We’ve had the Delta American Express Card since 2001. We’re done with it.The rewards it gives are frequent flyer miles, one per dollar spent. That’s not good enough. Why?
- We don’t always fly Delta anymore. We fly AirTran a lot.
- Miles aren’t easily transferable. Mrs. Muttrox and I have separate ledgers based on our individual spending with the card. Trying to move miles around is logistically hard, requires a lot of lead time, and costs extra money.
- It’s incredibly hard to redeem miles. They restrict the number of seats available. Cashing in a free flight is essentially impossible unless you are willing to fly at 3 am, or pay yet more money.
- We want to be able to use reward points more flexibly. We do fly a lot, but since other programs allow you frequent flyer miles as well as other rewards, why not use those?
It was time for a new card. The last time I tried to cash in miles started the ball rolling. My Vegas trip in March cost almost as much as if I had paid the normal fee. I was finally triggered to take action by an interesting article in the New York Times that had some specific suggestions. I sat down to figure out what we wanted in a new credit card.
What were the criteria?
- One of the majors: Visa or American Express. (I’ve had a MasterCard for 20 years, no reason to have two credit cards from the same group.)
- No annual fee
- We don’t care about APR or balance transfer rates. We pay in full every month, and always will.
- Very flexible rewards redemption. There’s nothing more flexible than cash.
- A high rate of rewards. The standard is 1% or 1 mile for every dollar spent. We wanted to beat that.
Capital One sucked. Their offers are all based around APR rates, terrible rewards program. Starwood Preferred Guest is a good program but wasn’t for us. It has a $45 annual fee and the rewards are all based around hotel rooms. We don’t stay at hotels much. It came down to two programs.
- The Costco American Express TrueEarnings card:3% cash back for gas and restaurants, 2% for travel, 1% for everything else. Because we’re Costco members already there is no annual fee. Straightforward and generous.
- American Express Blue Cash Card: The terms are a bit more complicated. On the first $6,500 a year spent, you get 1% back on groceries and gas and 0.5% on everything else. Not very good. But after $6,500 you get 5% back on groceries and gas and 1.25% on everything else, which is very good.
The next stop was Mint.com. This is a personal finance site. They make most of their money by making you offers on financial products like credit cards. The neat part is that they already know your financial situation. They can make recommendations based on true knowledge of your spending patterns. Sure enough, once I filtered out the “sponsored listings” I was left with the same two choices as before. Because it knows what I spend my money on it can make informed estimates of how much I can expect to save with each one. Costco came out barely on top. But I didn’t trust their numbers. I ran my own.
After 10 minutes of furious scribbling, I decided that the BlueCash card would have an approximate 1.6% rewards rate, and the Costco card would have a 1.4%. However, that was highly dependent on how much spending we did every month. Which is highly variable for us. With only slightly different assumption the Costco card looked better. And frankly, we like Costco. That’s what we applied for, our new cards should be here in a couple weeks.
What do you use for your credit card? And why?
Update: We’re approved.