Last Updated: 7/7/2011

The Discover Open Road Card is a cash back card specializing in gas and restaurant rewards. It is hands down one of the most, if not the most, complex rewards programs that I have ever come across. It’s so complex that it took me a full 30 minutes just to figure out how to program it into the PlasticIQ Ranking Engine. While we are big fans of Discover and tout some of their cards, unfortunately this card isn’t one of them (not per se because of the complexity, but simply because the rewards don’t add up).  The Discover Open Road card reminds us of the cool Talking Heads song, “Road To Nowhere”.

If you’re looking for a Discover cash back card, see our review of the Discover Escape card. Using the PlasticIQ Standard Spending Profile, the Escape credit card earned an average of 2.1% cash back over a 3-year period, while the Discover Open Road card earned only 1.3% cash back over the same time-frame. If you’re looking for a gas or restaurant card, see our recommendations at the end of this article.

Key Rewards, Fees and Benefits of the Discover Open Road Card

This table highlights some of the key aspects of Discover Open Road’s rewards and fees structure.

Earning Rewards With The Discover Open Road Credit Card

The Discover Open Road card is another prestigious winner of our Sneaky Snake award, and right below we’ll call out some of the Discover Open Road’s potholes:

• Firstly, on your initial $3,000 of spend each year with the Open Road credit card, you only earn 0.25% cash back (excluding gas & restaurant purchases). Yes, that’s pretty bad. It’s not until you cross the $3K threshold that you begin to earn a rather ho-hum 1% cashback.
• Secondly, while gas and restaurant purchases pay out at 2% cash back, you are capped at $250 of combined spend in these two categories each month. So that’s a maximum of $5 per month in extra rewards in these categories. You won’t last long on the open road with five bucks these days.
• Thirdly, the first $250 in gas and restaurant purchases each month, along with any warehouse club purchases, don’t count towards the $3,000 annual spend target. Ouch!

Redeeming Rewards With Open Road

While you can redeem your rewards for partner gift cards, merchandise, and Discover Gift Cards, at the end of the day straight-up cash redemption is the way to go. Nothing fancy here. The minimum redemption is in $20 increments.

PIQ’s Final Word on the Open Road Discover Card

While the Discover Open Road Card is a train-wreck, there are some other cards that can step in to fill the gap. We’ve already mentioned the Discover Escape card for a pure best-in-class cashback rewards card. If you’re interested in a gas card, check out our review of the PenFed Platinum Visa Rewards Card, which offers a whopping 5% cash back bonus on all gas spend with no caps. For a powerhouse restaurant card, check out our review of the Citi Forward Card, earning you 5 ThankYou Points for every $1 of restaurant spend.

Cards discussed:

Discover Open Road Card	Escape by Discover Card	PenFed Visa Platinum Cashback Rewards Card
Apply for Open Road by Discover	Apply for the Discover Escape Credit Card	Apply for PenFed Visa Platinum Cashback Card

Last Reviewed: 11/29/2010

The Discover Motiva credit card is aimed at the ultra-profitable segment of the credit-using population that pays their minimum balances each month, but nevertheless carries a balance.  Remember, credit card companies essentially make little or no money on cardholders who pay their balances in full each month (and actually probably lose money on these folks, since they are stilling paying out rewards).

If you intend on redeeming your rewards in the form of pure cash back or statement credits, then check out our reviews of either the Escape by Discover card (statement credits with some specific restrictions–but a fabulous rewards card) or the Amex Blue Cash Preferred Card, which provides huge rewards in some major categories and will significantly outperform the Discover Motiva card in this aspect.

However, Motiva allows you to purchase partner gift cards using your cash back bonus, and in some cases enables you to effectively double the value of your cashback bonus. These rewards of course come in the form of gift cards, not cash back. PlasticIQ will describe how to accomplish this below. PIQ assesses the value of the Motiva card under 3 different use cases:

• If you use it just for cashback rewards
• If you redeem for partner gift cards that increase the value of your cashback by 50%
• If you redeem for partner gift cards that increase the value of your cashback by 100%.

