American Express, a payment card many merchants abhor, especially low margin merchants like supermarkets, is getting ready to unleash its “Amex Everyday Credit Card” next month. The card offers double “extra” points for up to $6,000 in grocery purchases per year and its standard 1% on all other purchases. (like everyone else in the national credit card business)
CAVEAT – Use the Amex Everyday Credit Card to make 20 or more purchases in any billing period and earn 20% extra points on all those purchases less returns and credit.
So how valuable are those points? Maybe 1.5 cents and, if lucky on a good day, 2.0 cents.
So best case, if you charge $6,000 in groceries, then you earn 300 points or $60 in real value. The typical AmEx U.S. cardholder charged about $15,000 last year so you could earn 1500 points or $150 in real value. With the 20% bonus you get, hopefully, $200 in real value. With groceries added, maybe $300 (best case scenario) real value.
AmEx is offering a 15 month 0% APR for purchases and no annual fee but does it add up compared to most other reward cards offered by big issuers?
REAL CAVEAT – The interest rate is 12.99% to 21.99%, depending on creditworthiness, and is Prime Rate based – OUCH!!! So if your get a $10,000 credit line (a dream by today’s standard) you annual debt service expense could be $1,300 to $2,200 without a Prime Rate increase.
BOTTOM LINE – Do you really want a new credit card that encourages grocery store purchases as an incentive to run up painfully, expensive debt?
Consider debit cards as an “Everyday” payment card.
AMEX EVERYDAY CREDIT CARD FOOTNOTE:
For each dollar charged on an eligible purchase in each billing period on your Amex EveryDaySM Credit Card from American Express, you earn one Membership Rewards® point. You earn: 1 additional point (for a total of 2 points) on the first $6,000 of eligible purchases in a calendar year at supermarkets located in the U.S. (superstores and warehouse clubs are not considered supermarkets). Eligible purchases are purchases for goods and services minus returns and other credits. Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of travelers checks, purchases or reloading of prepaid cards, or purchases of other cash equivalents. Additional terms and restrictions apply. Merchants are assigned codes based on what they primarily sell. A purchase will not earn additional points if the merchant’s code is not eligible. Purchases made through a third-party payment account or on an online marketplace (with multiple retailers) will not earn additional points. A purchase may not earn additional points if the merchant submits the purchase using a mobile or wireless card reader or if you use a mobile or digital wallet.
The cost of feeding a family of four a healthy diet can run $146 to $289 a week, according to the U.S. Department of Agriculture.