Who are black credit cards suitable for?
Before you apply for a new credit card, let's see who a black credit card suits. Generally, these cards are suitable for:
- High income earners. As black credit cards are geared towards luxury experiences, they usually come with higher income requirements. You probably won't be approved if you are a low income earner.
- Frequent travellers. If you're constantly globe-trotting, you'll benefit from travel perks such as airport lounge access (often via Priority Pass) and elevated status with hotel programs such as Shangri-La, Hilton, Marriott, IHG, and Hyatt.
- Big spenders. The more you spend, the more benefits and rewards you can enjoy. But only if you don't carry a balance, since the interest negates the value of the rewards.
- Someone seeking exclusivity. Make a statement when you pull out a black credit card (or, increasingly, a metal card).
Who are black credit cards not suitable for?
- Low earners. Given their prestige, the banks generally set a higher bar to qualify for a black credit card. These cards have higher minimum income criteria. Don't apply unless you earn enough.
- Low spenders. If you prefer to keep your money rather than spend it, you may struggle to hit the minimum monthly spending requirement that many black credit cards have. Failure to spend the minimum usually means either forfeiting any rewards earned in that period, or earning at a reduced rate.
- Budget conscious. As a general rule of thumb, annual fees for black credit cards are higher than average. Several hundred dollars is not uncommon. If you live on a budget — which is a good thing — you might be inclined to spend less and therefore not get the true value on offer.
- People with bad credit. Much like income requirements, the banks are reluctant to approve someone with questionable credit worthiness. If you are determined to have a black credit card, clean your credit up before applying.
Are black credit cards worth it?
Whether black credit cards are "worth it" is highly subjective. They can offer excellent value, but only if you are in a financial position to take full advantage of the myriad perks and rewards they offer.
Is a black credit card worth it for you? Various factors come into play, including your financial situation, spending habits, and lifestyle preferences. You are the only one who can really decide, but here are some points to consider if you are weighing things up.
Reasons why black credit cards are worth paying for
The range of perks and benefits is an ever-changing landscape as banks work to outcompete each other in the market. If used as intended, they generally make the annual fee worth it.
- Airport lounge access. A fairly standard perk that can be worth $100+ annually. You may be able to cancel an existing membership and save money.
- Instant hotel status. Some cards have deals so that cardholders instantly get higher status, meaning you can get room upgrades and early checkin/late checkout.
- Concierge service. Many black cards give cardholders access to a 24/7 globally-available concierge service. Often overlooked, but useful for odd jobs like price comparison and making reservations.
- Exclusive offers. Again, often overlooked, but the special event invitations and exclusive discounts for cardholders can save money and get access to experiences you can't get elsewhere.
Earn more points
- Bigger sign up bonus offers. Black cards tend to have some of the biggest welcome bonus offers of any category of credit card.
- Higher base reward earn rates. These cards typically have higher earn rates on cashback, air miles, or points, which can be very lucrative for high spenders.
Higher credit limits
Big spenders need high credit limits, which is what these cards typically offer. This is particularly useful if you plan on adding supplementary cards.
They are a status symbol
Although it might not be why you apply, having a black credit card is a flex that is recognised globally.
Reasons why black credit cards are not worth paying for
High anual fees and interest rates
Let's just say black credit cards are not known as the budget option. Their annual fees are higher than average, often reaching several hundred dollars. And if you carry a balance, expect interest rates to be on the higher end too.
There's a chance you'll end up not using everything the card has to offer.
For example, you may not use whatever airport lounge passes are available because you already have airline status or are travelling premium anyway. Or you may not use the concierege service because your assistant has that covered.
The bottom line is this: if you don't use the card's benefits, it's more difficult to justify the annual fee.
Rewards can be complex to master
The rewards programs on these cards can take some getting used to. There are all kinds of terms and conditions to keep up with, like spending enough every month to meet minimum spending criteria and selecting and managing bonus categories. There is an element of active card management that some people like, but you might not be one of them.
Risk of overspending
The combination of high credit limits and high rewards earn rates might be great for earning points, but it can also lead to overspending and debt.
What to compare for black credit cards
When it comes to choosing a black credit card, here's what you should be keeping an eye on:
- Annual fees. How much will the card cost you each year? Is it worth the benefits you'll receive? Can the fee be waived for a year or longer?
- Rewards. Are you earning a good return on your spending? What type of rewards can you redeem? Can the credit card rewards points you earn be converted or transferred to other programs?
- Airline alliance. What airlines can you use points to book flights with? Is your preferred airline a partner, for example, Singapore Airlines or Cathay Pacific?
- Travel perks. What kind of airport lounge access do you get? Are there any hotel or travel-related benefits? For example, is the card compatible with EZ-Link?
- Customer service. Is there a dedicated customer service line for black card customers? Does the card come with a 24/7 concierge service?
How to compare black credit cards
Ready to take the leap? Follow these steps to find the black credit card for your lifestyle:
- Assess your spending habits. Analyse where you spend the most money and make sure whatever card you choose rewards such purchases. For example, what is the earn rate on petrol, overseas transactions, restaraunt spending, etc.?
- Compare annual fees. How much are you willing to pay for the benefits and rewards on offer? Don't forget to factor in the cost of supplementary cards you may need.
- Calculate potential rewards earned. A black card is just another type of rewards credit card with an earn rate, redemption options, and applicable caps and expiration dates. Bear these factors in mind as you estimate how many points you could earn. Is it better than earning cashback?
- Investigate travel perks. If you travel frequently, find a card with airport lounge access, travel insurance, and other travel-related benefits like no fee foreign transactions.
- Check eligibility. Make sure you qualify for the card you want. Things to check include income requirements and when you last applied for a card with them.
- Apply. Gather your documents, fill up the form online, double-check it, and submit.
- Hit the spending target. Most black cards offer a generous welcome bonus, which you'll only get if you hit the target.
Pros and cons
- Premium rewards and benefits. Enjoy a suite of exclusive perks, from dining experiences to travel upgrades.
- Status symbol. Stand out from the crowd with a prestigious card in your wallet.
- Dedicated customer service. Get personalised and prompt assistance when you need it.
- High annual fees. Black credit cards usually have hefty annual fees, so be prepared to pay up for those exclusive perks.
- Stringent eligibility criteria. These cards have higher income requirements, which might not be suitable for everyone.
- Overspending temptation. With such enticing rewards, some cardholders may overspend to pursue those benefits.
Are black credit cards worth the high annual fees?
Black credit cards can be worth the high annual fees if you take full advantage of their benefits and rewards. Some of their perks, like fast-track airport security or airport lounge access, are hard to put a price on.
Are reward points better for black credit cards?
Black credit card reward points systems are usually more generous than what's on offer with regular credit cards. Cardholders can earn more points per dollar spent and may also have access to higher-value reward redemption options.
Is it difficult to qualify for a black credit card?
Qualifying for a black credit card is typically more challenging than obtaining a regular one, as black credit cards typically have higher income requirements and more stringent eligibility criteria. However, if you fit the bill, the premium perks are yours to enjoy!