Why it can make sense to pay for a premium credit card

A credit card isn’t only a convenient way to cover costs – many cards offer added benefits in return for an annual fee.

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In the same way that many people choose to pay a fee for a packaged current account in return for extra perks such as travel insurance or breakdown cover, you can also pay for a credit card or charge card and receive benefits such as free entry to airport lounges, generous cashback or reward schemes and access to concierge services to help with things such as hotel bookings or dinner reservations.

Although there’s no official category for this kind of card, they are often known as ‘premium’ cards, and tend to be designed for high earners, heavy spenders or regular travellers.

The benefits offered by premium cards vary widely, so it makes sense to do plenty of research before choosing one. Remember too that if you won’t use all the benefits on offer, you are likely to be much better off opting for a card without an annual fee, as premium credit cards typically don’t generally tend to offer lengthy 0% introductory periods on purchases or balance transfers, and rates can be higher than average.

Here’s our round up of some of the best premium cards currently available…

Premium cards for regular travellers

If you do a lot of travelling, then there are plenty of premium cards which come with travel-related benefits. 

American Express Platinum

Perhaps the cream of the crop is the American Express Platinum charge card – note it’s a charge card, not a credit card. It comes with unlimited access to over 1,000 airport lounges in 83 countries around the world, as well as elite tier membership to a number of hotel and car hire loyalty schemes such as Hilton, Starwood, Accor, Carlson, Hertz and Avis.

The card has no pre-set spending limit and no interest charges, but you must pay off your balance in full each month.

As well as access to airport lounges, cardholders collect points whenever they spend, earning 30,000 Membership Rewards points if they spend £2,000 in their first three months - enough for 2 return flights to Barcelona. After that, they earn one Membership Rewards point for virtually every full £1 spent. These points can be redeemed for a wide range of products, vouchers, experiences, travel, including Avios points, and hotel stays.

Cardholders also benefit from a dedicated Platinum Travel and Concierge service to help with travel plans, tickets and dinner reservations.

The card comes with comprehensive worldwide travel insurance for the cardholder and their family too, as well as any supplementary cardholders. But all this doesn’t come cheap, as the card has a hefty £450 fee, so you must be certain you will make the most of all the available benefits. Also, you must earn at least £40,000 a year to be eligible. 

American Express Gold

If you don’t want to pay such a steep fee, then it may be worth considering the Platinum’s sister card instead. The American Express Gold charge card has a lower fee of £125 which waived in the first year, and it still comes with lots of travel-related perks. These include two complimentary airport VIP lounge passes every year, and a welcome bonus of 20,000 Membership Reward points if you spend £2,000 on the card in the first three months. Cardholders can also earn double points on all their spending while abroad.

These points can be redeemed for travel experiences or shopping and other treats and experiences. For example, 20,000 points is enough for one return flight to Istanbul with British Airways, or a £100 Spafinder gift card which can be put towards treatments at any of over 400 UK spas, including Champneys. Alternatively, points can be transferred to 15 major frequent flyer and hotel programmes.
There is no concierge service with the Gold charge card however. 

Lloyds TSB Duo Premier

If £125 a year is still a bit steep, then it might be worth considering the Lloyds TSB Duo Premier credit card, which has a £50 annual charge. This is in fact two credit cards, an American Express card and a Mastercard, both of which enable cardholders to collect Avios points. Cardholders collect 1.25 Avios points for every £1 they spend on the Premier Duo Avios American Express Card and 1.25 Avios points for every £5 they spend on the Premier Duo Avios MasterCard Card. If you spend over £15,000 on your cards in a year, you’ll get a ‘Companion Ticket’ so you can take someone away with you when you next go on a trip. Points can be also be used for holidays and days out.

This card may suit you if you are looking to transfer a balance across from another credit card, as it offers an introductory rate of 0% on balance transfers for six months, subject to a 3% balance transfer fee. Cardholders also get 1,500 extra Avios for every whole £1,000 balance that you transfer from a single provider.

However, if you use this card for spending it is not advisable to make use of the balance transfer offer. This is because while you won’t be charged interest on the transferred balance, any purchases will incur interest at a representative annual rate of 23.7%. So even if you pay your spending off each month, you will still be charged interest from the day the purchase is made until the day your monthly bill is paid. Therefore you’d be better taking out a separate 0% card if you want to make a balance transfer. 

Virgin Black

If you fly regularly with Virgin, then the Virgin Black card works in a similar way to the Lloyds Premier Duo card in so far as it is in fact two credit cards - an American Express card that gives you two Flying Club Miles for every £1 spend and four miles for every £1 you spend direct with Virgin Atlantic and Virgin Holidays, and a Visa card that gives you one Flying Club for every £1 spend, or 2 miles for every £1 you spend direct with Virgin Atlantic and Virgin Holidays.

The cards have a 0% introductory offer on balance transfers for the first six months, subject to a 2% handling fee, but there is a hefty £140 annual fee however, which bumps up the cards’ representative APR to 52.1% (variable). Therefore as with the Lloyds Duo card, you’d be better off using your Virgin Black cards for spending only and take another card if you want to make a balance transfer.

Premium cashback cards

Capital One Aspire Elite

If you are a heavy spender and want to earn generous rates of cashback on your spending, the Capital One Aspire Elite card could be worth a look. It offers 5.00% cashback for three months, capped a maximum £200.

You earn 1.00% cashback on the next £14,999.99 spent on the card rising to 2.00% on spending between £15,000 and £49,999.00 and 1.35% on spending above £50,000.

You must earn at least £50,000 a year to qualify for this card. There is a £120 annual fee and the card has representative annual percentage rate (APR) of 19.9% (variable), so it is best suited to people who clear their balance in full each month. As well as cashback, cardholders will receive a £12,000 credit limit and the card also comes with a 24-hour concierge service to arrange things such as flights, hotels and restaurant bookings.

You will need to put virtually all your spending on the card to ensure the cashback you earn outweighs the annual fee. If you don’t think you can do this, then you are likely to be better off choosing a cashback card which charges a much lower fee.

For example, Barclaycard’s Cashback Card has an annual fee of £24 and pays 6% cashback on your top five purchases in the first three months, and up to 2% cashback on your top five monthly purchases thereafter. You earn 0.5% on everything else. This card has a representative annual percentage rate of 24.8%, so again you will need to clear your balance in full each month.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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