Premium credit cards
Premium credit cards can offer some great rewards and are sometimes seen as a status symbol. However, they’re only offered to high earners with strong credit scores.
Think you might be eligible for a premium card? Learn more about the advantages – as well as what to watch out for.
What is a premium credit card?
Premium cards are similar to standard credit cards, but typically come with an annual fee. In return for this you’ll receive perks and benefits, like points when you spend and airline lounge visits.
Often referred to as black or purple credit cards, premium credit cards are usually reserved for big spenders with high incomes.
What’s included with your premium card will depend on the one you choose. Common perks include:
- High credit limits
- Generous rewards schemes
- Travel insurance for you and your family
- Breakdown cover
- Home emergency cover
- Access to exclusive airport lounges worldwide
- 24/7 concierge or personal assistance service.
How do premium credit cards work?
Premium cards work much like standard credit cards in that you spend on them (earning points in the process), then repay that money each month.
As with standard credit cards, you’ll have to apply and be approved. To be eligible, you’ll need to be over 18, have a UK bank account and no history of bad debt.
What are the premium card benefits?
The best premium credit cards offer great rewards, including:
- Travel benefits – you’ll find credit cards with lounge access, as well as those offering worldwide travel insurance, and concierge services for booking travel and accommodation. Many cards offer air miles you can build with each purchase and use for free or discounted flights.
- Lifestyle benefits – many cards have generous rewards schemes offering points for shopping at certain retailers. Other benefits can include breakdown cover and home emergency cover.
Premium cards are particularly useful if you’re a frequent traveller.
What are the disadvantages of premium credit cards?
There’s a few downsides to premium credit cards:
- Hefty annual fees – those perks don’t come free. Amex’s Platinum card has a £575 annual fee.
- High credit limit – you could be tempted into big spending, and that could land you in debt if you can’t repay the balance each month.
- High interest rates – interest charges are often higher than those for standard credit cards. If you want to keep costs down, a premium card might not be the best choice.
How do premium credit cards compare to standard credit cards?
Premium credit cards offer exclusive rewards you might not get with a standard card, but there are other differences to consider:
- Premium cards always come with an annual fee, whereas some standard cards are fee-free.
- Many standard cards offer 0% interest introductory offers, whereas you’re unlikely to find this with a premium card.
- Some premium cards are actually charge cards. That means you can’t borrow against them, unlike standard credit cards, and you’ll need to pay off the full balance each month.
- The minimum age for standard credit cards is typically 18; some premium cards require you to be at least 21.
If your premium credit card includes travel insurance, make sure it offers the level of cover you need. For example, pre-existing medical conditions are often excluded. If you’re not fully covered, you may need to take out a separate travel insurance policy.
How do you qualify for a premium card?
To qualify for a premium card, you’ll need an excellent credit rating. Some premium cards are invitation-only.
To be eligible, you’ll need to be over 18 (sometimes 21) and earning a high salary – although what counts as a high salary will vary among providers.
How much do premium credit cards cost?
Premium cards come with an annual fee, which varies depending on the card and benefits package. Annual fees range from £100 to as much as £700, so you’ll need to make full use of the perks for it to be worthwhile.
The APR (annual percentage rate) – or total cost of borrowing money over a year – for premium credit cards is often very high, but this takes into account the fees.
Is a premium credit card right for me?
Whether a premium card is right for you will depend on your income and spending habits. If you’re a high earner and spend sensibly, a premium credit card could offer a host of benefits.
If you don’t use the card wisely, it could be both risky and expensive. Premium cards rarely offer a 0% introductory period and APR rates can be high. So if you can’t pay off your balance in full each month, a premium card might not be for you.
Premium credit cards often have high credit limits, so need to be used with care. Borrowing more can make it harder to make your minimum repayments.
Consider how much benefit you’ll get from the perks on offer. You may find that some, like travel insurance, are cheaper elsewhere. Or you may already have them.
What alternatives are there to premium credit cards?
There’s a few alternatives to premium credit cards, including:
- Rewards cards can offer a whole heap of goodies – from cashback and shopping vouchers to air miles and discounts on family days out.
- 0% credit cards offer an interest-free period on balance transfers or purchases, so you can spread your repayments without paying interest.
- Travel credit cards can offer low (or no) fees and better exchange rates when you use them abroad.
How do I apply for a premium credit card?
Before you apply for a premium or high credit limit credit card, check the terms and conditions to make sure you fit the criteria.
Eligibility can be a lot stricter than for standard credit cards, and often depends on your salary, age and credit history.
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and meet the minimum age criteria set by the card provider. Credit is subject to status and eligibility.
Are premium credit cards worth it?
Whether a premium card is worth it depends on your circumstances. They can certainly offer fantastic perks, and if you travel frequently or use concierge services, a premium card might be worth considering.
But if you’re looking to save money and can’t always pay off the balance each month, a premium credit card could cost you a fortune. If you think the annual fee could be better spent elsewhere, you might want to look for an alternative.
The content written in this article is for information purposes only and should not be taken as financial advice. If you require support on the products discussed here, please speak to your bank/lender or seek the advice of an independent professional financial advisor. We also have more information on our Customer Support Hub.