Credit cards are popular financial tools, offering a variety of benefits to suit different needs. Many people assume that no-annual-fee cards are always better than those with an annual fee, but that’s not necessarily true.
Banks often provide premium credit cards with annual fees, promising enhanced rewards, cashback, and exclusive privileges. While these cards can offer value—such as travel perks, fuel savings, and shopping discounts—the key question is whether they truly help you save more.
If used wisely, a paid credit card can offer significant benefits, but if the fees outweigh the rewards, it may not be worth it. So, can a paid credit card actually help you save more? Let’s find out!
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Paid Credit Cards
What exactly is a paid credit card? Paid credit cards charge annual or joining fees but offer premium benefits. These may include higher cashback rates, complimentary lounge access, and milestone rewards.
Adhil Shetty, CEO of Bankbazaar.com, explains, “Some cards waive annual fees if a spending threshold is met. The cost of these cards typically ranges from Rs 500 to Rs 10,000 per annum. Higher-tier cards offer luxury privileges such as free movie tickets, concierge services, and travel insurance. Banks promote these as money-saving tools, but the key is to compare the value of rewards against the fees. If the benefits exceed the cost, a paid card can be useful. Otherwise, a no-fee or low-cost card may be a better option.”
How Paid Credit Cards Help Save Money
Many paid credit cards offer significant savings if used correctly. Cashback and rewards can reduce expenses on groceries, fuel, and travel. Some cards provide dining discounts and exclusive shopping deals, leading to additional savings.
Business professionals and frequent travellers can benefit from free lounge access and lower forex charges. Some premium cards offer insurance coverage, reducing financial risks. However, the key is to redeem rewards effectively. If reward points expire unused, or if fees exceed the savings, the card may not be beneficial. Choosing a card that aligns with one’s spending pattern ensures maximum benefits.
When Paid Credit Cards May Not Be Worth It
A paid credit card is not ideal for everyone. If spending is low, it may be difficult to recover the annual fee through rewards. High-interest rates on outstanding balances can nullify any savings. Many users fail to track reward expiration, leading to wasted benefits. Impulse spending to reach spending milestones can also be a drawback. Additionally, certain benefits like travel perks or airport lounges may not be useful for every cardholder. If the additional features are rarely used, paying a fee may not be justified. A thorough cost-benefit analysis is necessary before opting for a paid card.
Paid credit cards can be valuable for those who utilise their benefits efficiently. High spenders who frequently use travel, dining, or shopping perks can save more. However, those with low spending or irregular usage may find the fees excessive. The decision should be based on spending habits and financial needs. Comparing different cards and understanding the terms can help maximise savings.