As you will see below, the ranking of the Motiva card varies dramatically based on the manner in which you redeem your cashback bonus.

One final note (really, warning): Motiva actually has built-in incentives to encourage you to not pay your balances in full (see the “Earning Cashback” section below for more info on this). If you plan on carrying balances and paying interest, you should forget about rewards cards altogether, and look for low APR or 0% balance transfer cards.

Discover Motiva Rank Based on PlasticIQ Credit Card Ranking Engine

If you redeem your rewards for cash, then Motiva ranks a miserable 33 out of 40 cards as of 11/28/10, per the PlasticIQ ranking engine. However, if you selectively redeem your rewards for partner gift cards yielding a 50% lift to your cash bonus, then Motiva’s rank improves dramatically, to the #8 spot. Finally, if you are very selective, and only redeem your cashback for gift cards yielding 100% cashback bonus, then Motiva moves up to the #3 position! Below are the screenshots from the PIQ ranking engine for the best and worst scenarios.

Earning Cash Back from the Discover Motiva Card

At first glance Motiva has a weak rewards structure. You earn only 0.25% on your first $3k of spend per year, and only after hitting that threshold do you then get to earn just a standard 1% cashback. We did some quick math, and figured out that for the PlasticIQ base spending profile, the effective cashback reward on a yearly basis is about 0.90%. It only gets worse if you spend less than $2K per month with Motiva. Also note that warehouse-type purchases are always rewarded at 0.25% and also don’t count towards attaining the $3K threshold. This weak rewards structure is why redeeming for straight cash back is, in the words of Sun Tzu, a losing strategy. Did he ever really say that?

Callout: Pay-On-Time Bonus

If you pay at least your minimum balance each month for 6 months in a row, Discover Motiva will refund you the periodic finance charge you incur in month 7. They call this their “pay-on-time” bonus. The fact is that this bonus is worthless at best, and downright harmful at worst. In the best case scenario (which should be you!), the cardholder always pays his or her balance in full, thus making the bonus worthless (as there is no finance charge to refund). Worst case, a Discover Motiva cardholder untrained in the ways of the Force may feel this is such a great bonus that he/she decides to actually *only* pay the minimum balance in order to collect the highest bonus possible.

PIQ performed some simple napkin math to come up with an example of how the Pay-On-Time Bonus can really hurt you. We assumed the cardholder charges $2K per month to the Motiva card, and each month only pays the minimum required balance (2% of the outstanding balance). We also assumed the lowest currently published interest rate of 11.99% per annum. Through 7 months you would have paid $527 in interest, but would have been refunded $135 under the Pay-On-Time bonus program, for a net outflow of $391. Meanwhile, you would have earned rewards of about $117.50. So you’d still be down about $274.

Redeeming Motiva’s Cash Back Bonus

Since Motiva is a cashback card, you can deposit earnings directly into a bank account of your choice, or credit your Discover Motiva credit card account. As we’ve mentioned above, if direct cash is your intent, then this card is a dud. For a strong cashback card, you can check out the the Amex Blue Cash Preferred Credit Card.

However, if you are interested in getting gift cards from one or more of the below merchants, then Motiva becomes a significantly more attractive piece of plastic. While there are over 100 merchants offering extra value when you use your cashback bonus, PlasticIQ has listed only those merchants that give you at least a 30% increase in the value of your rewards.

If you redeem for gift cards yielding 100% increase in the value of your cash back bonus, the Discover Motiva credit card is actually a top 5 ranked cashback card! Even if you average a 50% increase in value, Motiva would still be ranked in the top 10 under most spend assumptions.

PlasticIQ’s Conclusions about the Discover Motiva Credit Card

When we first started reviewing the Discover Motiva credit card, we were pretty sure it was a dud, given it’s sub-par rewards earningstructure. However, if, and only if, you are willing to redeem your cashback bonus for a select number of partner gift cards offering extremely favorable exchange rates, the Motiva card rises like a Phoenix from the ashes to become a force to be reckoned with. This is a judgment you must carefully make prior to getting this card. Personally, for me, I could definitely see myself getting gift cards for car rentals (Alamo, national, enterprise), for Hyatt hotels, maybe Omaha steaks or Samsonite.

