posted: Aug. 3, 2002 @ 1:43a
This is thread for discussing how to best use the "AMEX Cash Rebate Card," first introduced in the summer of 2002, and its sucessor, the "AMEX Blue Cash Rebate Card," which was launched in Spring 2003. I’m hoping that this thread will clarify how these cards function and help us maximize their potential. Many changes have been made to these cards since their launch over give years ago. Obsolete provisions and strategies have been italicized for quick identification.
These cards replace the older AMEX Platinum Cash Rebate Card, and has some very interesting but complex features. The AMEX page on the card is here
The AMEX Costco Cash Rebate card has NOT been replaced, but is not as attractive a product as the newer card, since rebates top out at 2% (no everyday-spend category), and it offers no singnificant advantages over this newer card. Thus even regular costco buyers users should probably opt for Cash Rebate Card product.
For any known temporary promotions applicable to this card, see bottom of this post.
Edited 8/06: the cap on the top tier has been removed, and AMEX has stressed that the card is to be used for personal purchases only.
Edited 11/08 to remove the lingering reference to bonds.
Here is the excerpt verbatim from my most recent statement:
Rebate We are removing the cap on the total amount of annual eligible purchases that can qualify for a Rebate. We are also making additional changes to the Rebate section of your Agreement. Accordingly, effective with Rebate Years ending on or after September 1, 2006, the second sentence of the Rebate section of your Agreement is deleted, and the last sentence of the first paragraph of that section is deleted and replaced with the following: "For the first $6,500 of Eligible Purchases (as defined below), the rebate percentage is 1% for Everyday Purchases (as defined below) and 0.5% for all other Eligible Purchases; for Eligible Purchases of $6,500.01 or more, the rebate percentage is 5% for Everyday Purchases and 1.5% for all other Eligible Purchases."
Also, effective with billing periods beginning on or after September 1, 2006, the first sentence of the second paragraph of the Rebate section of your Agreement is deleted and replaced with the following: ""Everyday Purchases" are Eligible Purchases at U.S. supermarkets, gas stations, and drug stores, in each case that are not departments of superstores or warehouse clubs." In addition, effective with Rebate Years ending on or after September 1, 2006, the first sentence of the fourth paragraph of the Rebate section of your Agreement is replaced with the following: "You will receive the Rebate in the form of credit to your Account approximately one month after the end of the applicable Rebate Year."
Using the Card Effective with billing periods beginning on or after September 1, 2006, the following sentences are added to the end of the second paragraph of the Using the Card section of your Agreement: "A maximum of 3 Additional Cards are permitted on your Account. You agree to use the Account only for legitimate purchases of goods and services for personal, family or household purposes."Cash Rewards Structure after 5/7/05
"Rebate percentage for each Rebate Year are as follows: For the first $6500 of Eligible Purchases, the rebate is 1% for Everyday Purchases and 0.5% for all other eligible purchases. For Eligible Purchases of $6500.01 to $50000, the rebate percentage is 5% for everyday purchases and 1.5% for all other Eligible Purchases."
Note that this is MUCH simpler than the previous rebate structure. First, there is no longer any "revolve bonus" (discussed below), ending controversy over what will allow a cardholder to get it, and how the annual bonus will be computed. It also makes it much easier to check to see what the annual bonus should be, since the only tricky part is figuring out what qualifies for ED spending and what does not.
Basic Cash Rewards Structure before 5/8/05 (now italicized to indicate its obsolescence)
First and most interesting is the Cash rebate structure.
The Cash reward is paid annually, 2 months after your card’s anniversary date, in the form or a credit to your statement. There are 2 classes of purchases: “Everyday Spend,” including merchants that AMEX codes as “qualifying stand-alone U.S. supermarkets, drugstores, gas stations and home improvement stores in the US.” For a list of merchants that fall within this category, see taylor's AMEX everyday spend merchant classification thread. Assuming you carry no balance, the reward structure for these is:
First $0-2K of TOTAL annual purchases spent on “Everyday Spend” = 0.5% rebate
Next 2K-6K of TOTAL annual purchases spent on “Everyday Spend” = 1.0% rebate
Next 6K-50K of TOTAL annual purchases spent on “Everyday Spend” = 3.0% rebate
So if you spent $50000 on ONLY “Everyday Spend” and NEVER carried a balance, you’d get a total of $1370 back.
The reward level for all other purchases is exactly HALF of the above table: .25%, .5%, and 1.5% respectively. If someone purchases “Everyday Spend” items and other items on the same day, AMEX gives you the benefit of the doubt and adds the other items to your total FIRST, maximizing your possible rebate.
“Revolve” Bonus Rebate
The Card boosts the rebate credited during months where a balance is carried with a so-called “revolve bonus.” “If, in any billing period, your Account is carrying a balance, you will receive a 2.0% rebate for “Everyday Spend” and a 0.50% rebate for “Non-Everyday Spend” posted to your Account that billing period, in addition to your rebate described above….Carrying a balance means you have not paid your outstanding balance for your statement in full by the payment due date on that statement.”
