In theory, billionaires should be able to afford almost anything they want. However, that doesn’t mean they don’t use credit cards.
Some billionaires do have credit cards that can be utilized in various day-to-day transactions as well as for larger purchases. These credit cards are often exclusive, with several accessible through invitation only.
Sometimes the use of a credit card is for convenience purposes or the perks associated with it, rather than a lack of money to pay for something right away. It is these benefits that might make credit cards appealing to billionaires.
Why might billionaires use credit cards?
Why have a credit card when you can afford to pay for things without one? For some billionaires, the various perks of using a credit card can make them attractive.
The option to obtain frequent flyer miles, complementary hotel room upgrades, included travel insurance, and other exclusive perks may make sense for some billionaires who travel a lot. Additionally, many exclusive credit cards come with concierge services, which can be useful for billionaires who want the benefit of a personal assistant service wherever they may be.
Chinese billionaire Liu Yiqian purchased a Modigliani painting for $170 million at auction and used his American Express credit card for the purchase. According to his wife, the points gained from the purchase would be used to fly his family around the world for free.
It’s worth bearing in mind that while billionaires have assets that create their billionaire wealth, those assets aren’t all liquid and easily accessible. For large purchases such as artwork, billionaires may not have ready access to cash to pay for the entire purchase right away, in which case a credit card allows them to obtain the purchase and pay it off in stages.
Credit cards also offer certain purchase protections that debit cards and cash do not, such as protection against fraudulent purchases. Additionally, there is a certain convenience to having expenses and purchases charged to one account that can be paid off monthly, rather than balancing various accounts with debit cards each month.
As long as the credit card balances are being paid off before they start to accrue interest, the associated perks may be appealing to billionaires who would use these services anyway but rather get them without having to pay additional money for them.
What credit cards might billionaires use?
There are many different credit cards available for the average individual. However, some credit cards are only available to very wealthy individuals, with a few available through invitation only.
The world’s most exclusive credit card is the American Express Centurion Card. There is a certain level of mystery surrounding this card and how to obtain one, though a few details are available.
Individuals need to have held an American Express Platinum Card for at least a year and have charged a minimum of $250,000 to the card in a year. If invited and accepted for the Centurion Card, the cardholder has to pay an initial $10,000 fee and an annual $5,000 fee.
In return, the card reportedly offers various perks such as a 24/7 concierge service, complementary hotel rooms, personal shoppers, and flight upgrades.
The Stratus Rewards Visa Card is only available to high net worth individuals through invitation and is known as the White Card due to its color (with a nod to the contrast of American Express’s “Black Card”). There is an annual fee of $1,500, though the cardholder has access to perks such as luxury hotel upgrades, discounted charter flights, and the option to pool rewards points with fellow cardholders to use towards perks such as private jet trips.
The most exclusive credit card in England is the Coutts World Silk Card which is used by Queen Elizabeth II, along with other individuals who have $1 million or more in a Coutts account. The card offers benefits such as a 24/7 concierge service and private shopping in designer stores, though it has a high annual percentage yield, which encourages balances to be paid off quickly.
Not all billionaires use credit cards
While some billionaires do use credit cards, others are actively opposed to them. The American billionaire Mark Cuban advises people not to use credit cards.
There is also evidence that many rich people don’t use credit cards because it helps them avoid spending more on purchases and they are committed to not overspending and keeping as much of their income as they can each month to grow their money.
Regardless of how much money an individual may have, paying off a credit card balance each month is extremely important or the interest charges will soon start to outweigh the perks.