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Premium Credit Cards Getting Popular. Here Is What Works For Them

Adhil Shetty
Picture for representation only

The BankBazaar Moneymood 2020 report has plenty of revelations about how India borrowed in 2019. In its second edition this year, the report revealed that despite the slowdown in the year 2019, India remained on track with its life goals and aspirations. They continued to rely on credit but were also smart about borrowing within limits. So loan for small-sized homes ruled over big-ticket ones, hatchbacks and sedans were preferred over small cars, and premium credit cards won over plain vanilla cards.

In 2019, applications for premium credit cards went up by 30% driven by millennials applicants. The findings reflected the growing need for upgraded card benefits and exclusive lifestyle privileges that come with premium credit cards. What is more interesting about the finding is that applications for such cards from women went up 33% year-on-year. So what makes premium cards so popular amongst customers? Let us find out.

Premium Cards Vs Vanilla Credit Cards

Plain vanilla credit cards are easy to access and come with basic features. They double up as a convenient spending tool along and provide rewards, basic benefits, and cashback. Premium credit cards, on the other hand, offer higher credit limits, and are largely offered on invitation by the bank. They offer accelerated reward points, lower interest rates, and lifestyle benefits like lounge access at domestic as well as international airports, and discounted fine-dining experiences.

What Makes Them So Special  

Premium credit cards these days are offered to customers with high income and good credit profiles, and not just to high net-worth individuals. The upwardly mobile Indian millennial is looking to travel frequently, have premium dining and shopping experiences, and also has income to burn.

Higher Spending Limit

Premium credit cards come with higher spending limits than vanilla cards. This means that the card holder can enjoy a lower Credit Utilisation Ratio (CUR), should he wish to. CUR is the percentage of your spending limit you’re using in a month. A low or high CUR reflects on your credit score as good or bad, respectively.

Benefits For Travellers

A premium credit card can help frequent travellers as it offers air miles that can be redeemed for discounts or seat upgrades on select airlines. Besides the air miles, some premium credit cards also offer travel insurance that financially protects you against flight cancellation, delays, theft, lost passport and other defined, travel-related problems. You may also get discounts on hotel bookings, and also be assigned concierge services to help you with your various bookings.

Better Rewards And Shopping Deals

Using a premium credit card will reward you better than a vanilla credit card in accumulating points. For the annual charges you pay towards the premium card, you may be rewarded with gift vouchers and deals. You may also enjoy additional benefits and preferential treatment with select merchants. You may also enjoy the advantage of unlocking additional benefits on hitting spending milestones (such as Rs. 50,000 or Rs. 500,000) as defined in your card agreement.

What You Need To Keep In Mind

Like any other credit card, ensure you make the payments on time. Although they are convenient to use, you should take a call on using them only as per your requirements. For example, a non-frequent flier may not benefit much from such credit cards. Do check the fees you will be paying for a premium credit card, but do remember whatever you will pay as annual cost, you may be repaid through gift vouchers and discounts. A card company will send you the invite for a premium card depending upon your transaction history, net worth and banking relationship. However, terms and conditions will vary from one company to another.

With more and more Indians becoming premium credit cards pros, this is the perfect time for you to buy a premium credit card, especially if you are a frequent flier and looking for a lifestyle upgrade.

The writer is CEO, BankBazaar.com, India’s leading online marketplace for loans and credit cards.