[Update: Some offers mentioned below have expired.]
Here are some questions you don’t normally see on a credit card application: Where did you go to school? Where are your favorite places to dine out and shop? What do you like to do for fun?
In short: Are you cool enough to be part of our club?
That’s exactly what Magnises, the newest luxury card to hit the market, wants to know about applicants. People aren’t applying for Magnises because they’re looking for a new financial services provider — they’re looking for an all-access pass to some of New York’s most exclusive clubs, restaurants and retailers. If you make the cut, you’re basically giving one of your credit or debit cards an influential facelift, from plastic to black stainless steel.
The Perks of Magnises
CEO Billy McFarland, 22, got the idea for Magnises when looking at his credit cards and realizing how little their benefits related to his lifestyle. From his perspective, the rewards of high-end credit cards are sporadic and irrelevant to 20- and 30-somethings, and he wanted something that impacted his day-to-day life, not a list of rewards he might be able to earn a few times a year.
“Let’s make this card more community-based and offer perks that are actually relevant to and enhance your everyday life,” he said. “It’s got the restaurants you love, the clothing stores, the fitness clubs.”
There’s also a clubhouse in Manhattan where Magnises members can hang out, bring clients and network with each other. Another house just opened in Rio de Janeiro. (Magnises, by the way, doesn’t mean or stand for anything — it’s a made-up word with a nice ring to it, McFarland said.)
The Cost of Exclusivity
If you get into the club, which opened in March, the annual membership fee is $250. Given the target audience for Magnises, that’s pretty reasonable.
“It occupies a little bit of the sweet spot,” said Jason Steele, an expert on credit card products and contributor to Credit.com. A lot of high-end credit cards require an annual fee. “There’s a lot of cards at $100 and a lot of cards are at $500.”
The trick is getting accepted: There are about 2,000 Magnises members in New York, but the company receives about 100 applications a day and accepts between 25% and 35% of them. The typical Magnises member is about 28 years old.
Steele said the concept reminded him of events some credit card issuers hold for their elite cardholders, but the Magnises clientele is a different crowd than the typical high-end credit card user.
“This is clearly appealing to a younger demographic who wants benefits that are tailored to their lifestyle, like nightclubs and shopping,” Steele said. “It’s a neat concept. I think this guy has really hit on something, and it wouldn’t surprise me if he’s successful in New York.”
The network will soon expand to D.C., from which Magnises receives the most out-of-town requests, and after that, the next Magnises city will be Atlanta. (McFarland said they have a higher volume of requests from Los Angeles and San Francisco than Atlanta, but there’s a significant demand from Atlanta, and the plan is to eventually expand westward.)
Steel vs. Plastic — Is Magnises Better Than a Credit Card?
Magnises is essentially a steel upgrade for an existing card you have in your wallet. The card data is duplicated in the magnetic stripe on Magnises, so it’s processed the same way as your original card: Merchants still pay the processing fee, and you still earn any rewards associated with transactions on that card. As long as that card is valid, you can use it on Magnises, and if you need to change the account on your fancy status symbol, you can. There’s also a mobile application for it.
Magnises isn’t trying to change the high-end credit card industry, McFarland said. The company is focused on community, rather than financial services. You can also hook up a debit card to your club account, if that’s your preferred payment method.
As exciting as the idea is, most people aren’t cool enough to get in on the Magnises action. Even if you are, you have to be a New Yorker to access the perks, so you’re stuck with traditional credit cards for now. They may not be all-access passes to exclusive locations in the Big Apple, but these cards still carry serious benefits, and not all of them carry expensive fees. Here’s how to pick a good rewards card.
Instead of an impressive social status, you’ll need a great credit score to qualify for the best rewards cards. If you want to rack up benefits with your everyday spending habits, make sure your credit is in good standing before you apply (you don’t want to apply if you don’t think you’ll get approved). You can review your credit data for free, including two free credit scores, through Credit.com.
Keep in mind you should always pay your rewards credit card balances in full every billing cycle, because rewards cards tend to carry higher interest rates than other cards (here’s a primer on APR, if you want to know more), and the cost of paying interest will likely outweigh the value of any rewards you’re earning.
More on Credit Cards:
- The Credit.com Credit Card Learning Center
- How to Lower Your Credit Card Interest Rates
- 6 Smart Credit Card Strategies