Do Rich People Actually Use Expensive Credit Cards?

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Money doesn't always buy purchase rewards.

We've all heard of the invite-only luxury credit cards flaunted by the rich and famous. (Black Card, anyone?)

The media would love for us to believe every rich John and Jane is running around buying private airplanes with the swipe of a credit card. And sure, plenty of wealthy people have exclusive cards you may not even know exist.

However, for every rich person with a swanky card, there is one sporting the same rewards credit card you have in your own wallet -- often for the same reasons.

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Waste not, want not

What you spend your money on should provide value to your life, and that applies just as much to credit cards as to anything else. So, regardless of how much money they have, everyone considers these same things when opening a new credit card:

  • The annual fee
  • The rewards

Not everyone with money to burn wants to use it on credit card annual fees. Especially when those flashy, invite-only cards can also invite you to spend four figures on your annual fee each year. (Oh, and some cards will charge you a five-figure "initiation" fee to boot.)

If you're forking over all those figures, you'd think the rewards have got to be pretty amazing, right? Well, not necessarily. Most invite-only credit cards are actually light on the purchase rewards; in many cases, you'll earn more with a comparably affordable travel rewards card than you would get with the fancy-schmancy options.

One reason expensive credit cards don't always come with high rewards is that they offer a wide array of other perks. Everything from a personal concierge to airline status or limo service can all be part of the package if you have enough money.

But, as with any other credit card, if you're not getting your money's worth out of those perks, why pay for them? Would you pay a $95 annual fee for an airline credit card if you don't fly that airline -- even if you could afford the fee? That same logic means many rich people wouldn't pay $5,000 or more for a credit card that doesn't offer real value.

Time-cost analysis

Even if the most expensive credit cards also came with the best rewards or high-value perks, there's still a lot of time and effort that goes into making use of those benefits. That time could be expensive.

Think of it this way: If it takes you an hour a month to track and maximize your credit card rewards, that's an hour you're not spending on something else. How do you value that hour?

For some folks -- both rich and not -- fancy rewards credit cards simply aren't worth the energy it takes to use them. A basic cash back rewards card and autopay can wind up being far more worthwhile than any purchase reward or cardholder perk if it saves you valuable time.

That's a write-off

Of course, all of that overlooks one other big aspect of how the wealthy use credit cards: business cards.

At a certain point of wealth building, chances become very good that you own or are a financial voice in a major business. As any accountant can tell you, it's vital to keep personal and business expenses separate. That means you'll likely make good use of a business credit card (or, if your business is large enough, a corporate credit card).

When most of your travel, dining, and even entertainment are related to your business, your personal cards probably don't see a lot of use -- which makes it that much less likely you're wasting big money on their annual fees.

There will always be a segment of the wealthy population that enjoys the perceived prestige of flashing an expensive credit card for every purchase. But just as many -- if not more -- rich people have workaday credit cards that easily earn their keep, both personally and professionally.

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