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“Reader Questions” are now answered twice a week — Tuesdays and Thursdays — by TPG Associate Editor Brendan Dorsey.

Online retail giant Amazon added a strong new benefit to one of its credit cards last month, offering 5% back at Whole Foods. With the new bonus category, TPG reader Joshua asked when it makes sense to use the card:

Amazon is now offering a Visa [card] with 5% back at Whole Foods and 5% back from the Amazon website. How much money do I have to spend on Amazon and at Whole Foods in order it to make sense to use this card rather than my Sapphire Reserve?

TPG Reader Joshua

First, let’s establish that there are two Amazon credit cards, the Amazon Prime Rewards Visa Signature Card and the Amazon Rewards Visa Signature Card. The Prime Rewards offers the following bonuses on spend:

  • 5% back at Amazon.com and Whole Foods Market
  • 2% back at restaurants, gas stations and drugstores
  • 1% back on all other purchases

While the basic card offers:

  • 3% back at Amazon.com and Whole Foods Market
  • 2% back at restaurants, gas stations and drugstores
  • 1% back on all other purchases

Neither card has an annual fee, but you’ll need to be an Amazon Prime member to qualify for the Amazon Prime Rewards Visa Signature Card. Prime costs $99 a year and comes with a slew of benefits like free two-day shipping at Amazon and Prime Video streaming.

It’s not really a matter of how much Joshua spends on the card when choosing between his Chase Sapphire Reserve and Amazon Prime card, but rather what categories he’s spending on.

The 5% back at Amazon is basically unmatched. The Sapphire Reserve only gets 1 point per dollar at Amazon — remember, the CSR earns 3x on all dining and travel, but groceries aren’t included in that — so you’re earning a 2.1% return at the store according to TPG’s valuations. Even if you paired it with a Chase Freedom Unlimited, part of the Chase Trifecta and a great pick for everyday spending since it earns 1.5% on all purchases, you’d be earning just 3.15% back compared to the Prime Rewards card’s 5% back.

There’s also the Discover it card, which offers 5% back at Amazon one quarter a year on up to $1,500 of spend. At the end of the first cardmember year Discover will match your cash back, too, so you could potentially earn $150 cash back on Amazon purchases in your first year. Outside of the Discover it card, the closest you’re going to get to 5% back is with The Blue Business℠ Plus Credit Card from American Express that gets 2x points on every purchase (up to $50,000 a year; then 1x). When running the numbers with TPG’s valuations, each Amex point is worth 1.9 cents per point, so you’re essentially getting a 3.8% return — still lower than 5% with the Amazon card.

When it comes to shopping at Whole Foods, the Amazon Prime card is one of the best options as well. The only product that can beat it is the Blue Cash Preferred® Card from American Express, which offers 6% back on US supermarkets purchases (up to $6,000 a year; then 1%). The Amex EveryDay® Preferred Credit Card comes close too with its 3x Membership Rewards points on US supermarket purchases (up to $6,000 a year), or a 5.7% return.

So Joshua, the Amazon Prime card is going to be better to use than your Sapphire Reserve at Whole Foods and Amazon.com. If you want to continue to earn Ultimate Rewards points, you could sign up for a Chase Freedom, which is currently offering 5% back or 5x points on mobile wallet purchases among other other spending categories, with next quarter’s bonus category being grocery stores, Chase Pay and PayPal. Chase has offered Amazon as a bonus category on this card in the past, so there’s always a chance you could earn 5x UR points at Amazon with this card sometime in the future. Remember, if you’re a Sapphire cardholder you can transfer points from the Freedom or Freedom Unlimited to Ultimate Rewards.

If you’re goal is to earn straight cash back, the Amazon Prime card is a solid option for spending at Amazon and Whole Foods — but it could make sense to use a transferrable points-earning card if you’re trying redeem for business or first-class airline awards —that’s where you’ll be getting the most value for your points and the highest return on your spending.

If you find yourself in a similar situation to Joshua’s, just ask yourself if your priority is to earn cash back or points — then make sure you’re using the best card for each purchase. Thanks for the question, Joshua, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

Featured photo by Emanuele Cremaschi/Getty Images

Chase Sapphire Reserve®

This is one of the top premium cards out there since you earn 3x on all travel (excluding $300 travel credit) and dining and have access to great perks like a $300 travel credit each cardmember year, 50% more value when you redeem points for travel through Chase Ultimate Rewards and you get elite travel benefits like Global Entry application fee rebate, Priority Pass Select and special rental car privileges.

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More Things to Know
  • Earn 50K bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Named a ‘Best Travel Credit Card for 2017’ by MONEY® Magazine
  • 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. $0 foreign transaction fees.
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 50,000 points are worth $750 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,000+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select
  • Up to $100 application fee credit for Global Entry or TSA Pre✓®
Intro APR on Purchases
N/A
Regular APR
17.74% - 24.74% Variable
Annual Fee
$450
Balance Transfer Fee
Either $5 or 5% of the amount of each balance transfer, whichever is greater
Recommended Credit
Excellent Credit

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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