Amex Membership Rewards Card Showdown – Which Card Wins?
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Yesterday, American Express announced that, starting in 2015, the Premier Rewards Gold card would no longer offer a 15,000-point bonus for spending $30,000 or more in a calendar year. Many readers had questions about the change, so today TPG Special Contributor Eric Rosen looks at the benefits of this card going forward, and compares it to two other cards in the Membership Rewards program, the Amex Platinum and Amex EveryDay Preferred.
Along with the announcement that Delta SkyMiles will limit transfers from other points programs, the other major news pertinent to Membership Rewards yesterday was that the Amex Premier Rewards Gold card – long a thoroughbred in the Amex stable – would no longer offer a calendar year spending threshold bonus. This can be construed as a major blow to the card’s benefits, because it cuts the card’s earning potential by up to 50% for big spenders. For many TPG readers and Amex cardholders, this changes the calculus of card benefits and may impact your decision of which card to carry.
With that in mind, let’s have a look the Premier Rewards Gold again and compare it to two other premium Amex Membership Rewards cards, The Platinum Card from American Express and the Amex EveryDay Preferred. In this post I’ll examine the benefits of each and look at a few scenarios to help determine which card is best suited to your spending habits.
Before we get into the spending scenarios, below you’ll find a rundown of the detailed terms for each of the three cards, including the current sign-up bonus, category spending and other bonuses, extra benefits, and annual fee.
Premier Rewards Gold Card
Current Sign-up bonus: 25,000 points when you spend $2,000 in 3 months.
Category Spending Bonuses: 3x on airfare, 2x on gasoline and supermarkets, 1x on all other purchases.
Other Benefits: Use Pay With Points to book flights, cruises, hotels and vacations packages with no seat restrictions or blackout dates on americanexpress.com/travel.
Annual Fee: $0 Intro annual fee for the first year, then $195
The Platinum Card
Current Sign-up bonus: 40,000 points when you spend $3,000 in 3 months.
Category Spending Bonuses: None.
Other Bonuses: None.
Other Benefits: Airport club access including Delta SkyClub and Priority Pass Select; no foreign transaction fees; $200 annual airline credit; Global Entry $100 statement credit or TSA PreCheck $85 statement credit; free land-based Boingo WiFi access; Amex Fine Hotels & Resorts benefits; automatic Starwood Gold Status; Premium Companion Ticket.
Annual Fee: $450.
Amex EveryDay Preferred Credit Card
Current Sign-up bonus: 15,000 points when you spend $1,000 in the first 3 months
Category Spending Bonuses: Earn 3x Membership Rewards points at U.S. supermarkets (not including warehouse stores like Costco), on up to $6,000 of purchases annually (then 1x); 2x on US standalone gas stations; and 1x points on all other purchases.
Other Bonuses: Use the Card to make 30 or more purchases in a billing period and get 50% extra points on all those purchases (less returns and credits).
Other Benefits: 0% introductory rate on purchases and balance transfers for the first 12 months.
Annual fee: $95.
As you can see, each card has its strengths and weaknesses. The EveryDay Preferred card has some great category bonuses and the potentially super valuable 50% transaction-based bonus, as well as the lowest annual fee of the bunch (though it’s not waived the first year). The Platinum Card is expensive at $450 per year, but if you can max out those top-tier benefits like the $200 airline credit, Global Entry fee waiver, lounge access and Boingo, you could be saving a ton of money each year. The Premier Rewards Gold is a middle of the road offer, with some notable uncapped category spending bonuses as well as a first year annual fee waiver.
Differentiating between these cards comes down to which of the benefits you value most, and which card’s spending bonuses you can best leverage to maximize your earnings. To determine that, I looked at a few different spending scenarios.
These scenarios are based on three different kinds of consumers. The first is a head-of-household – let’s say the breadwinner of a family of four. The second is a premium business traveler – someone who’s on the road for half the year and spends a good amount on travel. The third is your classic singleton with a moderate income and spending level. I also started with a fourth, general scenario that doesn’t emphasize spending in any one category. I applied the spending pattern for each scenario to all three cards to see which one comes out ahead, based on the rules and benefits of the cards in 2015 as we know them now.
