People often qualify for credit cards based on their credit history. Consumers with no credit may have problems securing any credit card because lenders have few options for evaluating credit worthiness, for example. If you have bad credit due to missed payments, high debt volume or relationships with collection agencies, your credit card may carry high interest rates, high fees and a low available balance. On the other hand, consumers with good credit may qualify for preferred gold and platinum credit cards. Gold and platinum credit cards share some similarities, but there are some differences.
Both gold and platinum credit cards typically offer increased services and benefits for cardholders. Compared with traditional credit cards, platinum and gold credit cards sometimes offer lower interest rates and higher credit balances. Platinum and gold credit cards may offer lower annual fees; sometimes, however, cardholders will pay higher annual fees for the perceived luxury of a preferred credit card. Penalties for missed or late payments for platinum and gold cardholders may be lower compared with traditional credit cards.
Platinum credit cards may offer lower interest rates, higher credit balances and more frequent credit limit increases compared with gold credit cards. Some platinum credit cards may advertise that they carry no credit limits; this isn’t true, although some may permit balances of hundreds of thousands of dollars. Because some credit limits are sometimes linked with income, platinum credit cards may be more readily available to consumers in higher income brackets. Platinum credit cards may also offer additional benefits compared with gold credit cards, with extra services sometimes including travel insurance, fraud protection services, cash-back programs or frequent-flier miles. Other platinum card perks may include baggage insurance and companion tickets when traveling.
Some financial advisers argue that there’s no real difference between gold and platinum credit cards, but that the distinction is a marketing ploy designed to stroke consumer ego with a flashier card. Unless you like the idea of carrying coveted plastic, traditional credit cards and gold credit cards may serve your purpose just as well as platinum.
Beware of promotions advertising that high-fee gold and platinum credit cards help build better credit. While it’s true that many preferred credit cards are offered to people with better credit histories, securing a gold or platinum credit card doesn’t necessarily guarantee better credit. If you miss a payment, rack up lots of credit card debt or never pay more than the minimum payment then your credit history could take a hit instead. Some companies will charge initial fees of $50 in 2010 to secure a gold or platinum credit card, making them more expensive to consumers, according to the Federal Trade Commission.