Stop Waving That Fancy Credit Card Around: This is What It Says About You

12,157 Views
platinum credit card
NK SUTTLE/Getty Images
Honest Abe

Disclosure:

Some of the links in this post are from our sponsors. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.

Have you ever whipped out a flashy platinum credit card to pay your tab at a bar or restaurant?

Or have you seen someone else do it?

It looks cool, right? It’s downright impressive. Oooohhh, a platinum card. FANCY.

According to new research, however, that flashy credit card may be a sign of low self-esteem.

If you can’t afford a Porsche or a Jaguar or the latest fashions from Armani or Gucci or Fendi or Prada, then brandishing a platinum credit card in a social setting is another way of showing off a status symbol.

It can serve as an achievable way of improving your social image and building up your self-esteem, according to a new study by economists from the University of Chicago, the Sao Paolo School of Economics, UCLA, the World Bank and Harvard.

Here’s the catch: Financially, you’re better off with an ordinary credit card. A less-flashy card that offers cash back or other discounts.

An Average Joe or Plain Jane credit card might not be a self-esteem boost, but it would serve you better than that super sexy platinum card.

Not So Exclusive Anymore

Historically, gold or platinum cards came with higher credit limits. They were symbols of prestige, signifying that cardholders belonged to an exclusive club of high rollers.

That’s no longer the case.

These days, platinum cards often have higher fees than ordinary credit cards.

The economists who conducted the recent study on self-esteem and credit card use tried this experiment: They offered people a platinum card that didn’t offer any cash-back rewards.

They found that nearly half of these platinum cardholders used their flashy card in social settings — even though they had another card that would’ve gotten them cash back on their purchase.

“Platinum cardholders … appear willing to pay a cost to show off their platinum cards,” the researchers wrote.

Here’s What to Do Instead

Don’t let all that shiny platinum go to your head. Instead, just get a better credit card.

One way to do this: Sign up with a free service like Credit Sesame, which can help you search for smart credit cards, ones that might better benefit your lifestyle. It also offers tips for reducing your debts and raising your credit score.

Another option: With a cash-back rewards card, you can get paid for every dollar you spend. We recommend checking out the Barclaycard CashForward World MasterCard. You’ll earn 1.5% cash back, plus a $200 bonus for signing up.

Status Symbols: Even Pricier Than Expected

A platinum card is only one of the tempting status symbols that can backfire on you financially.

  • If you buy a fancy car, you’ll pay more for auto insurance.
  • If you buy a big house, you’ll probably pay more for maintenance and repairs.

Moral of the story: Next time, skip the platinum card. Your self-esteem doesn’t need the artificial boost.

Advertiser Disclosure: Many of the credit card offers that appear on this site are from credit card companies from which ThePennyHoarder.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). We do not feature all available credit card offers or all credit card issuers.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He does not have a gold or platinum card. Not even a copper or tin one.

Honest Abe

Disclosure:

Some of the links in this post are from our sponsors. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.