Status Symbol Credit Cards Come With Premium Cost

Information verified correct on October 24th, 2016
Platinum Credit Card

Premium credit cards are very enticing but exclusivity does not come without a hefty price. Recently, big banks have been using premium credit cards to attract consumers as part of their home loan packages or deals. Quite often, the cards used are platinum cards or high-end credit cards offering exclusive access and a lot of bonus rewards. As expected, a lot of consumers find qualifying for a status symbol credit card highly appealing – and they don’t even have to apply for it. Most of these offers turn up unsolicited in the mail and given to a loyal customer entitled to a new platinum credit status.

After the passing of credit card reforms ten years ago, the premium offerings are now used by banks and other credit card issuers to legally circumvent the reforms that reduced the hefty fees banks billed each other every time a credit card was used. Ten years ago, the Reserve Bank of Australia (RBA) was troubled that credit card holders might be subsidised to use their credit card through provisions that contributed to merchants’ costs. With each swipe of a cardholder, the merchant’s financial institution paid interchange fees to the cardholder’s financial institution. These fees are then used by card issuers to fund lucrative rewards programs on credit card products.

However, at this time of economic uncertainties, credit restrains and increased efforts of Aussie households to repay their debts, banks and credit card issuers may find it difficult to earn those fees. In turn, these financial institutions appeal to the consumer’s vanity by offering status symbol credit cards that gives exclusive member rewards such as bonus points, mileage points, gifts, discounts and a whole array of free services.

These exclusive cards have been pointed out by RBA as a new-found way of banks to claw back the fees that were affected in the RBA’s reforms. While the interchange fees have been monitored, the exclusive rewards and bonus points are not given for free. Cardholders pay a hefty $500 in annual fees, not to mention the interest rates that come with these cards.

”Card schemes have found ways, within the bounds of the Reserve Bank’s regulation, to increase incentives for card issuers to promote particular products within their suite of offerings; card issuers have responded, particularly through new strategies focusing on the premium segment of the market,” the RBA said.

Essentially, premium credit cards have a higher fee structure that will cost the cardholder more. In addition, Christopher Zinn, Spokesman for consumer group Choice, warned cardholders of card issuers making rewards out of reach once they have upgraded the card. The RBA also revealed that there was a 50 percent jump in average spending to get a minimal reward; it currently takes $18,000 of spending on an average credit card to earn a $100 shopping voucher.

Platinum cards, in the traditional sense, were originally designed to attract high-spending customers; these cards were previously few in number and offered both relatively generous reward points and other benefits,” RBA said. But now, these premium cards are simply a tool to generate revenue for card issuers.

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Credit Cards Comparison

Rates last updated October 24th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 3% balance transfer fee $59 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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