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I recently spoke with David Rabkin, the Senior Vice President of Consumer Lending Products at American Express about 2 new credit cards from American Express. He’s responsible for some of our favorite American Express cards such as the Starwood card etc!
2 New Cards
American Express has long been the leader in charge cards (where you pay the balance back in full) targeted towards the affluent market. But American Express has been very clear that they need to cater to new markets to continue to grow.
For example, American Express Bluebird was targeted at a completely different segment and has done extremely well because it was very thoroughly researched and was a much better product than other checking alternatives and pre-paid cards. It also helps to have Wal-Mart as your partner!
American Express is introducing 2 new cards, the EveryDay (no annual fee!) and the EveryDay Preferred ($95 annual fee). As a former Brand Manager, I’ve introduced consumer products to the market, and I know that it takes a long time from when you come up with an idea to when it is introduced in the market. I was told that both these cards took years to develop (market research takes time!)
And they target a very different market. In particular, folks within the US who would like to earn bonus points for their “everyday” spending – hence the card name “EveryDay.” The cards target folks who are already using debit and credit cards ~40 times a month, but who wonder why their spending is not rewarded.
After all, business owners get 5X Ultimate Rewards Points per $1 on the Chase Ink Plus or Ink Bold cards by shopping at Office Supply stores. But there’s no comparable product which gives you bonus points for your regular household spending! Sure, you get 2X Ultimate Rewards points per $1 for travel and dining on the Chase Sapphire Preferred, but there really aren’t many cards designed for folks who spend more on gas and groceries than on travel and dining!
The good news is that BOTH these cards earn American Express Membership points, even the EveryDay card with no annual fee. And even better – you can transfer these Membership Rewards points to airlines or hotels!
Readers often ask how they can prevent their Membership Rewards points from expiring when they close other Membership Rewards cards such as the Business Gold card or the Premier Rewards Gold card which have high annual fees. The easiest way to keep your Membership Rewards points from expiring is to have another American Express card open which earns Membership Rewards points.
And these 2 new credit cards make it very easy to have an American Express Membership Rewards card open – especially because 1 card doesn’t charge an annual fee.
EveryDay Credit Card
The 1st new card is the EveryDay credit card which earns 10,000 Membership Rewards points after spending $1,000 within 90 days.
The sign-up bonus is not a lot, but the card has NO annual fee. So the sign-up bonus is comparable to the sign-up bonus on the Chase Freedom card.
- 2X Membership Rewards points per $1 at US supermarkets up to $6,000 a year and
- 1X Membership Rewards points per $1 on other purchases
But if you use the card to make more than 20 purchases within a billing cycle, you will earn an extra 20% Membership Rewards points, less returns and credits. There is no minimum transaction amount for any of those 20 purchases.
So you’re effectively earning:
- 2.4X Membership Rewards points per $1 at US supermarkets up to $6,000 a year and
- 1.2X Membership Rewards points per $1 on other purchases
This isn’t too bad and is a good way to have a card which keeps your Membership Rewards points active!
Is it Better Than the AMEX Premier Rewards Gold Card?
This is also a good card for folks who don’t want to pay the $175 annual fee on the Premier Rewards Gold card which earns only 2X Membership Rewards points per $1 on groceries and gas.
Of course, you also earn 3X points on airfare per $1 with the Premier Rewards Gold card and 15,000 extra Membership Rewards points after spending $30,000 within a calendar year. But for many folks, the EveryDay card is a better card for groceries!
Is it Better Than the AMEX Blue Cash Everyday Card?
Sure, the Blue Cash Everyday with no annual fee earns:
- 3% cash back at supermarkets (up to $6,000 a year) &
- 2% cash on gas
But you can’t transfer those points to airlines and hotels like you can with the EveryDay card.
I’m guessing that American Express knows that there are folks who want to be able to transfer their points to airlines and hotels for their everyday spending. That’s because they know how to extract the most value from their airline miles or hotel points!
EveryDay Preferred Credit Card
The 2nd new card is the EveryDay Preferred credit card which earns 15,000 Membership Rewards points after spending $1,000 within 90 days.
But the earnings are much better! You earn:
- 3X Membership Rewards points at US supermarkets up to $6,000 a year
- 2X Membership Rewards at US gas stations
- 1X Membership Rewards points on other purchases
And if you use the card to make more than 30 purchases within a billing cycle, you will earn an extra 50% Membership Rewards points, less returns and credits. There is no minimum transaction amount for any of those 30 purchases.
So you’re effectively earning:
- 4.5X Membership Rewards points at US Supermarkets up to $6,000 a year and
- 3X Membership Rewards at US gas stations
- 1.5X Membership Rewards points on other purchases
Much Better Than the Premier Rewards Gold for Groceries & Gas!
This makes it much better than the Premier Rewards Gold card which offers only 2X Membership Rewards points for groceries & gas.
And this is perhaps the best card for everyday spending (assuming you value American Express Membership Rewards) because you will earn 1.5X Membership Rewards points compared to ~1 point for spending on most other cards.
Of course, you have to make at least 30 purchases (less returns and credits) within a billing cycle to earn the 50% bonus to get you to 1.5 Membership Rewards Points per $1. But that shouldn’t be too hard!
What About the Blue Cash Preferred?
Yes, the Blue Cash Preferred will earn:
- 6% cash back at US supermarkets up to $6,000 and
- 3% back at gas stations and select department stores
But you earn cash back from the Blue Cash Preferred and can’t transfer those points to airlines and hotels like you can with the EveryDay Preferred card. So what do you prefer? 4.5 Membership Rewards points (which you can transfer to airlines or hotels) or 6% cash back?
And AMEX knows that the EveryDay Preferred is more appealing to folks who know how to get the most value from their airline miles or hotel points and who want to transfer their points to airlines and hotels.
When Can I Apply for the Cards?
You can’t apply for these cards until April 2, 2014. But you can see how Tina Fey is using the card in the AMEX commercials!
You don’t get the new American Express EveryDay cards for the sign-up bonus, but to actually spend money on. That’s because you now have an option to spend money on cards – with either no annual fee or a reasonable annual fee – but which still earns Membership Rewards points which you can transfer to airlines or hotels.
Another reason to get the cards is because it is an easy way to prevent your Membership Rewards points from expiring!
I would have liked the cards to have no foreign transaction fee and a higher sign-up bonus, but these are still some exciting new options! Of course, these cards aren’t for everyone. But I’m sure that some folks will really like these cards.
What do y’all think about the new EveryDay cards?
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