As one company launches a new credit card aimed at upmarket customers, we work out whether these premium services are worth paying for.
American card issuer Morgan Stanley has launched a new "ultra-premium" credit card aimed at high-spending British cardholders.
Its i24 MasterCard claims to offer "some of the most compelling benefits available in the ultra-premium card market". For example, it pays 1% cashback on all purchases, charges no foreign exchange fees on overseas purchases, provides annual family multi-trip travel insurance, a free additional card, free Priority Pass access to over 450 airport lounges worldwide, plus a 24/7 concierge service. Not everyone will be able to get the card - there is a minimum salary limit of £70,000!
According to Morgan Stanley, premium card users spend an average of £28,854 a year on their plastic, with close to a fifth of this total being spent abroad. Hence, an i24 cardholder spending this amount would receive £288 cashback, plus avoid foreign currency fees (typically 2.75% of spending) of around £150 a year.
As ever, exclusivity comes at a price: the i24 card comes with a whopping annual fee of £275. So, the benefits may be generous, but so is the price tag!
As a working-class boy at heart, I'm not turned on by flashy "success symbols" and gimmicks; I prefer to shop around for the best deal and avoid paying annual fees. For example, rather than paying £275 a year for the i24 package, I would track down most of these benefits for free, as the following shows:
Cashback on spending: according to Moneyfacts, someone spending £2,405 a month would earn cashback of over £487 with an American Express Platinum credit card. What's more, its annual fee of £15 is waived if you spend £500 each year, and the minimum annual income for this card is £20,000. Morgan Stanley's other cashback cards also do well here, providing annual cashback of £309 at no cost.
Foreign card usage: I'd use a credit card from Nationwide BS which doesn't charge the usual 2.75% loading fee, such as its Classic, Cash Reward or Comic Relief VISA cards. Again, these cards have no annual fee.
Annual travel insurance: I'd choose a Best Buy annual policy; earlier this year, I explained how I found European annual family multi-trip travel insurance for a mere £15! For the record, worldwide family multi-trip travel insurance can be found for around £60 or so.
Airport lounge access: Personally, I always fly economy but, if I wanted a Priority Pass to get me into VIP lounges, it would cost me £259. Alternatively, a cheaper version is available for £69 plus £15 for each lounge visit.
Free additional card: most card issuers provide free additional cards, so this is hardly a premium benefit.
The only service that I can't replace is the 24/7 concierge service, but I think that I can live without it!
Hence, you can easily recreate most of the features of the i24 card at little or no cost. Indeed, with cashback of £487, no foreign exchange fees, annual travel insurance for £60 and a Priority Pass for £259, I'm actually making a profit of £168 while avoiding the i24 card's annual fee of £275!
Once again, this proves the worth of "unbundling" bundled products to assess their true value. During my many years in financial services marketing, I never came across a packaged product that didn't come with extra profit built in. Thus, my view is that bundled benefits usually end up costing you a bundle!
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