American Express

American Express EveryDay. Don’t Bother.

March 12, 2014

Tina Fey. Funny for a girl.

A million years ago, the American Express brand meant exclusivity. If you drove a Cadillac, smoked Pall Malls, owned a Curtis Mathes TV, and paid for it all with your American Express card, you were a conspicuously consumptive part of The 1%. And probably sported a monocle and waistcoat. Nowadays, Cadillac makes a model that costs just 10% more than a bare-bones Prius, smoking any brand of cigarette will label you a moron rather than a merchant prince, Curtis Mathes is all but out of business, and any teenager with a college registration can get an American Express card.

That’s by design. American Express still has cachet on the high end, thanks to the Centurion card that MasterCard, VISA, and Discover can only dream about offering and having people take seriously. Therefore, it makes sense that American Express ought to start examining the downmarket schlubs like you and us. Next month American Express releases the EveryDay card, which you know is hip and contemporary because it has a medial capital.

The standard American Express card costs $95 a year and requires you to pay your bill in full every month. But you can easily find a free card from one of the lesser 3 providers, so why bother with an American Express card? Great question, if we say so ourselves. It’s a rhetorical one, which is why American Express offers several co-branded cards (page 30, and just buy the freaking book already), partnering with Costco, Hilton, Starwood, JetBlue, Mercedes and Delta to give you rewards if you buy enough stuff. By the way, all of those co-branded cards except the first 2 come with an annual fee. Which can go as high as $450. But even with the Costco and Hilton cards, the downside is that you might be tempted to patronize a certain corporation even though its competitors are offering you a better deal, just to capitalize on the points. The trick is to not change your behavior – in other words, if you were committed to shopping at Costco or staying at Hilton hotels anyway, you might as well get rewarded for doing so. If Sam’s Club and La Quinta are treating you right, get an American Express Blue Cash card instead. (No annual fee, cash rewards.)

Which is a roundabout way of bringing us back to the EveryDay card. Of course, it has no annual fee, or we wouldn’t be mentioning it and instead would have rejected it out of hand and written about something else today. Here’s what it offers:

2x points for the first $6,000 you spend on groceries in a year.
1.2x points if you make 20 purchases a month.

Fine, we get it. They want you to use the card, which would seem to be the reason for offering it. It isn’t like a gym membership, where they get your money once a year and then hope that they never have to see your fat face until next January.

Our sympathies are with the 7-Eleven clerks who are now going to have to deal with people buying a candy bar, a Slurpee®, this week’s copy of UFC magazine (MMA fans can read?) and a Slim Jim and ask to ring it up as 4 separate purchases. Yes, American Express has already thought of this, and expects merchants to declare that all as a single purchase.

Looking at our own spending habits, we noticed that with our existing American Express card, we covered the 20-item threshold within days. Then again, we’re smart enough to put every single purchase we can on said card. Why? Because whatever we bought, we were going to buy anyway, so why not

not worry about carrying cash
protect ourselves against fraud (if a merchant screws us, American Express will do all the work of getting us reimbursed)
earn the rewards? Again, for no incremental effort.

Paying cash for stuff has its place, but not when the merchants already take American Express.

So if we were to switch to the EveryDay card, we’d get 20% more rewards out of the gate. And the double rewards on groceries. We’re not the Duggar family, so we’ll stay under the $6000 double-reward limit.

There’s one problem, however, and we should have brought this up 4 paragraphs ago.

What’s a “point”? How much is it worth?

We’ll get to that in a second. For now, understand that in and of themselves, “rewards” are stupid. With the listed exceptions, you earn 1 American Express Membership Rewards point for every dollar you spend. You can redeem the points to pay your credit card bill, which is what you should be using generic rewards points for anyway. And if you do, you’ll find that a point is worth about .6¢. In the words of Nelson Muntz, what a rip. Assuming that you indeed buy 20 things a month, American Express is thus offering a cashback rate of .72%. Discover offers 1% as an absolute minimum.

We’ve recommended the American Express Blue Cash Everyday card before, and continue to. The reward payouts are greater than for the EveryDay card, across the board. And yes, it’s confusing that Blue Cash Everyday has “Everyday”, not to be confused with “EveryDay”, in its name.

Blue Cash Everyday offers 3% cash back on groceries, up to the same $6000 threshold. And 2% at gas stations and some department stores. It kicks the new EveryDay card up and down the court. Don’t waste your time.

Filed Under: Credit Cards Tagged With: American Express, everyday card

You Need an American Express Card. Sorry, But You Do.

July 24, 2013

The doleful saga continues

Part of a continuing series in which we repurpose something on a topic we wrote about 3 years ago, which is still a far longer cycle than just about anyone else uses in this ludicrous culture we call personal finance blogging. Right now some debt blogger is writing about her emergency fund for the 3^rd time in a week.

We’ve written before about what credit card you should get. A few times. But offers change, as do our recommendations:

You have a bank account, right? They gave you a debit card when you opened the account, because otherwise you’d have to go down to your neighborhood branch every time you wanted money and then wait in line with a withdrawal slip. This is how the world used to operate not that long ago, we swear to God. You’d burn half an hour on a Saturday morning to access money that was yours. Of course, if you didn’t like that you were welcome to stash your cash behind a wall panel at your house instead. The world, or at least the money-procuring part of it, has gotten considerably more advanced since then.

