In the last 12 months, much excitement has been made over the launch of premium credit cards. From Chase getting into the game with the Sapphire Reserve, to the additions made by American Express and others to attract more high-end customers, the top is getting heavy with new and renewed premium credit cards.
How much is too much?
Earlier in August, the Associated Press published an editorial with concern about the future of high-end credit cards. Noting that all banks are targeting the same group of frugal travelers who have their eye on maximizing rewards and luxury access, they hypothesized the market may ultimately thin out as cardholders decide which high end card to hold. Even if value can be actualized out of multiple high-end cards, over $1,000 in fees every year for multiple luxury cards comes directly out of a frugal traveler’s bottom line.
Will the high-end card market close up? More importantly, is there truly an audience willing to pay $1000 and more to hold multiple cards?
One of the tenets of frugal travel is the ability to use high-end credit cards to unlock adventures at a low price. Although the upfront cost may be high, The Platinum Card from American Express and the Chase Sapphire Reserve both come with the potential to gain value equal to the fees. The Chase Sapphire Reserve comes with a $300 travel credit good for any travel expense, while the Platinum Card comes with a $200 airline credit and monthly Uber rideshare credits. Combined with points, the upside is only limited to how frugal travelers use their resources.
On the downside comes the reality of the matter: the bonuses associated with points and miles are only good if travelers use them to their benefit. Once again, using the Platinum Card as an example: travelers receive numerous benefits from holding the card, from limo access to roadside assistance. On the downside, unless a traveler is not only aware of all those benefits, but uses their Platinum Card primarily, they may not be able to access those benefits against their annual fee. The result is $550 thrown away for the luxury of saying you hold a premium card.
With more competition in the high-end card space, it is my opinion that we may see more cards launch, with frugal travelers being more careful with which ones they hold over time. With multiple fees coming out of multiple cards, being able to truly justify value becomes difficult. As a result, travelers who attempt to hold all the luxury cards may find themselves taxed to break even on all accounts – leading to one luxury card to rule them all.
Despite this, there are still those who will gladly pay multiple annual fees on their cards for the ability to travel in luxury and hold on to statuses granted by the high end cards. For them, value is not measured by how much they spend, but by how they travel. Paying forward to have access to lounges and upgrades means more than the annual fee itself – but these may not be the frugal travelers of the future.
At the end of the day, value is subject to what we make of it. For those who want value over price, their wallets may slim to only one premium card. Others who see value in luxury may continue to hold multiple cards – but at a price.
Which type of traveler are you: frugal or first-class? How will that affect which cards go in your wallet? Let me know your thoughts in the comments below!
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com