NB: The best evidence we have is that first-cycle purchases, like subsequent purchases, WILL be eligible for revolve bonuses if a balance from them is carried into the following payment cycle.
EDIT 4/03: while the above language is taken from my card statement, more recent agreements contain language suggesting that making payments in one cycle (e.g., Februrary) which equal or exceed the amount due in the preceding cycle (e.g., January) will void the revolve bonus for that preceding (January) cycle. Unless you evidence to the contrary (like the above language in your cycle), I would assume that this more recent policy applies.
Q: For a given charge, in what circumstances will I earn a revolve bonus for it?
A: Firstly, since the revolve bonus is awarded according to repayment activity for a given cycle, either all or none of the charges in a given cycle (appearing on the same statement) will earn the bonus; it is impossible to earn the revolving bonus on some charges on a statement, and not for others on the same statement. In order to earn the revolve bonus for all of the charges on a given statement, the payments you make that post during the following cycle (the time period between the end date printed on the statement in question and the end date of the next statemnt) must NOT be equal to or greater than the balance due on the staetment in question. For example, if you want to earn a revolving bonus on the charges on your statement that closed January 15th with a balance due of $1000, and your next statement is due to close February 15th, your payments made between 1/15 and 2/15 must NOT total more than $999.99. It does not matter at all for "balance carrying" purposes for the 1/15 statement charges if you made a $10,000 charge on 1/16 and your "current balance due" goes to $11,000 (although it WILL matter for how much interest you will be charged!) (Thanks to MarkM for proposing this clarification.)
Other Features Of The Card:
-Purchases through the first 6 billing cycles earn a 0% teaser rate. To confirm, check the “Supplement to the Cardmember Agreement,” which is contained on the sheet of paper to which your primary card was attached.
-Then, a variable rate of Prime plus 4.99%, 6.99% or 9.99%, depending on one’s credit history. Once you receive the Card, check the “Supplement to the Cardmember Agreement” mentioned above to determine your specific rate. Note that this is UNLIKE Blue’s FIXED rate, and is subject to change with short-term rates. Finance charges are computed based on a one-cycle “average daily balance” method, with interest compounding daily.
-Online Fraud Protection Guarantee. “Use the American Express Card online, and you won't be responsible for any unauthorized charges. Period. No fine print, no deductible - just pure protection, so you can shop with confidence anywhere on the Internet.”
-Buyer's Assurance. The Buyer's Assurance Plan extends the terms of the original manufacturer's warranty on a covered product purchased entirely with the Card up to one additional year on U.S. warranties of five years or less.
-Purchase Protection Plan. “The Purchase Protection Plan provides added protection-at no extra cost-for accidental damage to or theft of covered items purchased with the Card.” Basically, 90 days of this protection per item totally purchased with the Card.
-Travel Accident Insurance. “Travel Accident Insurance provides up to $100,000 in accidental death and dismemberment insurance while traveling on a common carrier (plane, train, ship, or bus) when the fare has been charged to the Card.”
There are other features, but they seem trivial (emergency replacement, 24 hour cash at ATMs, etc.) Note that this card does NOT have the BVG (price-matching, best value guarantee)—no newly issued free AMEX cards have that anymore UPDATE: except Costco's Small Business AMEX.
Other Relevant Notes About AMEX Cards
-Unlike with many other cards, you cannot change your billing cycle dates without canceling and reopening your card, and therefore waiting for a new one. (Silly, but this has been confirmed time and again by users and 3 AMEX departments.)
-With good credit, you can often get approved online instantly. (No one has reported instant purchase capabilty, however--you need to wait until the card arrives in the mail to start using it.) That approval date then becomes the first date of your billing cycle. Keep this in mind when you pick your application date.
-You are unlikely to get a large credit limit if either (1) you have limited credit history or (2) you have another large AMEX line. If this is your only AMEX product and your credit is good, you may call the new accounts team at 1-800-947-8192 and request a higher credit limit upon getting the card. This has to be done within the first 30 days of account's opening, from what I understand.
-You can easily move part of one AMEX line to another, and vice versa. I had a $20,000 Blue line, and moved $18,000 of it to the $2,000 Cash Rebate line. Supposedly it would take a couple of business days, but it didn’t take more than 3 hours to show up online and by phone (I asked for this around 3:30 PDT on a Friday.)
-Every cardholder on an account has a different card number, and therefore is able to receive lists of only their own purchases. This is a VERY nice feature of AMEX that other card issuers should follow. No wondering who charged what. Anyone over 17 can be an additional cardholder, and they don’t run credit or ask for SS#s for those folks.