That debit card’s going to be branded VISA or MasterCard. You can get separate VISA or MasterCard credit cards from a lending institution(s) of your choice, in the pretty color scheme of your choice (maybe even with a race car on it! Vroom vroom!!) but doing so seems redundant. Meanwhile an American Express card gives you purchase protection and a bunch of other perks, assuming you’re willing to meet the company halfway and pay your bills on time, thus remaining a cardholder in good stead. So yeah, you need a 2^nd card. If you never leave the United States, using Discover for your 2^nd card won’t hurt you, but American Express is the way to go internationally. Whip out a Discover card in Moscow or Kigali and the locals will think it’s a kids’ novelty item from a souvenir store.

But which American Express to get? They offer 20 different ones, but we can eliminate most of them right away. Those 20 include 2 prepaid ones (what are you, a teenager?), and 13 with annual fees. Of the remaining 5, one has an indirect annual fee – the Costco-branded card, yours for the asking when you pay $55 for a year of Costco membership. Costco membership is a deal in itself, and your CYC principals are both members. But that’s a topic for another day, and joining Costco doesn’t do you much good if you live in a city without a Costco. (That last clause represents the kind of piercing financial insight we’ve become infamous for.)

So that leaves 4 American Express cards, one of them co-branded:

Blue
BlueCash
BlueSky
HiltonHHonors.

We should clarify that the full title of the card referenced above is BlueCash Everyday®. There’s also a BlueCash Preferred® that has an annual fee. Here are the cards and the differences among them. We were going to do a chart but trust us, with all the qualification and fine print this way is easier:

Sign-up bribe if you spend $1000 in the 1^st 3 months

Blue 10,000 points
BlueSky 7500 points
BlueCash $100
HiltonHHonors 40,000 HiltonHHonors points, as distinguished from American Express points. And you only have to spend $750.

Reward schedule

Blue Spend $1, earn a point. Earn double points on flights, hotel stays etc. bought via AmexTravel.com.
BlueSky Spend $1, earn a point.
BlueCash 1% cash back. 2% at (U.S.) stand-alone gas stations and “select” department stores, and 3% on your first $6000 every year at U.S. (stand-alone) supermarkets.
HiltonHHonors Spend $1, earn 3 HiltonHHonors points. You get an extra 2 points at U.S. restaurants, supermarkets and gas stations; and an extra 4 points at Hilton’s own hotels, assuming you’d ever want to do that. Any cocaine kingpin will tell you that you never get high on your own supply.

So what’s a “point”, anyway? With Blue, it’s redeemable for merchandise and not cash. We’d say that that alone should disqualify Blue from consideration, but of course it depends on how much the points are worth. Which is buried on a different American Express site (MembershipRewards.com), and reads as follows:

You can use points in 20,000-point increments to get a $100 credit on your Card Account.

So a point is worth ½¢, which is a joke.

With BlueSky, a point can be worth 1⅓¢, but only on travel purchases, and only in 7500-point increments. Another joke. In the words of Dale Gribble, jokes should start with “Knock knock” or “What do get when you cross a”. Not “Terms and Conditions: Important Notice.”

Meanwhile the BlueCash cash back is available only in $25 increments. Earn $24.99 and you can’t do a thing with it.

As for the HiltonHHonors points, and obviously this is only worth mentioning if you stay in hotels a lot, points operate on a different scale. At the Hampton Inn in McAllen, Texas, at least tomorrow, a Hilton HHonors point is worth .64¢ in room credits. At the Hilton Manhattan East next month, a HiltonHHonors point is worth as little as .27¢.

But don’t forget, you earn the HiltonHHonors points more quickly than Blue (and its variants) cardholders earn American Express points. At least 3 times faster, in fact. Best-case scenario, if you’re buying groceries at the right store and staying in the appropriate Hilton hotels as a matter of course, you can be “rewarded” up to 4 times as generously as the lowly Blue cardholders.

They make this confusing for a reason. To summarize, our position hasn’t changed despite American Express’s new offerings. Get a BlueCash card and be done with it.

Filed Under: Credit Cards Tagged With: American Express, blue, bluecash, BlueSky, hilton, hilton hhonors

Is There Ever An Excuse For Paying A Fee To Hold A Credit Card?

February 1, 2013

Also, it’s so pretty!

Yes. But for our purposes, no.

In The Greatest Personal Finance Book Ever Written, we tout American Express Blue Cash Everyday® as the best consumer credit card available. It’s been a while. Is our recommendation still valid?

Blue Cash Everyday® was called simply “Blue Cash” at the time, without the “Everyday” qualifier, which we’ll get to in a second. Why did we think this was the best card out there? Let’s explain in handy point form:

No annual fee, duh
At least 1% cash back on everything (up to 3% on some things)
The best protection in the business. No one resolves a customer claim as quickly and efficiently as AmEx does.