1. General Scenario
In this scenario, let’s say the cardholder spends $30,000 a year on their Amex (which, not coincidentally, equals the current calendar year spending threshold for the Premier Rewards Gold bonus that ends in 2015). Let’s say that they spend the following amounts in each category annually.
- Airfare: $3,000
- Hotels: $3,000
- Gas: $5,000
- Supermarkets: $10,000
- Other: $9,000
Let’s also assume that this cardholder hits 30 transactions per billing period (to reach the Amex EveryDay threshold) every other month, and that spending is identical in each category from month to month, so the card will earn an average 25% bonus on spending with that card, rather than 50%. Here’s how the earnings would work out for each of those cards.
- Premier Rewards Gold: 51,000 points
- Platinum: 30,000 points
- EveryDay Preferred: 58,750 points
The EveryDay Preferred and Premier Rewards Gold are close in this instance thanks to their category spending bonuses. The EveryDay Preferred is slightly hobbled by the $6,000 annual cap on the grocery bonus, so the Premier Rewards Gold outperforms it on airfare, and gas and supermarkets thanks to its uncapped category bonuses. However, the EveryDay Preferred makes up that ground with the 50% transaction bonus, even when it’s only earned every other month. Note that with the expiring 15,000 point spending bonus, Premier Rewards Gold would come out ahead.
The Platinum card lags with just 1x points per $1 on everything. An important consideration in the first year is that the $95 annual fee for EveryDay Preferred is not waived in the first year, while the $175 annual fee for Premier Rewards Gold is waived, but you’ll be stuck paying that higher rate in subsequent years.
Let’s move on to see how each of these cards performs in a specific spending scenario based on typical consumers. To be realistic, I consulted the latest Bureau of Labor Statistics consumer expenditure survey, which contained figures for 2013, and rounded the numbers slightly for calculation purposes. I had to extrapolate certain numbers such as gas versus airfare costs where the BLS groups them together under “transportation,” etc. You can find the full survey here.
2. The Householder
For the second scenario, let’s take a head of household of a family of four with two school-age children, with the spouse as an additional cardholder. The family’s overall annual credit card spending on various things from gas and supermarkets to school supplies, restaurants and department stores is about $50,000. I’m assuming they meet the 30-transaction requirement each billing cycle for the EveryDay Preferred 50% bonus. Here’s how their spending might break down by category.
- Airfare: $4,000
- Hotels: $3,000
- Supermarkets: $15,000
- Gas: $8,000
- Other: $20,000
Here’s how the earnings would work out for each card.
- Premier Rewards Gold: 81,000 points
- Platinum: 50,000 points
- EveryDay Preferred: 105,000 points
In this case, thanks to maxing out the supermarkets category and meeting the transaction threshold, the EveryDay Preferred pulls far ahead of the Premier Rewards Gold, which is geared more toward travelers.
3. The Premium Traveler
The Premier Rewards Gold and especially the Platinum Card are geared toward premium travelers, both in the leisure demographic and road warriors who travel several times a month and covet value-added perks like Global Entry and Priority Pass lounge access. Let’s take one of these travelers as our second example – a mid-level executive who can put her expenses on her own Amex card and get reimbursed, and who travels about half the year. We’ll set her spending level at about $100,000 per year. Let’s also say she meets the transaction threshold for EveryDay Preferred. Here’s how her spending could break down.
- Airfare: $25,000
- Hotels: $30,000
- Supermarkets: $5,000
- Gas: $5,000
- Other: $35,000
And here’s the points she would earn on each card:
- Premier Rewards Gold: 160,000 points
- Platinum: 100,000 points
- EveryDay Preferred: 172,500 points
Even though the Premier Rewards Gold is geared more toward travelers than the EveryDay Preferred, and this particular consumer has about a quarter of her spending in the lucrative 3x airfare category, the EveryDay Preferred still edges out Premier Rewards Gold, with the Platinum card a distant third. Note that once again, the expiring 15,000 point spending bonus would have been enough to put Premier Rewards Gold on top.
