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‘Premium Credit Card’ Ratings

Friday 3rd December 2004

Complete information and ratings can be found at CardWatch Launches ‘Premium Credit Card’ Ratings as December Spending Looks to Top $2.3billion

With the festive season upon us, New Zealanders will be breaking out the plastic to buy gifts and food, and of course to travel to visit friends and family. With this increased activity CardWatch estimate December credit card spending is likely to rise to approximately $2.3 billion1, 32% more than the monthly average for the rest of the year and up on the December 2003 spend of $2.1 billion.

In addition, CardWatch predicts New Zealanders will break through $4billion dollars in outstanding credit card debt by the end of this year. With this increased expenditure and outstanding balances in mind, CardWatch have today released ratings of ‘premium credit cards’, which with their high limits, will come under increased usage throughout this period. Only ‘Gold’ and ‘Platinum’ cards are considered, giving current cardholders and those thinking about upgrading a comparison that reflects their distinctive requirements and usage patterns.

Key determinants With a higher general spend and a propensity to travel abroad, the key determinants of premium card ratings are the rewards programs, and in particular the travel insurance offered by the various issuers. Other peripheral benefits also accrue, such as concert tickets, special functions and ‘club privileges’ but generally do not provide quantifiable value to the user.

Travel Insurance

It is important for users to understand the difference between the two very different types of insurance offered by credit card issuers. American Express and Qantas ANZ cards offer only “Travel Accident Insurance” if any, which provides no cover for medical expenses, lost luggage or assistance in an emergency. The remaining cards offer comprehensive insurance that covers a wide range of unforeseen circumstances.

Issuer Nature of Cover American Express Gold None Amex Platinum Qantas ANZ Travel Accident Insurance - only pays out a lump sum in the event of loss of life or limb while travelling on paid, publicly available transport. Does not cover baggage, sickness or circumstances when not on a plane, bus, taxi etc.

ANZ (not Qantas) ASB BankDirect BNZ GlobalPlus National Bank Westpac

Comprehensive travel insurance – varies slightly but generally covers medical expenses or medical evacuation; loss or theft of luggage, travel documents and money; missed transport connections; personal injury; personal liability; kidnap and ransom.

CardWatch Recommends Upgrading to ‘Premium Cards’

Should New Zealanders choose to upgrade to a premium card? In general the answer is yes – if you met the minimum $45k to $65k income threshold that is! Those eligible for premium credit cards generally will not only seek the higher credit limit, but should also use the higher credit limit to maximise the rewards available through the various issuers.

In addition, the comprehensive travel insurance available from credit card issuers offers significant value for users. Significantly, the comprehensive insurance offered for a single overseas trip alone is enough in most cases to justify the higher annual fees charged. 1 Based on analysis and extrapolation of spending throughout 2004 and previous comparable periods


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