If these gift cards don’t interest you, and you want to stick with a Discover Card, then check out our review of Escape by Discover.

Discover Motiva Cash Back Credit Card	Discover Escape Credit Card
Apply for Discover Motiva only if you are willing to redeem for high-value partner gift cards.	Alternate Selection: Apply for Discover Escape

Last Updated: 5/13/2011

While there are some amazing airline and hotel loyalty credit cards out there, there’s something special about pure cash back credit cards that’s spiritually appealing to our inner capitalist selves. Out with black-out dates and annoying reservation systems; in with statement credits and instant gratification.

This year’s list of the 3 best pure cashback cards is dominated by American Express:  one card (Amex Blue Cash Preferred) offers a whopping 6% cashback in a typically high-spend category, along with good bonuses for some other categories;  a second cash back credit card (Fidelity Amex Investment Rewards Card) is an obscure, little-marketed powerhouse; and a 3rd card (Amex True Earnings Costco Card) specializes in delivering strong performance in certain categories of purchases. But one thing they all have in common: all 3 easily deserve to be considered among the best cash back credit card deals around—-bar none.

To add some spice and variety beyond Amex, we’ve also included an honorable mention for the Discover Escape Card.  It’s not technically a cash-back credit card, but as long as you travel every so often it behave an awful lot like the real deal.

One final note before we embark: the team at PlasticIQ didn’t just pick these cards out of a hat. Rather, we relied on a powerful analytical tool called the PlasticIQ Ranking Engine to tell us. We provide it with a “standard” spending profile, and it ranks all of the credit cards in our database from best to worst. We also assume cardholders pay off their balances in full each month—if this isn’t true for you, you had best seek out a low interest rate card and not a rewards card, since rewards, no matter how generous, will never exceed finance charges.

So, without further ado…

Super(Market) Warrior: Blue Cash from Amex

Overview

As of the revision date on this post, the Amex Blue Cash Preferred card is a newcomer, only a few weeks on the scene.  But yet it’s already making waves.  With a crushing 6% cashback on supermarkets, and a very respectable 3% cashback on gas and department store purchases (and 1% cashback on everything else), it’s hard to beat this monster.

Sign up/Spend bonus

You earn a $100 cash bonus if you spend $500 on the card within 60 days of activation.

Earning Cashback

As noted above, 6% cashback bonuses at supermarkets, along with 3% bonuses at gas stations and department stores, mean that for those who eat, drive, and shop, there are some big savings here.  The program is super simple, and there are no cashback reward limits or bizarre terms and conditions to worry about.

Redeeming for Cashback

Again, super straightforward.  As soon as you reach $25 in cashback earnings, you can apply this as a statement credit.  What could be easier?

Fees

There is a $75 annual fee for this card, but just spending $25 per week at your local supermarket will completely pay off this fee.

Read PlasticIQ’s Detailed Review of the Amex Blue Cash Preferred Credit Card

or go directly to the Amex Blue Cash Preferred Application:

Caution: Amex actually shows both the Blue Cash Everyday and the Blue Cash Preferred Card on the same page.  Make sure you apply for the card on the right side of the page (Blue Cash Preferred), since it way outperforms the EveryDay card in almost every situation.

Our Well-Rounded, Unsung Hero: Fidelity Investment Rewards by American Express

Overview

According to the PlasticIQ Card Ranking Enging, the little known Fidelity Investment Rewards Amex clocks in at #2 on our list. Based on our standard spending profile,assuming no balances are carried, cardholders would earn $1,418 in rewards (net of fees) over a 3-year period. That places it within $50 of our #1 pick–mere rounding error.

Sign up bonus

None.

Earning Points

Cardholders earn 2 points for every dollar spent, without spending category restrictions or earnings caps.

