By  Updated on Thu Jul 24, 2014

Outsmart These 2 AmEx Credit Cards Rewards to Get the Most Bang for Your Buck

 

Tina Fey divulges her busy personal life in numerous advertisements for the new American Express EveryDay credit cards, but are they truly the rewards-earning machines that they are made out to be for daily multi-taskers?

Outsmart These 2 AmEx Credit Cards Rewards to Get the Most Bang for Your Buck

Launched earlier this year, the American Express EveryDay and EveryDay Preferred cards are the newest additions to the company’s credit card lineup. They were designed so that consumers earn bonus points when they meet a monthly usage threshold — as in, use the card a certain number of times during the month and you’ll be eligible for extra rewards points.

Also, they are two of the few American Express credit cards that participate in the card issuer’s Membership Rewards program.

The American Express EveryDay card has no annual fee, while the American Express EveryDay Preferred card carries a hefty $95 annual fee and a more generous rewards structure. Depending on your spending patterns, the extra $95 yearly cost may not be worth it. Furthermore, there are two other popular American Express credit cards that offers similar rewards on the same spending categories. How do you decide which one to get?

Read on to see for yourself.

Put them to the test

The American Express EveryDay card offers 2 points per dollar spent at U.S. supermarkets on the first $6,000 spent per year in the category. Everything else earns one point per dollar.

If you use the card at least 20 times during the billing cycle, you will earn 20 percent bonus points. So, if you earned 500 points during any billing cycle and swiped the card 20 times too, you’ll get a total of 600 Membership Rewards points.

The American Express EveryDay Preferred card offers 3 points per dollar spent at U.S. supermarkets on the first $6,000 spent per year in the category and 2 points per dollar at U.S. gas stations. All other purchases earn one point per dollar.

If you use the card at least 30 times during the month, you’ll earn 50 percent bonus points. On 500 points earned during the month, you’d get a total of 750 points if you meet the usage requirement.

In many ways, the two EveryDay credit card competes with two other American Express credit cards — Blue Cash Everyday and Blue Cash Preferred. Because of their similarities, the Blue Cash credit cards are worth throwing into the conversation.

(Blue Cash Everyday has no annual fee and offers 3% cash back at U.S. supermarkets on the first $6,000 spent in the category, 2% cash back at U.S. gas stations and select department stores, and 1% cash back on everything else.)

Blue Cash Preferred has a $75 annual fee and offers 6%, 3%, 1% cash back, respectively, on the same categories as its no-annual-fee sibling. Neither card participates in the Membership Rewards program.)

Let’s take a look at how the four American Express cards will fare against each other in the following hypothetical scenario:

  • Annual spending at U.S. supermarkets: $4,000
  • Annual spending at U.S. gas stations: $1,500
  • Annual miscellaneous spending: $4,000

Credit Card American Express Everday American Express EveryDay Preferred Blue Cash Everyday Blue Cash Preferred
Earned 13,500 MR points 19,000 MR points $190 $325
Bonus 2,700 MR points 9,500 MR points - -
TOTAL 16,200 MR points 28,500 MR points $190 $325

To better assess the worth of the Membership Rewards points, we must look at the ideal redemption options available from the rewards program. Then, we can properly determine if the Everyday cards are more appropriate for you, versus the Blue Cash cards.

Maximizing the value of M
embership Rewards points

Firstly, it is extremely unwise to use Membership Rewards to redeem cash back because you get a 1-point-per-0.5-cent ratio. So, every 20,000 points will only get you $100.

The redemption ratio is much better with gift cards, which tend to have 1-point-per-1-cent ratios. That is, for most gift cards, every 10,000 points is equivalent to $100 in stored value.

However, the most valuable aspect of Membership Rewards points may come from the points-transfer program to partnered airlines and hotels. As of June 16, 2014, American Express is partnered with 17 airlines and four hotel chains. For the majority of the travel partners, point transfers start from 1,000 points per 1,000 miles.

Now, let’s revisit the scenario above for an example:

A roundtrip Delta flight from New York City to Los Angeles costs $738 (before taxes) while a Standard Award flight through the Delta SkyMiles frequent travel program costs 40,000 miles. If the person in the above scenario had the American Express EveryDay Preferred card, they’d have nearly 72 percent of the points needed to redeem that trip — a value of roughly $526 when compared to the standard ticket price.

In this particular case, the 28,500 Membership Rewards points beats the $325 cash back you would have earned with the Blue Cash Preferred card. As gift cards, those points may be worth $285. As cash back, the points only get you $142.50.

The 16,200 points earned on the Everyday card is the equivalent of $299, if compared proportionally to the standard $738 airfare.

Should you get it?

If you are a fan of cash back, the new American Express EveryDay cards are terrible choices — the Blue Cash cards are better.

They are also bad if you don’t swipe your credit cards enough during the month, because you’re missing out on the bonus points. (American Express warned that some merchants will combine separate purchases, over a short period of time, and count them as a single transaction.)

The EveryDay cards deserve a presence in your wallet if you meet these three conditions:

  • 1. Your biggest everyday expenses include groceries and gas.
  • 2. You use your credit cards often enough to meet bonus-points requirements.
  • 3. You plan to use your points on travel and expect to use airlines/hotels partnered with American Express.

However, you may have trouble deciding between the no-annual-fee EveryDay card and the more expensive EveryDay Preferred card. If we’re using travel rewards as the basis for calculating the value of $95 annual fee, it would prove extremely difficult because there are many different travel partners and award levels to take into account.

But, using the above scenario again, you’ll see that the same amount of spending generated $526 of airfare value with the EveryDay Preferred card as opposed to the $299 of airfare value on the EveryDay card. Deducting the $95 annual fee, you’re still up $132 in value.

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Post a Comment

  • Gary

    Actually, the Blue card had/does participate in Membership Rewards. These cards were not the first credit cards to do so.

    • http://www.mybanktracker.com Simon Zhen

      Gary, thanks for pointing that out — the story has been edited.

  • Teresa AF

    In the case of the Annual fee, some companies require their employees to use AMEX cards for bookkeeping purposes for company travel and expenses and will pay that fee for them (as it is in my case), so in a way, it can be a win-win for certain people. Something to consider when deciding on which card is best.