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A $1,500 signup bonus. Five times the points at your favorite hotel chain. Up to $200 in annual Uber credits … on top of a $200 annual credit for airline fees. VIP gifts delivered directly to your door.

Chances are, at least one of these credit card offers (or an equally flashy one) has caught your eye in recent months. Elite credit cards — perk-laden plastic touting major travel rewards and super-swanky privileges — are getting a lot of press these days. But if you’ve paid attention to the fine news print, you’ve likely noticed these cards have something else in common: a hefty annual fee, usually at least $400 … or more. And while mega-miles, generous airport lounge access and complimentary hotel room upgrades certainly have mass appeal, that yearly price tag isn’t for everybody.

Here’s what’s behind the elite credit card surge — and how to decide if you should sign up for one.

What’s an Elite Credit Card? 

Elite credit cards, also known as premium, premier or luxury credit cards, offer a wide range of tempting benefits. The details vary from card to card, but there are a few categories that tend to be a focus.

  • Earned Points: Most elite credit cards earn points redeemable for rewards such as travel credits, gift cards and cash back. These cards often earn one point per dollar spent on most purchases and multiple points per dollar spent on certain spending categories, typically related to travel, like dining or airfare. Frequently, there are big signup bonuses (think tens of thousands of points) for meeting certain spending requirements or adding authorized users (though that’ll usually cost an annual fee, too).
  • Travel Perks: Perks for the frequent traveler can include hundreds of dollars in annual travel credits and reimbursements, airport lounge access, hotel upgrades and even VIP treatment at hotel properties and car rental agencies.
  • Concierge Services: Many elite credit cards offer 24/7 concierge services that can help members book travel, get event tickets and even shop for rare merchandise.
  • VIP Experiences: Select cards provide access to exclusive experiences like dining, fashion or sporting events available only to cardholders.
  • Made of Metal: Premium plastic is passé. Elite credit cards are now coming in metal, giving them a distinct “plunk” factor.

Plastic with these kinds of perks isn’t exactly new. Premium travel credit cards geared to frequent fliers (or big spenders) have been on the market for years, but the majority of plunky products were reserved for the rich and famous — and you needed an invite to apply. (See American Express’ near-mythical Centurion Card, a perennial celebrity wallet-stuffer made of anodized titanium, laden with perks and carrying a $7,500 initiation fee/$2,500 annual fee.) The new wave of elite credit cards may not be as VIP as the still-existent invitation-only cards, but their perks are certainly eye-popping — and, $400-plus annual fees aside, anyone can apply.

Open to the Public 

These days, it seems like there are more elite credit cards on the market than you can shake a stick at.

Chalk the boom up to two major factors, said Richard Crone, CEO of Crone Consulting LLC, an independent advisory company that specializes in payments and advises some of the biggest players in the financial sector.

First, there was the Durbin Amendment, part of the Dodd-Frank Act passed in 2010 as a response to the conditions that led to the 2008 recession. This amendment capped the amount debit card issuers could charge merchants in interchange fees (also known as swipe fees) for every transaction.

But “these regulations were not applied to credit card transactions,” Crone said. “The focus was then shifted to credit,” with financial institutions throwing considerable weight behind designing and marketing credit cards that could extract more revenue in swipe fees.

Second, issuers saw a big opportunity in millennials, who have been wary of credit and preferred debit cards following the recession. Credit card use is still low among millennials, but that attitude may slowly be changing as the economy rebounds.

“They’re entering prime purchase years, and so issuers took notice and fine-tuned promotions and cards to create packages that attracted millennials,” Crone said — and noted that this demographic loves perceived deals and will pay high rates to get them.

These factors combined caused the elite credit card market to heat up in several ways.

New Players Emerged

The Chase Sapphire Reserve (full review right here) caused a big splash last year when it launched with a massive signup bonus (worth $1,500 in travel booked through Chase Ultimate Rewards), annual travel credits and a metal design. Despite the $450 annual fee, the new card was so popular Chase initially ran out of the metal to manufacture it.

“Conventional wisdom has been that only high-spend travelers would invest in a premium card,” Eric Lindeen, credit card industry expert and vice president of Marketing at ID Analytics, said. “The success of the Chase Sapphire [Reserve] card came as a surprise … The most important lesson is there are more consumers willing to spend $500 on a card than anyone expected, as long as there is value to justify the spend.”

A Chase spokesperson said the bank saw a gap in the premium credit card category, specifically for modern travelers that needed flexibility in how they earned and redeemed rewards. Half of the initial applicants for the Chase Sapphire Reserve were millennials, who, according to Chase, tend to value experiences over things and appreciate a card with flexibility.

Reimagined Premium Offerings

Even well-established premium cards like Luxury Card’s MasterCard Black Card have seen recent redesigns. In early 2016, Luxury Card added the Gold Card and Titanium Card to their Luxury Card portfolio. The new cards serve as higher-tier and lower-tier alternatives, respectively, to the flagship product. (The Black Card has a $495 annual fee and offers rewards, concierge services, surprise gifts, VIP treatment at many hotel properties and other luxury perks.)

The additions show there’s faith in the potential for a greater customer base.

“Our MasterCard Black Card has been very successful, and so we launched two additional tiers,” Marina Kissam, vice president of customer experience at Luxury Card, said. “We were able to construct benefits that effectively segmented the luxury experience into tiers.”

Those tiers potentially open the Luxury Card up to a wider range of cardholders.

Expanded Benefits

Issuers long in the luxury market have also sweetened their deals, adding new perks and expanding existing benefits.

The Platinum Card from American Express is the most notable example. Back in October, the issuer added five times the points on airfare booked directly with airlines or through its travel portal in addition to the one point per dollar they earn on all other purchases. And in late March, the Platinum Card (full review here) underwent a more dramatic makeover.

