Corona Revenge Spending Surges... Premium Credit Cards Gain Popularity

Popularity of Premium Cards Specialized for Hotels and Department Stores
Marriott Shinhan Card and Samsung American Express as Representative Examples

[Asia Economy Reporter Ki Ha-young] Premium cards launched this year are reaping significant benefits from the COVID-19 pandemic. This is interpreted as a result of the pent-up consumer sentiment during the prolonged COVID-19 period being realized as revenge spending, leading to a sharp increase in demand for cards targeting this trend.

According to the card industry on the 12th, the 'Marriott BonvoyTM The Best Shinhan Card,' launched at the end of last month, is being newly issued at a rate of about 500 cards per day despite an annual fee approaching 300,000 KRW. This card, the first global hotel membership private label credit card (PLCC) in Korea, offers a one-time free stay voucher and preferential services usable at Marriott hotels worldwide. It is especially popular because it provides elite stay credits for hotel membership tier upgrades, allowing users to enjoy benefits exceeding the annual fee.

Samsung Card also recently introduced two types of premium credit cards. The 'Shinsegae The S Prestige,' launched at the end of last month, is a card available only to Shinsegae Department Store VIP Gold grade or higher customers with an annual purchase amount of at least 20 million KRW. This card, with an annual fee of 150,000 KRW, offers a 1.2% discount on payments made within the department store and payment day discounts on luxury purchases.

Earlier this month, three types of the global premium card 'American Express' were also released. Among them, the 'American Express Platinum' card, with an annual fee of 700,000 KRW, provides benefits such as a 500,000 KRW discount at luxury hotels and 100,000 KRW discounts overseas and at department stores. The limited edition 'American Express Gold (Rose Gold Edition)' is especially popular.

Hyundai Card's new product 'The Purple Oje,' launched last month as a new version of the existing premium card The Purple, is also reportedly receiving a warm response from consumers. This card has an annual fee of 800,000 KRW and offers vouchers worth approximately 600,000 KRW in addition to reward benefits.

The popularity and launch of premium cards by card companies are analyzed to be due to pent-up consumption during the COVID-19 pandemic being released as revenge spending on luxury purchases and hotel stays. In fact, offline card approval amounts showed double-digit growth last month, indicating a clear recovery in consumption. According to Shinhan Card data analyzed by the office of Park Kwang-on of the Democratic Party, card approval amounts in March reached 13.5072 trillion KRW, a 16.5% increase compared to a year earlier. Especially, offline card approval amounts last month increased by 15.9% year-on-year, marking the largest growth since the COVID-19 outbreak.

An industry official said, "As consumer sentiment, which had been suppressed by COVID-19, revives, premium cards are gaining popularity," adding, "With card benefits reduced according to profitability guidelines, the preference for premium cards that offer benefits exceeding the annual fee solely through voucher benefits seems to have also influenced this trend."