Credit cards are ubiquitous in Canada, with over 70% of the population using them regularly.
Among the many credit card options available, premium credit cards stand out due to their exclusive benefits and rewards. But are they worth paying hundreds of dollars a year for? Let’s take a closer look.
What are Premium Credit Cards?
Premium credit cards are typically designed for high-income earners or frequent travelers who are willing to pay a higher annual fee in exchange for exclusive benefits and rewards. These benefits often include higher reward points earning rates, travel insurance coverage, airport lounge access, concierge services, and more.
The annual fees for premium credit cards in Canada can range from $120 (premium) to $700 (ultra-premium). While the cost may seem steep, the benefits can be significant, depending on your spending habits and lifestyle.
Benefits of Premium Credit Cards
The most significant benefit of premium credit cards is the rewards program. Cardholders earn reward points for every dollar spent, which can be redeemed for travel, merchandise, or cashback in some cases. Some cards also come with annual travel credits, or other offers exclusive to cardholders.
Premium cards usually offer higher earning rates than regular credit cards, and the rewards may also be more valuable. An example of this would be the American Express Cobalt card, which earns 5X on Dining & Groceries, as well as elevated earn rates on Travel and Streaming Subscriptions. Redeeming these points for domestic travel can easily double your earn rates, making the card a strong option for frequent fliers.
Another significant benefit of premium credit cards is travel insurance coverage. Many premium cards include travel insurance, such as emergency medical coverage, trip cancellation insurance, and lost baggage protection. This coverage can save you hundreds or even thousands of dollars in unexpected expenses when traveling.
This has been a lifesaver in my case, and I’ve had to use it on numerous occasions over the past year — recouping a few thousand dollars in what would otherwise be wasted hotels or attractions.
Premium credit cards may also provide exclusive access to airport lounges, concierge services, and other perks. These benefits can make travel more comfortable and luxurious, and the concierge services can save you time and hassle when booking travel or making reservations at some hard to get spots.
Drawbacks of Premium Credit Cards
There are always two sides to every coin, and the main drawback of premium credit cards is the annual fee. This can range from around $120 for some mid-tier cards like the RBC Avion Visa Infinite, to $699 for the American Express Platinum. If you don’t use the card enough or take advantage of the benefits, the annual fee may not be worth it.
Additionally, the higher rewards and benefits may come with stricter eligibility requirements, such as a higher minimum income or credit score. All Visa Infinite cards have a minimum income requirement of $60,000 in personal income, or $100,000 in household income — while Mastercards come with a $80,000 personal, or $150,000 household income requirement.
Is it Worth Getting a Premium Credit Card in Canada?
Whether a premium credit card is worth it for you depends on your spending habits and lifestyle. If you travel frequently, spend a lot of money on your credit card, and can take advantage of the benefits, a premium credit card may be worth it. In fact, if you travel enough, you can probably justify holding 3 or 4 premium cards, all with their own perks.
However, if you don’t travel often or don’t spend enough to earn significant rewards, a regular credit card with no annual fee may be a better option. It’s essential to weigh the benefits and costs carefully and consider your financial situation before choosing a credit card.
If you do happen to decide that a premium card is worth it, we would suggest taking a look at the American Express Cobalt, or any of the core tier Aeroplan cards as a solid starting point.
Conclusion
Premium credit cards in Canada offer many exclusive benefits and rewards for those willing to pay the higher annual fee. Whether they are worth it depends on your spending habits and lifestyle. If you travel frequently and spend enough to take advantage of the benefits, a premium credit card can be a great option. However, if you don’t travel often or don’t spend enough, a regular credit card with no annual fee may be a better choice. Ultimately, it’s important to do your research and choose a credit card that fits your financial situation and goals.