Is a Premium Credit Card Worth the Fee?

Premium credit cards promise a lot, such as exclusive benefits like airport lounge access, concierge services, and comprehensive travel insurance. Many premium cards offer higher rewards earning rates as well. 

But premium credit cards often charge an annual fee. Before you apply for a premium Canadian credit card, it’s important to consider whether you’ll get enough out of the rewards to make it worth the cost.  

Understand the annual fee 

Gaining access to the best credit card perks comes at a cost, which is why premium credit cards charge an annual fee — sometimes a big one. Not all premium cards have the same annual fees and the benefits you get vary depending on the card.  That is why it’s important to shop around and figure out what card best suits your needs. 

Examine rewards and other perks 

While a premium card might offer a high rewards rate in certain categories, it’s only useful if you spend a lot in those categories. Aim to find a credit card that matches your spending habits and offers the perks that you really want.  

For instance, if you travel frequently, a credit card that offers access to airport lounges, priority boarding and free checked bags might make the cost of the premium card worth it.   

Match rewards to your spending habits 

Once you’ve examined the rewards structure on premium credit cards, you can find the card that offers the highest earn rate in your top spending categories. Generally, the best premium credit card for you is one that offers the highest rewards on the purchases you make most frequently.  

For instance, if you enjoy dining out or cooking at home, find a card that provides the highest rewards earnings at restaurants and grocery stores. If you’re a frequent traveller, look for a card that rewards travel purchases. 

Be mindful of interest 

When you carry a balance on your credit card, you accrue interest, which increases the cost of your purchases. Eventually, interest charges may undercut the benefit of any rewards that you earn. 

Before applying for a premium card, it’s helpful to create a budget to ensure you can pay your credit card on time and in full each month. If you know you’ll carry a balance frequently, you’ll have to decide if the value of the rewards and perks outweigh the annual fee and interest you’ll owe. 

Make sure reward redemption options work for you 

In addition to earning rewards, you should also think about how you’ll redeem them. If flexibility is important to you, look for a card that allows you to redeem with multiple airlines and hotels. If you’re loyal to a specific airline or hotel chain, you may prefer a co-branded premium card.  

Also, consider how you feel about redeeming your rewards through the issuer’s rewards portal. Some premium credit cards let you earn extra rewards or points when you book through the rewards portal, but their offerings may be more limited. 

Premium credit cards may be worth it for some 

Premium credit cards offer a range of impressive benefits, but are they worth the cost? 

By finding a card that aligns with your spending habits and understanding how you can earn and redeem rewards, you can make a more informed decision about whether a premium card is right for you. 

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