There are many offers out there these days for so-called premium credit cards. Many people don’t know the difference between one of these cards and a regular credit card. It is important to examine the pros and cons of such cards before making a decision to apply for one.
You can look over many credit card offers, including regular and premium card offers, and compare rates and features with the FREE credit card finder!
There are differences between a regular credit card and a premium card and you should know what they are, what they cost, and what to look out for.
Regular Credit Card Details
A regular credit card is one where you can charge merchandise or services up to a set limit each month. The total amount of credit available for you to use decreases with each purchase of goods or services and is available again after you make your payment. These cards usually have a minimum monthly credit card payment and do not offer any special programs such as cash back, frequent flier miles, or any other type of reward program. These cards can include gas credit cards or store specific cards in addition to a general-purpose charge card.
Regular credit cards are what most people starting out are issued, a very basic card with few frills. As your income and credit history grow you will be able to get premium credit cards that come with added benefits.
Information on What a Premium Credit Card Is
These premium cards are known by different names, gold or platinum cards for example, and have a variety of extra features included with them. They can offer frequent flier miles, cash back incentives, reward points used in a special catalog or airline and hotel upgrade plans. Cash back credit card programs often do not pay out in cash directly to you, but rather generally allow you to apply the cash earned towards paying down your outstanding balance. There are a few credit card companies that will apply the cash to your home mortgage or credit the amounts to any investment account you may have.
Examine the details of any premium card offer you may be considering, you may only accrue rewards after you have charged a set minimum amount over the course of a year. Also take note of how you can redeem the rewards, there are often restrictions that can make it tough to use the points, or miles you accumulate. You should also look at the expiration time of any reward if there are any, and be aware that these reward plans can change at any time. Be sure to check your credit card statements carefully each month to see if any changes have been made from the previous billing period.
The Comptroller of the Currency has a website that answers many questions regarding credit card terms.
Keep in mind that getting one of these premium cards means you will likely have to qualify in one of a number of ways. Some companies will require a certain annual income before they will issue you one of their premium cards, others only offer such cards to people with a set minimum credit score.
One last thing to note is that many companies will erase any rewards you’ve earned if you fall behind on your monthly payments. It pays to pay on time every month.
Premium Credit Cards Cost More than Regular Cards
Generally, yes, they do. They will often have a higher annual fee, sometimes reaching several hundred dollars more per year. They may also have a higher credit card APR. You should weigh any costs to use the card against any rewards you may earn by using them. Sometimes they are a good deal, sometimes not. Fox Business has some very good information on the subject of premium credit cards at their website.
It is also worth noting that most credit card companies even charge merchants a higher fee per transaction when these premium cards are used, so if you are running a small business, you may wish to explore the kinds of cards you accept and see what kinds of additional fees you are paying. These extra fees can run up to a full percentage point more on some cards.
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