American Express - Reviewing the Rewards

I have completed my first year using the American Express Blue Card. You may recall that I applied for this card after I dumped Bank of America for being a pain in the butt. Because I pay my cards in full each month (except when I have a 12-month no interest at Best Buy or something), I did some homework on rewards programs before settling on this one.

The cash back formula is:

1% on gas, groceries and drugstores and one half of one % on everything else on the first $6,500 spent each year. After that, 5% on gas, groceries and drugstores and 1.5% on everything else.

I used this card for everything, everywhere that takes Amex, including two dollar purchases at McDonald’s and most travel expenses for work. I used my Mileage Plus Visa as a backup. I was pleasantly surprised to find that Amex is accepted most places. Notable exceptions were:

1. School tuition. Part-time students can pay by credit card, but BU doesn’t take Amex.
2. Doctor’s offices. Veterinarian’s offices.
3. Hair salons and spas are iffy.

Hidden perk – Costco only takes American Express. So I was able to start buying my gas there. I don’t do it all the time, but it is a nice option to have.

The bottom line? $703.65 was my cash back for the year’s purchases.

The web site analysis told me that the average card user manages the 5% return on 15% of her purchases. My 5% return was on 25% of my purchases. I attribute that to two things:

1. I pay for groceries on my credit card. That makes some people squeamish.
2. My prescription drug program has me making the initial purchase and then being reimbursed by BCBS. So I am getting 5% back on all of those allergy drugs.

There is some fine print to note regarding the rewards program. For one thing, if you pay your bills late, you may forfeit the cash back altogether. That would suck. Also, there is a limit to the single-visit cash back for that 5% return ($500?). Neither of these things is an issue for me.

At the close of the year, American Express says that it will pay the reward after 30 days. Mine posted to my account over the weekend, so I was pleased.

Where I am not-so-pleased:

The web site shows earnings of 1.25% rather than 1.5% for the next time around. I am disappointed, but the talking heads warned us that these benefits were in jeopardy as banks tried to stabilize. So I am not crying about it.

Especially since that $736 that I spent in New Orleans was pretty well covered by that cash back. So my “free” vacation just became free again. Almost.