Cardholders now earn five times the points on hotels and airfare booked through AmexTravel.com or directly with an airline carrier (they still earn one point per dollar elsewhere). The issuer also increased airport lounge access, added a Global Dining program, expanded their VIP By Invitation Only Program and, for the cherry on top, added up to $200 in annual Uber credits ($15 per month, plus a $20 bonus in December). It also increased the card’s annual fee from $450 to $550.

According to American Express, the modifications to the Platinum’s benefits were a response to the changing preferences of their members. Of course, it’s worth noting the changes come at a time of increased market pressure.

What’s Next? 

While it may be too early to tell, its possible a premium credit card arms race is unfolding, and consumers may be able to pick from an even greater variety of options going forward. There are a few possible trends we could see in coming years, experts say.

New card offerings will continue to pop up, whether in an attempt to disrupt the industry or simply to grab some market share.

“It’s fairly easy to stand up new card products, so I expect to see a continuing flow,” Lindeen said. “Many will be look-a-likes that fade away, but some will resonate. We definitely won’t see the market settle down anytime soon … We may see banks and issuers with smaller card volumes introduce a luxury card to increase the appeal of their branded cards and defend against national brands.”

In fact, U.S. Bank just launched its own premium travel credit card — the Altitude Reserve Visa Infinite — touting a 50,000 point signup bonus (if you spend $4,500 in your first 90 days), $325 in annual statement credits and a $400 annual fee.

“We introduced U.S. Bank Altitude Reserve in response to customer feedback and the evolving marketplace for premium reward cards,” Bob Daly, senior vice president of Retail Payment Solutions at U.S. Bank, said in a statement.

A noteworthy caveat? The card, made of metal, is only available to U.S. Bank customers. (You have to have an “eligible consumer U.S. Bank account relationship” for a minimum of 35 days prior to submitting an application, per the bank’s website.)

When it comes to expanding benefits, card issuers are just getting started, experts say, and the market will continue to see expanded and more unique benefits. These perks could come in many forms, but they’ll likely strike a balance between providing value to the consumer and profit to the issuer.

“What’s in play now is attracting first-time credit users. So what would appear to be expensive bounties [is] market acquisition,” Crone said. “There’s a lot of wiggle room for more benefits to come.”

The challenge will be creating benefits that don’t eat into the profitability of the card. Card issuers may also have to move beyond massive signup bonuses, which encourages a lot of upfront demand but could result in declining activity after the first year.

Right on Target

To capture niche markets and to further differentiate themselves from the competition, issuers may need to innovate by designing cards that appeal to highly specific buyer profiles and provide custom experiences.

“There is a commoditization of luxury cards, so differentiating for smaller segments will become more critical,” Lindeen said. “Benefits will shift to local benefits, like Uber, spa, winery, brewery and dining credits. These are areas where vendors will be willing to cost-share the benefit and different consumers will find the offer appealing. Unique benefits with specific appeal will be increasingly important.”

Luxury Card also believes in the value of specificity, and has been focusing on custom experiences in a different way. Kissam believes their customer base is motivated in part by custom experiences and one-on-one service, and notes that their concierge generates high levels of engagement.

Bottomline: Card providers will likely move to demonstrate value that is highly specific to a consumer’s needs.

So Should I Get an Elite Credit Card?

First things first: To land a premium card, you’ll likely need excellent credit, so if your scores are less than stellar, hold off on filling out that application. (You can see where your credit stands by viewing two of your credit scores, along with tips for what you can do to improve on them, for free on Credit.com.)

Keep in mind, these are not credit cards for people prone to carrying a balance. You’ll just wind up losing precious points, miles or credits to interest.

Now, if you can afford the annual fee and find a card that provides a return on your investment, an elite credit card could make a good addition to your wallet. The value of many premium credit cards can be supercharged by frequent use of benefits and exploitation of the card’s quirks — and may even exceed the hefty annual fee.

But you’ll have to look forward: Picking a card with a big signup bonus can help mitigate much of the cost the first year, but will you travel or spend enough the second year to recoup those dollars?

How Can I Find the Best Elite Credit Card for Me?

If you do decide an elite credit card is worth your while, be sure read card agreements closely to find the one that’s best for you.

Compare benefits to see which card provides the greatest potential value. Look at the flashy perks and the more standard policies and programs, like price protection or trip cancellation insurance. And, even if you’re not known to carry a balance, be sure to compare costs, like annual fees, annual percentage rates and other charges. (A big item to note: foreign transaction fees, which are waived by the better travel credit cards on the market.)

It’s also important to choose a card that offers benefits you’ll frequently use, as that’s the best way to ensure value. For instance, if you often stay at Ritz-Carlton properties, the Ritz Carlton credit card from Chase may provide the best return. If you’re a frequent traveler with no loyalties to specific airlines or hotels, a flexible elite credit card, like the Citi Prestige, might be appropriate. Picking a card that fits your lifestyle will help you get the most bang for your buck. [Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.]

Finally, if you’re on the fence, see if a prospective card provider will sweeten their offer.

“Card issuers are banking on the fact that people won’t use the benefits,” said Crone, but notes that some are able to take advantage by frequently using the benefits and negotiating better terms. “Don’t simply follow the script … it’s all negotiable.”

And, if you determine that an elite credit card isn’t right for you, don’t sweat it. There are plenty of fee-free credit cards out there that can help you rack up rewards. (You can find our favorite cash back credit cards right here.)

At publishing time, the MasterCard Black, MasterCard Gold, MasterCard Titanium, Platinum Card from American Express and Citi Prestige credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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