What Your Credit Card Says About Your Self-Image — and How It Can Cost You

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If you tend to reach for a platinum credit card in social situations, your self-image might be lacking.

Platinum cards are more likely to be used in public situations — such as at restaurants, bars and clubs — where they can be seen by other people. By contrast, they are less likely to be used in private situations like online shopping. That’s among the findings of a new report from the nonprofit National Bureau of Economic Research.

The findings support the authors’ hypothesis that “platinum credit cards are used to earn social image by signaling high income or status.”

The report was written by researchers from the economic departments at the University of Chicago and Harvard University, as well as the Sao Paulo School of Economics, UCLA Anderson School of Management and the World Bank. To conduct field experiments for the report, the researchers worked with a large Indonesian bank that markets widely recognized platinum cards.

The researchers also found that demand for the platinum card was “substantially higher” than demand for a nondescript credit card that offered the same benefits as the platinum card. It wasn’t the wealthier folks demanding the platinum card over the nondescript equivalent, though. The researchers write:

“We find that it is precisely the less-rich (middle-class) individuals in the sample who show a demand for the social image aspect of the platinum card. … This is consistent with the intuition of income signaling, since the more wealthy are likely to have many other ways and occasions to signal their high status, while the platinum credit cards provide a valuable opportunity to signal status for the less wealthy.”

Is your image costing you?

MarketWatch notes that high-end credit cards tend to charge users hundreds of dollars in fees every year just to carry the cards. Sometimes such cards come with a large sum of points upfront that might make the fees seem worthwhile.

But that’s not the case for most cardholders. From “10 Key Facts to Test Your Credit Card IQ“:

As you’ll see if you try Money Talks News’ credit card search tool, there are plenty of great credit cards that are fee-free. That means typical cardholders probably shouldn’t be paying for the privilege of charging their purchases.

What’s your take on platinum cards? Sound off below or on our Facebook page.

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