably be eligible for a low fee card that also allows you to earn points for airline miles, cash back and other rewards. However, if your credit rating is outstanding and you are both a high earner and big spender, you could be eligible for an elite credit card, which provides far more extreme benefits. Not all financial institutions issue such cards, but many do, including Bank of America, US Bank, Citi, American Express and Barclays Bank.

Whether the card is white, black, gold, platinum or sports an enigmatic name, all elite cards share some common traits:

• An annual membership fee, often costing hundreds of dollars or more.
• Programs and services not available to holders of "regular" credit cards.
• Available only to a select group of preferred customers.

Bear in mind that the annual fee is not punitive, as it would be if the bank deemed you a risky borrower. Rather, it covers the cost of a wide array of expensive perks. "There is a card hierarchy," says Mona Hamouly, an American Express spokeswoman. "These are top-tier products. The benefits define the card." Still, some accounts are particularly pricey, as illustrated by the ultra-exclusive American Express Centurion card, which is constructed from genuine titanium. Cardholders pay a one-time $5,000 joining fee and $2,500 annually. In contrast, the company's platinum card (made of standard plastic) is a mere $450 per year.

The benefits of prestige
So what you get for the privilege of holding such a rarified credit card? That depends on the issuer and card-type, but most programs include:

• Generous travel benefits, such as airport club access, hotel and resort upgrades, late checkouts and helpful travel experts.
• Access to private sales and personal shoppers at high-end retailers.
• Concierge services, including help with dinner and entertainment reservations, event planning, and personal shopping assistance.
• Exclusive tickets to sports and performing arts events.
• Heightened warrantee protection on purchases.
• Hard-to-get reservations in trendy restaurants.
• Upgraded rewards points redeemable for luxury products and upgraded airline seating.

In the case of the Centurion card, as well as US Bank's Stratus Rewards card (aka the white card, which comes with a $1,500 membership fee), cardholders are privy to some serious VIP treatment. In addition to the standard package of elite card perks, cardholders enjoy sky-high charging power, a client service staff that caters to the extravagant whims of its affluent members, and entry to experiences unavailable to the general public, such as hobnobbing with the stars at private events.

Does it make sense to pay more?
To determine if moving up to the next credit card level is a good idea, first determine whether an inexpensive rewards account will suffice. Many banks issue cards with no annual fee that also come with excellent customer service, heightened insurance and warrantee protection and a decent load of enticing travel and shopping rewards.

Still want or need the extras only associated with elite accounts? Review the fee-based credit cards on the market, analyze the perks of each and compare them to their annual cost. Choose right and it is possible to come out ahead if you maximize the benefits. For example, if you travel extensively and want to relax in members-only airport clubs, find out how much the airline's membership charge is. (It's usually around $400 per year, which is just about the price of the average elite credit card.) According to Dan Nainan, a professional comedian and actor who is frequently on the go, his Delta Gold card is worth its weight in -- well, gold. "My prime motivation is the airline club. It's luxurious. And if I had to pay, it would be the same price of the card, so why not?" Since he's a frequent flier, being regularly upgraded to first-class seating is another strong advantage.

These premium products may have cachet (promotional materials for the Stratus card cite a blurb from CNN American Mornings, "How to make a blinding impression at a business lunch? Flash the white card."), but their benefits are practical for many cardholders. "Some people may get an elite card for status, but I actually use my card for normal business transactions, as well as for personal use, such as vacations and large purchases for my home," says Bob Venero, CEO of Future Tech Enterprise Inc. in Holbrook, N.Y., who holds a Barclays Bank Visa Black card. "I have very good credit, as does my business, so using the elite card allows us to do more and work faster with a larger credit line."

Qualifying for above-the-fray cards
Even if you do want a super-special card, getting one is not guaranteed. Part of their appeal is their exclusivity, and they are only offered to a small group of hand-picked customers. While credit issuers are not specific about exactly who qualifies for these products and why, there are a few standards to know before applying. Your credit rating needs to be stellar, and you should have a history of charging expensive purchases. A high income is also important, as most issuers require a potential cardholder to have a salary that's comfortably in the six figures. If you do not fit these criteria, don't bother completing the paperwork, and certainly don't apply randomly since an overabundance of inquiries will take your credit score down a few notches.

Oh, and if the Centurion or Stratus cards sound fabulous, forget applying at all. Membership is strictly by invitation only and they'll come to you if you meet their standards.

In the end, remember that whatever precious metal or substance the cards are made from or named after, all are payment tools, and it would be a waste of money to pay for extras that don't fit your lifestyle. If you travel infrequently, charge sparingly, shop well independently and aren't interested in cocktailing with celebrities, then conventional wisdom prevails: go for the low-fee account. "What's critical is that you choose the right card," says Hamouly.  "One card does not fit all."

Here's a rundown of the top seven elite credit cards and their perks:

See related: Do credit card rewards make people spend more?, Who owns the rewards on a company credit card?, Do you lose your miles if you cancel your rewards card?, Tracking rewards program changes before they happen, Credit card video: Credit card rewards and incentives, Are credit card rewards taxable?

Published: August 21, 2009

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