Redeeming Points

Here’s where it gets a bit more complicated. Fidelity offers several methods for redeeming points, with some potential for major upside here. Firstly, Fidelity offers Basic Air Rewards, which require a pre-determined (fixed) number of points to purchase, and allow you to obtain air tickets up to a maximum allowed value. For example, for 25,000 points, you can obtain a free ticket within the 48 continuous states as long as the value of the ticket is $400 or less. To qualify for Basic Air Rewards, you must purchase the ticket 21 days or more in advance, and include a Saturday night stay. Assuming your average ticket price falls around $325, your points would be valued at $0.0130 per point—and you get 2 of them for each dollar you spend, thus turning your card into a 2.6% cashback card!

The Fidelity Credit Card also offers various other redemption options that convert at exactly $0.01 per point, thus yielding a solid 2% cashback on your card’s purchases. Examples include car rentals and hotel awards, where you can redeem in increments of 5,000 points for $50 credits.

Finally, if you just want straight-up no-nonsense cashback, you can redeem in chunks of 25,000 points for $250 cashback—again ensuring 2% cashback performance for your Fidelity Amex card.

Fees

There are no annual fees, and the international transaction fee is a modest 1%.

Read PlasticIQ’s Detailed Review of the Fidelity Investment Rewards Amex Credit Card

Broad Category Killer: TrueEarnings Card from Costco and American Express

Overview

The Amex TrueEarnings Costco Card has a baseline 1% cashback earning rate, but excels in specific (and important!) categories, such as gas purchases, restaurants (a rare category to receive bonus points in), and nearly all travel-related purchases.  Used as a nice card, the Amex TrueEarnings Costco Card can definitely deliver.

Sign up bonus

None

Earning Cash Back

Here are the key earnings points:

• Baseline 1% cashback on all purchases, even those made at Costco.
• 3% cashback on all gasoline purchases, up to $3,000 per year (that’s about $60 per week in gas purchases). After you hit the $3k limit, you’ll earn just the basic 1% cashback.
• 3% cash back on all restaurant purchases, with no spending limits.
• 2% cash back on all travel related purchases, including airfare, hotels, rental cars, cruises, and travel packages. No spending limits here either.

Redeeming Cash Rewards

Cash-back is awarded annually in the form of an in-store coupon redeemable for cash or merchandise at an US CostCo warehouse.  Having to wait a full year to redeem awards is definitely not a plus, but not enough of a downer to derail this card.

Fees

No annual fees, but you are required to purchase a $50/year Costco annual membership. Hopefully you’ll do some shopping at Costco and save some additional dough–though I always seem to walk out of there with a bunch of stuff I don’t need (example: giant bucket of trail mix).

Read PlasticIQ’s Detailed Review of the TrueEarnings Credit Card from Costco and American Express.

or apply for the TrueEarnings Card by Costco and Amex.

Covert Operative: The Discover Escape Credit Card

Overview

The Discover Escape card actually earns “miles” and not cash back (and thus isn’t a pure cash back card and is not officially included as a contender), but if you take a harder look at how these miles are redeemed, you will see that Escape’s rewards can function much like those of its cash-back brethren.  In fact, if Escape is thrown into the mix with pure cashback cards, it will typically rank in the top 3 cash back cards–sometimes even grabbing the #1 spot depending on what spending habits you provide to the tool.

Sign up bonus

Discover Escape cardholders will earn 1,000 bonus miles per month for the first 25 months they hold the card, provided they make at least 1 charge per month on the card.

Earning Miles

Cardholders earn 2 miles for every $1 spent, no spending category restrictions or earning caps.

Redeeming Miles

Miles can be redeemed for any airline, cruise, hotel, vacation package, or car rental—with no booking restrictions whatsoever. Discover simply issues you a $100 CASH travel credit for every 10,000 miles you earn. It’s basically a statement credit with a category restriction, and that, my friends, is why PlasticIQ considers this card to have at least one foot in the cashback credit card camp. As long as you travel at some point, sometime, anywhere, by just about any means, Discover Escape will perform just like a cashback card in terms of redeeming your rewards.

