CAMBRIDGE, Mass.—A new study shows that people will pull a premium credit card out of their wallet to signify wealth, choosing to pay higher fees and foregoing rewards from less prestigious cards they carry.
The report from the National Bureau of Economic Research clearly indicates that consumers will choose premium cards because they signify higher income, while ignoring the card’s other pricing features, MarketWatch reported.
"Demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits," according to the report.
What's more, the lower your self-esteem, the more likely you will opt for flashy credit cards with higher fees, MarketWatch stated.
"Social image is a substitute for self-image," the researchers wrote. "Demand for status is psychological in nature."
MarketWatch noted the “real-world drawback” of the practice, in that consumers are likely forgoing money in the form of cash rewards each time they use the platinum card instead of other cards in those situations.