I have advice featured in the NY Times travel section today and at one point I talk about how I value American Express Membership Rewards points at about 2 cents a piece. NYT reader Roger emailed me questioning my valuation of American Express points:
“I just wanted to point something that was mentioned in the article that is a mistake. In the article it mentions that 1,000 points on the Amex Gold is more or less equivalent to $20. I signed up for the Amex Premier Rewards Gold last January only after Amex kept sending me offers of more and more signing bonus points. When it got to 50,000 points I signed up. The other reason was the 3x points on travel and 2x points on groceries and gas. I redeemed the 50k bonus for airfare which was the equivalent of $500. We then proceeded to spend about 20k on the card and when I came to redeem the points for gift card, as you cannot redeem for cold hard $, the point to dollar equivalent was not 1 to 1. For example, a $100 Amex gift card requires anywhere between 15k to 20k points. The only reward category where 10k points would equate to $100 is when you redeem for airfare. I was very surprised by this and called Amex who confirmed that this was indeed the case. Hence, why I completely disagree when you say that 1000 points equates to roughly $20. The most 1000 points would equate to is $10 and only when redeeming for airfare.”
My response (sent from my iPhone while I was walking down the street so please excuse the brevity).
“Hi Roger- never redeem for gift cards- its a terrible value. The 2 cent valuation comes from the airline transfer partners.
So basically, you will get the most value out of your Amex (and Chase Ultimate Rewards) points by transferring to airlines – especially when they have transfer bonuses, like British Airways’ current 30% bonus. If you teach yourself the ins and outs of booking airline awards, it’s not hard to get 5+ cents per point in value back from your points.
However, Roger emailed me back and said that he is most interested in cashback rewards, in which case American Express Premier Rewards Gold probably isn’t your best bet. When the $175 annual fee kicks in after the first year that will take a toll on the maximum value he gets back from those points. There are other cards with lower or no annual fees that also give category bonuses.
Here is my rundown of major credit cards with category bonuses and cash back type rewards. Please feel free to comment, since I’m sure I missed some.
American Express Premier Rewards Gold- Earn triple points on airfare, double points on gasoline at U.S. stand-alone gas stations, double points at U.S. stand-alone supermarkets and single points on other purchases. $0 introductory annual fee for the first year, then $175.
American Express Business Gold Rewards- Triple points per dollar on airfare (on all scheduled U.S. and international passenger airlines), double points on advertising with select media (graphic design, tradeshows and advertising services), gas (from stand-alone U.S. gas and commercial fuel stations) and shipping (in the U.S. for courier, postal, and freight services) and single points on everything else. $175 annual fee, waived for the first year.
American Express Blue Cash Preferred- 6% cash back at U.S. stand-alone supermarkets, 3% cash back on gasoline at U.S. stand-alone gas stations and select major department stores; 1% cash back on other purchases.
American Express Blue Cash Rewards- 3% cash back at U.S. stand-alone supermarkets, 2% cash back on gasoline at U.S. stand-alone gas stations and select major department stores; 1% cash back on other purchases. No annual fee.
American Express TrueEarnings Costco- Earn 3% cash back on gasoline at U.S. stand-alone gas stations, including at Costco, for purchases up to $4,000 per year (1% thereafter), 2% cash back at U.S. restaurants, 2% cash back on eligible travel purchases, and 1% cash back on other purchases, including at Costco.
American Express SimplyCash Business- 5% cash back at U.S. office supply stores, U.S. wireless telephone service providers, 3% cash back on gasoline at U.S. stand-alone gas stations, 1% cash back on other eligible purchases.
American Express Co-Branded Fidelity Cards (Require Fidelity accounts)- 2x on everything. No annual fee.
Bank of America
BankAmericard Cash Rewards: Earn 1% cash back on every purchase, 2% on groceries, and 3% on gas (Quarterly maximum applies to bonus rewards on grocery and gas purchases). Plus earn a 10% customer bonus when you redeem into a Bank of America® checking or savings account. Get a $50 cash rewards bonus after you make at least $100 in purchases within 60 days of account opening. $0 annual fee.
Capital One Venture- 2x on everything. $59 annual fee, waived for the first year.
Capital One Cash Rewards for Newcomers- 2x on travel- great for people looking to build their credit and earn rewards while doing it. No annual fee.
Capital One MTV- 5x on entertainment and 2x on restaurants. No annual fee.
Capital One LSU- 2x on gas and groceries. No annual fee.
Chase Ink Business- 5x wireless/telecommunications services (excluding equipment such as phones and fax machines), cable and satellite television and radio services, office supply stores and wholesale distributors of office supplies. 2x on airfare and hotel. $95 annual fee, waived the first year.
Chase Ink Classic- 5x office supplies, wireless and land-line phone and cable (incl internet), 2x on fuel and lodging. No annual fee.
Chase Sapphire Preferred- 2x on travel and dining. $95 annual fee, waived for the first year.
Chase Freedom: $300 cashback offer after $500 spend in the first 3 months. 5x rotating categories on up to $1,500 spend: currently dining, department stores, movie theaters and charitable organizations. No annual fee. (Update: current offer is 10,000 points or $100 in cashback).
Chase AARP Card: 1% cashback on all purchases up to an annual total of $600 cashback, and for now, 5% cashback on all purchases in the first six months.
Citi Forward Card- 5x on restaurants, books, movies and music. No annual fee.
Citi AT&T Universal Business Card- 5x on AT&T Products and services purchased directly from AT&T and 3x on gas station and certain office supplies and professional services. No annual fee.
Citi Thank You Preferred- 5x at gas stations, supermarkets and drugstores for first 12 months. No annual fee.
Citi ThankYou Premier- 1.2x at gas stations, supermarkets, drugstores, commuter transportation and parking merchants. $125 annual fee, waived the first year.
PerkStreet Financial: 2% cashback on everything. 5% on special monthly categories.
Discover More Card: $150 cashback bonus when you spend $1,000 in the first 90 days. Up to 1% cashback on all purchases, 5% Cashback Bonus on a rotating selection of merchants (Oct-Dec is restaurants and fashion, Jan-Mar is gas and entertainment), 5-20% cashback bonuses on purchases through ShopDiscover portal. $0 annual fee.
Discover Open Road Card: Up to 1% cashback on purchases, 2% bonus on the first $250 each month at restaurants and gas stations. $0 annual fee.
Discover Student More Card: Up to 1% cashback on everyday purchases, 5% bonus on rotating categories. $0 annual fee.
Discover Student Open Road Card: 2% cashback bonus on your first $250 in purchases at gas stations and restaurants each month, plus up to 1% cashback on your other purchases. $0 annual fee.
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