Just like the clothes you wear, the car you drive and the home you live in, the credit cards in your wallet are a status symbol. And, as one new study from the National Bureau of Economic Research suggests, looks matter when it comes to what’s in your wallet.
A team of researchers conducted field tests on the behavior of urban, upper middle-class bank customers in Indonesia. Their findings were presented in the summer of 2017 as part of a white paper titled “Status Goods: Experimental Evidence from Platinum Credit Cards.”
First, the researchers isolated the status component of a credit card from its main benefits. They presented consumers with two different cards — a platinum card with the look and feel of a high-end, status symbol credit card and a credit card that had the exact same features and benefits as a platinum card, but with a plain appearance. They found that consumers were much more likely to select the platinum card with the status-symbol look and feel than the one with a plain appearance.
The experiment concentrated on a population in Indonesia because around 130 million of 330 million global luxury good consumers are located in emerging markets. Indonesia hosts 74 million middle-class consumers, which is projected to double by 2020. These consumers are eager to get access to credit cards along with luxury goods.
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We Want the ‘Cooler’ Card, Even If the Benefits Are the Same
Their experiments revealed that demand for the platinum card was much higher than that for the nondescript card with identical benefits. That indicated that some component of the demand was for the pure status aspect of the platinum card.
The researchers also reviewed transaction data to find that platinum cards are more likely to be used in social contexts, suggesting that the most high-end platinum cards are being used in public for their social image benefits.
It’s important to note that there are many cards in the U.S. market that carry the “platinum” moniker — these were not used in the study. The researchers worked with an Indonesian bank’s current card tier system — classic, gold and platinum — to craft the card benefits. The design of the platinum card used in the study was quite different than the classic and gold counterparts — it came in a dark purple color and displayed “Platinum” in script lettering across the card front.
How to Pick a Premium Credit Card
If you’re in the market already for a luxury or high-end credit card, there are plenty of offers available in the U.S. For business owners, this is especially true.
Business credit cards tend to come with more high-end perks and rewards as they cater to frequent flyers and big spenders. Here are a couple of cards that exemplify the perks you can get with a high-end business credit card.
For example, the rewards program for the American Express Business Platinum Card are rather standard, but its travel rewards are unbeatable. This card comes with access to business lounges at airports, faster security clearance, better status at luxury hotels and faster accrual of airline miles.
The Ink Business Preferred Card from Chase is strong on rewards related to business essentials. Cardholders gain additional piece of mind from extended insurance on cellphone coverage and auto rentals. It also has rapid bonuses accrual for categories like shipping, Internet service and online advertising.
Before signing on for a high-end credit card, be sure you understand the APRs and fees associated with the card. Premium credit cards can carry higher annual fees than their standard-level options, which balances out the rewards you reap if managed well. As a bonus, business credit cards can also help you build credit for your business and separate your business and personal expenses. (You can check your business credit scores for free on Nav.)