The Sneaky Reason Some Credit Cards Are Metal

When they were first released in the 1950s, credit cards were a luxury item marketed for wealthy individuals who traveled frequently. But as they evolved and became more common, credit cards lost their significance as a status symbol, leaving card issuers and banks looking to evolve again. Their answer was metal or titanium credit cards that offered a more luxurious feel for the user. Today, most major banks from Bank of America to Citibank — some of the credit card companies upper-class people trust the most — all provide a metal credit card for their premium credit products, which usually also offer the best perks. Even the American Express Platinum, the card with the second most expensive annual credit card fee, offers a stainless steel card. However, according to Money.com, these types of cards can also trick consumers into using them more often.

According to James Sufrin, an executive for IDEMIA who was interviewed by Money.com, banks create premium-feeling metal cards so that consumers are enticed to choose their metal card during checkout. Their goal is to become an individual's "top of wallet" card, or the card that they will instinctively reach for first when making a purchase. In the process, banks and card issuers generate profits from vendors through merchant fees and fees from individuals.

Consumers are drawn to metal cards largely due to the perks they offer. To attract individuals to use metal cards, credit card companies will offer travel perks and access to airport lounges instead of standard cash back perks. These upscaled perks are also the reason upper-class people are less likely to have cash-back credit cards than the average American. But beyond perks, individuals are also drawn to metal credit cards because of their sleek designs that provide a more high-end, luxurious feel than standard credit cards. According to a CompoSecure survey of 21,250 consumers, 68% of cardholders would choose one bank over another if they had a metal credit card. And when it comes to ultra-high-net-worth (UHNW) individuals, 66% said they would be more likely to reach for their metal cards over other payment methods. 

By having more people use their cards, banks collect more merchant fees, and late fees and interest charges from customers, as 46% of individuals cary a balance according to Bankrate. Meanwhile in 2020 banks collected $12 billion from customers due to late fees, according to the Consumer Financial Protection Bureau. Merchant fees range between 1.5% to 3.5% of each transaction, according to POS Nation. But with metal credit cards companies may lean on the higher end of the range to cover the costs of the premium rewards for customers. By making metal cards more lucrative and desirable, banks and credit card companies can sneakily increase their profits through higher merchant and customer fees.