Optimal Strategies for Using the AMEX Cash Rebate Card
Here are my thoughts, roughly from the obvious to the less so :
-EXPLOIT THE 0% OFFER AS MUCH AS IS FEASIBLE. This is a great deal, since it lets you “stack” both no interest AND a generous (if well-exploited) rebate. This suggests getting as big a line as possible, ideally by moving some of a line over from another card.
-BURN THROUGH THE FIRST TIER QUICKLY, THAN PARK EEVERYDAY SPENDING HERE. If you can find a way to spend $6,500 on this card fairly quickly, then you can earn %5 on the next $43,500 in ED spending without having to worry about carrying a balance. No other card comes close to allowing amounts this high on anything >2% cash rebate, much less 5%. This remains the card to use, then, if your ED spending needs are high.
EDIT 3/05: The following strategy notes are obsolete as of 5/05, due to the revised tier structure.
Also, the BEST deal is offered by the card by charging items early within the first 6 billing cycles. Then, you get the benefits of carrying a balance without paying for it (with the possible exception of the first cycle--see above for more on that.) For example, if you’re building or remolding a home and using heavily a place like Home Depot, you will make out like a BANDIT if you can time your project so that you purchase your supplies at the beginning of the 2d billing cycle. 5% back (if you’ve reached that tier already), AND 4-5 months interest free. AMAZING.
-ONCE THE 0% PROMO ENDS, consider carefully whether you want to try carrying balances after the promo period expires in order to get the bonus rebate. For many, this will be more trouble than it’s worth. The rate is variable to begin with, and for many it will be difficult to keep track of whether their balance-carry bonuses will warrant the finance charges.
-IF YOU DO want to play the balance-carry bonus game, then you stand conventional “grace period” wisdom on its head. Instead of maximizing this period by buying stuff early in your billing cycle, you want to buy as late as possible during your billing cycle so that your ending balance is high, but your average daily balance is low.
-WHEN TO APPLY. If you KNOW you want the carry-balance bonuses after the promo period, AND want to buy savings bonds, apply online at or near the first of the month. You’ll want to buy bonds at the end of the month (for reasons explained on the bond threads), but will want to have them post to your AMEX account at the tail end of your cycle IF you want to get a revolve bonus. OTOH, if you know you don’t want to carry a balance, apply a few days before the end of the month so that you can buy end-of-month bonds just after your billing cycle begins. IF YOU AREN’T SURE, do ahead and get a date of around the 24th of the month. That will give you the option of doing either without forgoing much of the benefits from either of the above strategies.
2 specific strategies:
-big initial purchase, then maximize “everyday purchases”
This is simple: the first day you get your card, buy $6K of bonds, tuition, business expenses, etc. if your credit limit is at least that high. This way you blow through the first two tiers, and have the rest of the year to rack up the huge 3-5% bonuses on everyday purchases. If you have a large family, rentals, many Costco purchases, or expensive drugs, you might well do this up to the $44K maximum without much work. Otherwise, consider giving additional user cards to TRUSTED family members, and having them make all their everyday purchases on the card and reimburse you. (Since bills are itemized at the end of the month, this isn’t as hard as it otherwise might be, especially since if they set up an online account it will report ALL and ONLY THEIR purchases, and export them to Quicken/money etc.) I began implementing the “big purchase then max everyday” strategy on 8/2, by buying $6K worth of bonds as soon as my credit limit was raised to $20K.
balance-carry, and maximize “everyday purchases”
If a person truly has lots of everyday purchases, this might be better. Once the 2d cycle begins and a balance is generated, pay only the minimum payment due, and buy everyday purchases rapidly (as in the construction example above.)
Once the promo period ends, it makes sense to pay your bills to as early and as heavily as possible WITHOUT completely paying off your balance. We’re still determining exactly how that is best done, since AMEX uses a somewhat different method of establishing when a balance is paid off.
UPDATE 2/27/05: AMEX is offering "double Cash Back" between 3/1/05 and 4/15/05 for for users who register. While it says it's only for targeted members, many are able to register despite not being targeted. Full details are available in this thread (thanks hud500).
UPDATE 3/30/05: It has now been confirmed that ALL users get the new tiers as of May 8. The above analysis has been updated to reflect this
Please post questions, corrections, and other strategies here, as well as suggestions for additional thread edits…I will try to update this initial post regularly.
Thanks to taylor (who at this point deserves co-author credit), NotAfool, SUCKISSTAPLES, nooch, MarkM, and all the others who helped gather the info that comprises this thread.
(Edited 4/17/03 to include MarkM's example. Edited 5/24/03 to clarify that AMEX Cash Blue has the same rewards structure. There are no other functional differences between the green Cash Rebate card begun in mid-2002 and the Blue Cash card begun in early 2003. Edited 2/05 to include the double cash-back promotion. Edited 3/05 to include revised tiers.)