30,000 Won Annual Fee Worth It... 'Premium Cards' Popular Amid Revenge Spending (Comprehensive)

Luxury Brands and Hotels Offer Specialized Benefits
New Products Targeting MZ Generation Flood the Market

[Asia Economy Reporter Ki Ha-young] Premium cards with annual fees reaching tens of thousands of won are gaining popularity. This is due to the surge in revenge spending on luxury goods, hotel stays, and more since the beginning of this year, as consumer sentiment, which had been subdued by the COVID-19 pandemic, has rebounded. In particular, the MZ generation (Millennials + Generation Z), who do not hesitate to spend on themselves, has emerged as a new consumer segment, prompting card companies to launch products targeting this group one after another.

According to the card industry on the 11th, there have been nine premium cards with annual fees over 100,000 won released this year as new products or renewed versions. Shinhan Card introduced two new cards: the 'Marriott Bonvoy The Best Shinhan Card' and the 'Shinhan Card Rave.' Hyundai Card also launched 'The Purple Oje,' a renewed version of the existing Purple Card, and 'The Pink,' a premium new product released after three years. Samsung, Lotte, and Woori Card have also restructured benefits of their existing premium cards or introduced limited edition special versions.

Premium Cards Specialized in Luxury Goods and Hotels... Differentiated by Metal Material Design

The premium cards released this year are characterized by specialized benefits for luxury goods, hotels, golf, and more. Additionally, considering the preferences of the MZ generation, the plate designs have been diversified.

Hyundai Card's 'The Pink,' launched at the end of last month, has an annual fee of 150,000 won and offers 5% M Points accumulation on payments made at all department stores nationwide, major premium outlets, and online shopping malls. The pink-exclusive M Points can be converted 1:1 into vouchers and exchanged for up to 500,000 won in Shinsegae gift certificates and others. Thanks to its shopping-specialized benefits, market response has been enthusiastic. It is said to be issued at a pace similar to 'The Green,' which issued 30,000 cards in one year.

The Marriott Shinhan Card, launched at the end of March, has issued about 6,500 cards so far. As Korea's first global hotel membership private label credit card (PLCC), this card provides one free night stay and preferential services at any Marriott hotel worldwide. Although the annual fee is 267,000 won, it is gaining popularity because it offers elite stay performance for hotel membership upgrades, providing benefits exceeding the annual fee.

Samsung Card's global premium card, the 'American Express Gold,' is also popular. Despite a minimum annual fee of 300,000 won, issuance from April to May this year increased by 500% compared to the same period last year, with the limited edition Rose Gold version being especially popular. In April, Samsung Card renewed and launched three 'American Express' cards equipped with hotel, department store, and overseas discount benefits. Lotte Card's 'Lotte Department Store Flex Card,' launched at the end of last year, has issued about 4,000 cards within five months of release, gaining popularity. It is said to be favored by the MZ generation as it offers accumulation benefits even for luxury brands. This year, they also released a limited edition 'Flex Card Montblanc Edition' in collaboration with Montblanc.

Card Approval Amounts Rise for Three Consecutive Months... Impact of Revenge Spending

The popularity and release of premium cards by card companies are analyzed to be due to pent-up consumption from the COVID-19 pandemic bursting out as revenge spending on luxury goods and hotel stays. In fact, card approval amounts have been on the rise for three consecutive months since February this year. According to the Credit Finance Association, card approval amounts recorded a negative growth of 1.9% in January, followed by increases of 8.9% in February, 20.5% in March, and 18.3% in April, marking nearly 20% growth for two consecutive months. Card spending surged especially at department stores.

The Consumer Sentiment Index has shown improvement for five consecutive months. According to the Bank of Korea's May Consumer Survey results, the Consumer Confidence Index (CCSI) in May was 105.2, up 3 points from the previous month. This is the highest level since the COVID-19 outbreak began and has remained above the baseline of 100 for three consecutive months, continuing an optimistic trend.

An industry insider analyzed, "As pent-up consumption from COVID-19 bursts out all at once, demand for premium cards offering luxury point accumulation and discounts on hotels and golf courses is surging. Especially, targeting the MZ generation, who value personal consumption, with tailored benefits has been effective."