While the Platinum Card lags behind in points earnings, it does offer all those premium travel benefits, including the $200 annual airline fee rebate, the $100 Global Entry fee waiver (or $85 PreCheck fee waiver), Boingo WiFi access (equivalent to $59 a month), Delta and Priority Pass lounge access and more, all of which might make up for the annual fee and the difference in points for travelers who spend a lot of time in airports. Also, the Platinum Card is the only one of the three that does not charge foreign transaction fees, so the math works out differently for someone who travels internationally a lot.
4. The Singleton
For the first time in modern history, the US has more singles than married people, so it’s worth looking at what an average singleton might spend and which card would work best for them. Here’s a reasonable breakdown for $30,000 of annual spending, again assuming that the 50% transaction bonus on the EveryDay Preferred is met each month.
- Airfare: $4,000
- Hotels: $2,500
- Supermarkets: $4,000
- Gas: $2,500
- Other: $17,000
Here’s how many points would be earned on each card with that spending pattern.
- Premier Rewards Gold: 44,500 points
- Platinum: 30,000 points
- EveryDay Preferred: 60,750 points
This person has a bit more free time on their hands for travel with friends or independently, spends the average amount on gas and groceries, and puts almost all his or her other expenses on the card, including restaurants, entertainment, apparel and more.
No surprise here, the EveryDay card beats out both other cards in terms of earning, especially thanks to the low expenditures in the bonus categories. This is when the card’s 50% transaction bonus really comes in handy, since you earn at least 1.5 points per $1 on even everyday purchases, and potentially 4.5 points per $1 on supermarket purchases. A person in this demographic might not want to consider the Platinum card, since its $450 annual fee is the equivalent to 1.5% of their annual spending, which is a bit high.
In terms of points earning, the EveryDay Preferred is the clear winner thanks to that 50% bonus when you make 30 or more transactions per billing period. However, the comparison must go beyond the number of points alone. As with any credit card, you have to consider a variety of factors, including how much you tend to spend each year, where you spend that money, whether you can maximize any bonus categories a card offers, any major fees that are either obvious (like annual fees that you cannot get out of) or less obvious (like forex fees), and what other benefits a card offers that you might be able to leverage.
If your sole interest is earning Membership Rewards points, then your top choice is probably the Amex EveryDay Preferred. Not only does it offer decent category spending bonuses at merchants like gas stations and supermarkets, but the 50% points bonus gives it one of the most generous everyday earning rates on the market. It’s also a good card for beginners looking to dip their toes in the premium travel credit card market with a manageable annual fee of $95. Both the Premier Rewards Gold and Platinum cards are charge cards, which means you cannot carry a balance on them or you will face very steep fees.
If your major expenses are airfare, groceries and gas, you might still want to consider the Premier Rewards Gold, because it doesn’t cap the bonus points above a certain spending amount as the EveryDay Preferred does with groceries. Its $175 annual fee is also waived the first year, which makes trying it out more of a bargain in the short-term.
Finally, for travelers who spend a lot of time on the road and especially in airports, the Platinum Card still offers a ton of potentially valuable benefits that could easily offset the $450 annual fee. In addition to those already mentioned, you can get hundreds of dollars in extra benefits like late checkout and room upgrades, as well as dining and spa credits that cardholders can take advantage of if booking through the Amex Fine Hotels & Resorts portal. Plus, it’s the only one of these cards I would take internationally, since the other two levy foreign transaction fees.
So points and miles enthusiasts out there take note; while the Platinum Card is still a good choice specifically for travelers who need the value-added amenities, the EveryDay Preferred has taken the lead for earning Amex Membership Rewards. Once the 50% annual points bonus on the Premier Rewards Gold card goes away in 2015, it’s going to be a much less attractive credit card for most consumers. Hopefully Amex will add some new features (like no foreign transaction fees or new bonus categories) to keep it competitive – especially with its $175 annual fee.
Do you have any or all of these cards? Which one(s) are you thinking about getting or keeping, and which will you get rid of? Share your thoughts in the comments below!