American Express is introducing two new credit cards to their lineup: Amex EveryDay, Amex EveryDay Preferred. The EveryDay card has no annual fee. The EveryDay Preferred will cost $95 per year. My understanding is that these cards will be available starting April 2, 2014
Both cards earn Membership Rewards points that can be transferred to airline miles…
AeroMexico, Aeroplan, Air France KLM, Alitalia, All Nippon Airways, Asia Miles, British Airways, Delta Air Lines, EL AL Israel Airlines, Emirates, Frontier Airlines, Hawaiian Airlines, Iberia, JetBlue Airways®, Singapore Airlines, Virgin America, Virgin Atlantic Airways
Or to hotel programs (but, in my opinion, the hotel transfers tend not to be a good value)…
Best Western International, Inc., Choice Privileges®, Hilton HHonors®, Starwood Preferred Guest
EveryDay Category Bonuses
Both of the new cards offer category bonuses as follows:
Amex EveryDay: 2X at U.S. Supermarkets, up to $6K spend per year (then the rate drops to 1X); and 1X everywhere else.
Amex EveryDay Preferred: 3X at U.S. grocery stores, up to $6K spend per year (then the rate drops to 1X); 2X at US standalone gas stations; and 1X everywhere else.
EveryDay Spending Bonuses
The most unique aspect to these new cards is that cardholders can earn bonuses by using their cards frequently. The two cards offer the following spend bonuses:
Amex EveryDay: Earn a 20% bonus on points earned when you use the card to make 20 or more purchases each billing period.
Amex EveryDay Preferred: Earn a 50% bonus on points earned when you use the card to make 30 or more purchases each billing period.
For those who successfully earn spending bonuses each billing cycle, the category bonuses and spending bonuses will add up to the following maximum earning potential:
Amex EveryDay: 2.4X at U.S. Supermarkets, up to $6K spend per year (then the rate drops to 1.2X); and 1.2X everywhere else.
Amex EveryDay Preferred: 4.5X at U.S. grocery stores, up to $6K spend per year (then the rate drops to 1.5X); 3X at US standalone gas stations; and 1.5X everywhere else.
Analysis 1: Rewards for merchandise or cash back
In my opinion, if you want to use rewards to buy stuff or to get cash back, you can do better with other cards. In fact, let’s look no further than Amex’s own very similar Blue Cash cards:
Blue Cash EveryDay: No annual fee; 3% cash back at US supermarkets (up to $6k spend per year, then 1%); 2% cash back at US gas stations and select department stores; 1% everywhere else.
Blue Cash Preferred:
$75 $95 annual fee; 6% cash back at US supermarkets (up to $6k spend per year, then 1%); 3% cash back at US gas stations and select department stores; 1% everywhere else.
With Membership Rewards points, it is possible to get up to 1 cent in value per point when redeeming for stuff (and sometimes more during promotions), but in general you’re better off with cash, in my opinion. However, let’s assume that each Membership Reward point is worth 1 cent each when redeemed for stuff (not airline miles) so that we can compare the cards…
No fee cards:
Blue Cash EveryDay
|Max Grocery store earnings||2.4X (2.4%)||3%|
|Max gas station earnings||1.2X (1.2%)||2%|
|Max department store earnings||1.2X (1.2%)||2%|
|Max everywhere else||1.2X (1.2%)||1%|
As you can see above, the no fee Blue Cash EveryDay beats the new Amex EveryDay card in all categories except “everywhere else”. And, there are many good options to earn more than 1.2% cash back on all purchases with no annual fee if you’re willing to add a second card to your wallet. Winner: Blue Cash EveryDay.
Amex EveryDay Preferred
Blue Cash Preferred
|Max Grocery store earnings||4.5X (4.5%)||6%|
|Max gas station earnings||3X (3%)||3%|
|Max department store earnings||1.5X (1.5%)||3%|
|Max everywhere else||1.5X (1.5%)||1%|
Again, the Blue Cash Preferred card beats or equals the new Amex EveryDay Preferred card in all categories except “everywhere else”. And, there are good options to earn 1.5% cash back or more on all purchases (with or without an annual fee) if you’re willing to add a second card to your wallet. For examples, please see “Best rewards for everyday spend”. Winner: Blue Cash Preferred.
