Does Bling equal Ka-ching? A Credit Card for the One Percent

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Thursday, March 20th, 2014

by guest blogger Caitlin Watkins

Would you spend $7500 for a piece of metal in your pocket? Fancy metal credit cards don’t provide any better consumer protection than the plain ol’ plastic. In fact, their fees are often higher. We’ve been seeing some fancy metal cards popping up lately from almost every credit card company, and we decided to take a look at these cards and break down what they offer. Here is what we found:

Pros

Cons

Concierge Services– Many cards offer fancy services that might benefit the cardholder like extensive rewards programs for traveling and hotels.

Higher annual fees– Most of the status-symbol cards tote a hefty yearly fee. Despite their price tag, people are buying into the concept: sales have skyrocketed since they were first promoted to the elite.

Perks– Some cards state that they will refrain from charging over limit, cash advance, or late fees, but these benefits may be easily undercut by the high annual and initiation fees.

High initiation fees– Some credit card initiation fees cost thousands of dollars.

So, what do consumers who pay for these cards get besides the allure of this status symbol?

Under law, nothing new. The CARD act, passed in 2010, ended the worst credit card practices and made it so financial services companies could no longer take advantage of consumers in certain ways Whether fancy and metallic, or just ordinary plastic, all consumer credit cards are covered by the CARD Act. Here are just a couple of ways you are protected under the law, as we explain on Defend Your Dollars:

1. Limits on the size of late fees: Credit card issuers cannot charge you a late payment fee that is larger than your minimum payment. Banks also cannot charge a late fee higher than $25 unless one of your last six payments has been late or if the bank can show that the costs associated with the late payment justify a higher fee.

2. Ban on multiple penalty fees for single violations: You cannot be charged more than one penalty fee for a single violation of your credit card agreement. For example, you cannot be charged both a late fee and a returned payment fee based on a single botched payment.

3. Ban on inactivity fees: Card issuers will no longer be allowed to charge you a fee for failing to use your account enough or for terminating your account. Your account can still be closed for inactivity by your card issuer.

Before signing on for any new card, make sure to extensively review the terms and conditions and make sure they fit with exactly with what you are looking for.

For more information about your rights when using credit cards, visit our credit cards webpage.

Would you pay $500 for a metal credit card? Let us know in the comments section.

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