That’s it. 3 criteria. We couldn’t be less interested in interest rates, late payment penalties, balance transfer rates or related nonsense. All of that is meaningless, if you pay your bills on time and don’t overextend yourself.

Looking at it now, we realize that the reason most every other personal finance “expert” advocates looking at interest rates first is because doing so means adopting a loser’s mentality. The implicit question is “How can I minimize the damage I will doubtless do to my finances?”, when it should be “How can I capitalize on the plethora of choices I have as a consumer in a diverse marketplace, and come out of this ahead?” Worrying about interest rates means you’re playing too much defense and not enough offense, and thanks to Dave at the dormant 6400 Personal Finance for creating so pithy an analogy.

Today, Blue Cash Everyday® offers 2% discounts at “stand-alone” gas stations and certain retailers*, 3% at stand-alone supermarkets. The latter is valid only for the first $6000 you spend in a given calendar year: beyond the 6001st dollar, you get the standard 1% that Blue Cash Everyday® offers on everything else.

In the past, one disadvantage to Blue Cash was that it reimbursed you with those discounts in inconvenient increments. You had to spend thousands to receive any credit. Today, American Express will reimburse you in increments as little as $25. (Figure out how long would it take you to buy $833 worth of groceries, and act accordingly.)

We used to be Discover devotees. Discover initially offered 1% back on everything, typically in $40 increments. Hey, a decade ago that counted as groundbreaking. Then, capitalism being what it is, some retailers decided it would be worth it to sign exclusive agreements with Discover and thereby give those retailers’ customers even greater discounts. Or maybe Discover initiated the process, it didn’t really matter. Either way, the strategy was the same: What if we, the card issuer, could throw some extra business your company’s way: how much would you pay us? Under such a system, everyone wins. Discover gets more customers, who then carry greater balances. Those retailers (Home Depot and 1-800-Flowers, among many others) get more business for the small price of an extra 1% discount. And oh yeah, the cardholders get the same stuff for less money. What’s not to love about this?

Today, Blue Cash Everyday® gives you money back in $25 increments. We don’t know if American Express offers non-cash rewards, such as discounted magazine subscriptions or sleek pen-and-pencil sets (perfect for the unimaginative Bar Mitzvah guest), and we don’t care. Because nothing beats cash. When you check your account every month, ensure that the refunds make their way to your account as credits, without you ever seeing them in any tangible form.

One more thing. Depending on how much and what you spend, you want to ditch girl-next-door Blue Cash Everyday® for her sluttier uptown friend, Blue Cash Preferred®. The latter costs $75 a year, which is $75 a year more than the former. However, you get an additional 1% at those aforementioned stand-alone gas stations and select department stores, and an additional 3% at stand-alone supermarkets.

A total of 6% savings on groceries? In what’s already one of the smallest-margin businesses in the world? How can they offer that? Not our problem, and we don’t care.

Actually, the 6% comes with the same asterisk that Blue Cash Everyday®’s grocery savings do. The 6% is valid up to only $6000 in a calendar year. So you get an extra $180 if you buy $6000 worth of groceries. If you’re looking for the break-even point, you’re coming out ahead with Blue Cash Preferred® after you’ve spent $2500 on groceries. That’s only $6.85 a day, so it’s a foregone conclusion that you’re better off paying the $75 and getting the Blue Cash Preferred®, right?

Read the fine print. Stand-alone. At CYC World Headquarters, barring unusual circumstances we buy our groceries at 2 stores and 2 stores only – Walmart, which isn’t stand-alone, and Winco, which doesn’t take credit cards. Oops. Narrowly avoided a $75 expense there.

So for us – and your mileage may vary – we’d have to spend $7500 a year on stand-alone gas and designer clothes to make Blue Cash Preferred® worth our while. For us, gas expenses run about $5000 a year per card. Then, considering that one of the CYC principals wears a tie just once a year (during an inevitable speeding ticket court date) and claims to have recently made it 12 months without buying a single article of clothing – not to be hyperfrugal, but because it just never came up – the idea of having to load up on an additional $2500 of cocktail dresses and suits doesn’t seem worth it.

Of course, it might be easy to imagine a scenario in which Blue Cash Preferred® makes sense for you. You might not even have to imagine, because you’re already living it. Either way, we’re holding fast with both Blue Cash variants as our recommended general cards.

EPILOG: Don’t waste your time with American Express Blue (no “Cash”), a weaker variant by which it takes forever to bank discounts and you get them back in $100 increments. Not worth it.

*Those are Bealls, Belk, Bloomingdale’s, Bon Ton, Boscov’s, Century 21, Dillard’s, JC Penney, Kohl’s, Lord & Taylor, Macy’s, Neiman-Marcus, Nordstrom, Saks Fifth Avenue, Sears and Stein Mart – at least 2 of which we’d never heard of, one of which we’d only heard of because they sponsor a bowl game, and one of which we thought was a real estate franchise. That last one you can blame on us being unsophisticates from west of the Hudson.

Filed Under: Credit Cards Tagged With: American Express, Blue Cash, Credit Cards