In my opinion, if you want to use rewards for stuff, look elsewhere. However, if you want to earn airline miles, I think you’ll find these cards appealing…
Analysis 2: Rewards for Airline Miles
Many miles and points enthusiasts prefer earning miles over cash back because it is then sometimes possible to get outsized value from your rewards. For an extreme example, consider that last year I flew Singapore Airlines Suites class in exchange for about 71,000 miles (transferred from Membership Rewards points) and less than $300 in fees. That same flight would have cost about $11,000 had I paid cash. If it were possible for me to redeem 71,000 Membership Rewards points for 71,000 pennies instead, I would have received only $710. Similarly, at the other extreme, it’s sometimes possible to get outsized value with economy flights. For example, several times I’ve transferred Membership Rewards points to British Airways and used those points to fly between Detroit and New York City on American Airlines for only 4500 points each way. Those same flights would have cost over $300 each way had I paid cash, so I arguably got about 7 cents per point value from those trips.
So, if you’re committed to earning airline miles, let’s look at how these new cards compare to popular alternatives. Note, though, that bonus categories with alternative cards do not line up as nicely as in my cash analysis above. So, let’s make some wild assumptions so that we can compare mile earnings across credit cards:
Assumption 1) The credit card holder will spend exactly $30K annually on the card in question.
Assumption 2) The credit card holder’s spend will be in the following categories:
- 15% Travel (2.5% with favorite hotel brand; 5% with favorite airline; 2.5% with other airlines; and 5% all other travel)
- 20% Dining
- 15% Gas
- 25% Grocery
- 5% other targeted categories (e.g. 5% cable/internet/phone/office-supply when analyzing Chase Ink cards)
- 20% non-bonus spend
Given those assumptions, here are the expected miles per dollar earnings from various credit cards:
Estimated Miles Per Dollar
|Amex EveryDay Preferred||$95||2.33||30 or more purchases per billing cycle|
|Amex Premier Rewards Gold*||$175*||1.55||Assumes all airline spend is directly with airlines, not through online travel agencies. No credit given for very specific computer supplies category.|
|Chase United MileagePlus Club Card||$395||1.58|
|Deta Reserve||$450||1.55||Contingent upon earning 15,000 bonus points with exactly $30K spend.|
|Amex EveryDay||$0||1.44||20 or more purchases per billing cycle|
|Chase Sapphire Preferred||$95||1.44||Includes 7% annual dividend|
|Chase Ink Plus||$95||1.4||Assumes half of “all other travel” is with hotels|
|Chase United MileagePlus Visa||$95
||1.38||Earn 10,000 bonus points at the $25K spend mark|
||1.32||Assumes 5% of annual spend is in rotating 5X categories. Assumes 10% annual bonus with Chase checking account.|
|Starwood Preferred Guest (SPG)||$65||1.28||Assumes points are transferred to miles 20K at a time (which results in 5K bonus)|
* The annual fee and category bonuses for the Premier Rewards Gold card have changed since this analysis was written. The card now has a $195 annual fee and they’ve added the following: 2X points at US restaurants; $100 Airline Fee Credit. Up to $100 a year for incidental fees with your selected airline. Terms and limitations apply.
As you can see above, given our credit card spend assumptions, the new Amex EveryDay Preferred card with up to 2.33 miles per dollar earnings beats the pants off almost all other cards in the roundup (when the goal is to earn airline miles).
Of the no fee cards, the new Amex EveryDay slightly edges out the Chase Freedom card with 1.44 vs. 1.32 miles per dollar earnings, respectively. Note that with the Freedom card, you or your significant other must have a premium card (Ink Plus, Ink Bold, Sapphire Preferred) to transfer points to airline miles. Of course, there’s no harm in having both no-fee cards. That way, you can concentrate spend within category bonuses in order to average quite a bit more.
I find it interesting to see the SPG card at the bottom of the list. It has long been celebrated as one of the best cards for earning airline miles: it offers a huge array of airline transfer partners and it offers a 5K bonus when transferring 20,000 points. However, unlike Amex Membership Rewards and Chase Ultimate Rewards, transfers can take up to a week to process. And, as you can see above, the earning power of the SPG card pales in comparison to many other cards. Even for spend outside of category bonuses, the SPG card earns less than the Amex EveryDay Preferred (1.25 vs. 1.5) and barely more than the no fee Amex EveryDay card (1.25 vs. 1.2).
If you would like to check my work, try different spend percentages, or model other credit cards, feel free to make a copy of this Google Docs Spreadsheet (you must make a copy if you want to edit cells):
If the requirement to use your card 20 or 30 times per billing cycle doesn’t disturb you, and if you’re primarily interested in earning airline miles rather than cash back, I think you’ll find these new EveryDay cards to be fantastic additions to your wallet. In particular, the EveryDay Preferred card has fantastic earning potential even with the $6K per year spend cap on the grocery category bonus.
I’ll have a lot more to say about these interesting new cards in the coming days and weeks, so please stay tuned.