Credit Card Companies The 'Upper-Class' Trust The Most Might Surprise You

When people think of millionaires, that picture likely doesn't include frequent credit card swipes or a substantial amount of credit card debt. The assumption is that people with high net worths have enough money to pay for things upfront and naturally don't need credit cards. However, a recent study by The Motley Fool showed the opposite: Upper-class Americans have more credit cards than the average person, use plastic for day-to-day spending, and even share the costly habit of carrying over balances month to month. Furthermore, when comparing Americans with net worths over $1 million versus average-income earners, the study found a significant difference in trust of credit card issuers.

The rankings were mostly the same, with the same companies coming up as most trusted and least trusted under both lists. But the percentage of people who said they trusted the major card issuers across both lists told a different story. Up to 80% of wealthy Americans said they trusted American Express the most, followed closely by Capital One at 78% and Citibank at 77%. But the trust in each issuer was several points lower among upper-class Americans than among average-income earners.

For wealthy households, choosing a credit card issuer isn't just about basic safety and fraud protection: it's about the perks and rewards offered. A 2019 report from Brookings showed that the richer you are, the more rewards and credit card perks are available to you. That in turn translates into a subsidy for the rich, with lower-income customers ending up with cards that earn less or offer no rewards at all.

In many cases, those premium rewards are more than just a bit of extra convenience. One example illustrates this: a family spending $250,000 a year on a card with a 2.5% cash-back reward earns $6,250, and according to Brookings' math, that's worth over $10,000 in pre-tax wages. It doesn't stop at cash-back rewards, with many premium cards offering perks in areas like travel and dining. The Platinum Card from American Express, which has the second most expensive annual fee, offers over $3,500 in perks that cover travel, dining, and entertainment in return for the $895 annual fee. 

But all of this doesn't automatically mean you should go after the same cards or the same issuers. Studies show that lower-income card users end up on the paying end of the subsidy created by card rewards. The dark truth behind those credit card rewards is that a lot of that revenue comes from the fees and interest rates that middle-class and lower-income cardholders end up paying each month and year. So logically, as an average-income earner, you should be more focused on what options serve you rather than the prestige. If you can afford the high fees and are used to paying your balances in full, some of the premium cards might work for you. Thankfully, many card companies have different card options, some of which have decent perks for middle-income cardholders.