Popular Premium Cards Specialized for Hotels and Department Stores
Marriott Shinhan Card and Samsung American Express Are Representative
[Asia Economy Reporter Ki Ha-young] Premium cards launched this year are reaping significant benefits from the COVID-19 pandemic. As suppressed consumer sentiment due to the prolonged pandemic has materialized into revenge spending, demand for cards targeting this trend has surged considerably.
According to the card industry on the 12th, the 'Marriott Bonvoy™ 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, Korea's first global hotel membership private label credit card (PLCC), offers a one-time free stay voucher and preferential services usable at any Marriott hotel 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 premium credit cards. The 'Shinsegae The S Prestige,' launched at the end of last month, is 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 within the department store and payment date discounts on luxury goods 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 a 500,000 KRW discount at luxury hotels and a 100,000 KRW discount overseas and at department stores. The limited edition 'American Express Gold (Rose Gold Edition)' is particularly 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 enthusiastic consumer responses. This card has an annual fee of 800,000 KRW and offers vouchers worth approximately 600,000 KRW in addition to reward benefits.
Revenge Spending Explodes Due to COVID-19... Clear Consumption Recovery Trend Last Month
The popularity and launch of premium cards by card companies are analyzed to be due to pent-up consumption caused by the COVID-19 aftermath 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. Notably, offline card approval amounts last month increased by 15.9% year-on-year, marking the largest growth since the COVID-19 outbreak.
Since last year, as card benefits have decreased due to the introduction of the 'Profitability Analysis System Guidelines,' there is also a view that consumers are responding to relatively benefit-rich premium cards. The profitability guidelines require card companies to release only products that can generate profits over the next five years based on profitability analysis.
An industry insider said, "As consumer sentiment, which had been depressed by COVID-19, revives, premium cards are gaining popularity," adding, "With card benefits reduced due to the profitability guidelines, the preference for premium cards that offer benefits exceeding the annual fee through voucher benefits alone seems to have also influenced this trend."
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