Fees

There is a $60 annual fee. Discover Escape does not charge any fees for foreign transactions.

Read PlasticIQ’s Detailed Review of the Discover Escape Credit Card

or go directly to the Discover Escape Application.

Summary of the 3 Best Cash Back Credit Cards Available

So if you’re looking for the best cash back credit cards out there–the Navy Seals of Plastic–consider your hunt over. The table below provides a quick snapshot comparison of these 3 commandos. Again, PlasticIQ’s rankings are based on our PlasticIQ Ranking Engine, and will hold true for the majority of folks. However, we still strongly encourage you to take the ranking engine out for a spin yourself.

The folks at PlasticIQ hope you have enjoyed our annual best-of-the-best cashback card review!

Blue Cash Preferred from Amex	Fidelity Investment Rewards Amex	TrueEarnings Card from Costco and Amex	Escape by Discover
Apply for Amex Blue Cash Preferred	Apply for Amex Fidelity Investment Rewards	Apply for TrueEarnings Card from Costco and Amex	Apply for Escape by Discover

Last Reviewed: 8/15/2010

The American Express Blue Sky credit card is another one of those cards masquerading as a travel credit card, yet behaving more like a cash back card with some redemption restrictions. Thus, on PIQ’s Plastic Ranking Engine you will find the AMEX Blue Sky card in both the travel and cash back categories.

With an effective cash back rate of 1.33%, the American Express Blue Sky credit card is definitely a cut above the run-of-the-mill 1% cash back cards that abound.

*Based on PlasticIQ’s standard spending profile for 3 years of card usage. Includes impact of various fees, including annual fees and international fees.

American Express Blue Sky Rewards

Here’s a quick table summarizing some of the key features of the Amex Blue Sky card:

Click here for Amex Blue Sky complete terms and conditions.

Other Benefits of the American Express Blue Sky Card

While PlasticIQ doesn’t factor in these hard-to-quantify benefits into its Plastic Ranking Engine, and nor do we evaluate the merits of these benefits (ie limitations and other fine print), we still feel it’s worth sharing them with our readers to give you a more complete sense of the pros and cons of each card. We’ve also tried to provide some links if you want to investigate further.

• Travel For Less: You can “save big” at many leading travel providers like Marriott and up to 20% off at Hertz with the Amex Blue Sky Travel Savings program.
• Complimentary hotel breakfasts: At JW Marriott Hotels & Resorts and Renaissance Hotels & Resorts worldwide. Available on weekend stays if you check in by Thursday and stay through at least the following Monday. Bookings with your American Express Blue Sky credit card must be made at Marriott.com or by calling Marriott directly. Rate includes complimentary breakfast in the restaurant for up to 2 adults. The offer is subject to blackout dates and other restrictions.
• Car Rental Loss and Damage Insurance: You don’t need to pay for additional car insurance coverage at the rental desk.
• Access to the Global Assist Hotline: Can help you out in a bind, including emergency services, wiring you money, and more. Click here to read the full details.
• Room Guarantee: Even if you arrive late, your room is guaranteed when you book it with your American Express Blue Sky Credit Card.
• Travel Accident Insurance: Up to $100,000 in coverage at no additional cost as long as you paid for your plane ticket, boat pass, etc with the American Express Blue Sky Card.
• Purchase Protection: If an eligible purchase (using your Blue Sky Card of course!) is accidentally damaged, stolen or even lost within the first 90 days, American Express will pay for it, up to $1,000 per incident. Rock on!
• Free Extended Warranty: American Express will double the warranty on eligible items as long as you purchase them with your Blue Sky credit card.
• Return Protection: When you purchase an item with your Amex Blue Sky Credit Card, you can return the item to Amex (even if the store won’t let you return it to them) for up to 90 days after the initial purchase, with a $300 limit per item.

PlasticIQ’s Final Assessment of the American Express Blue Sky Credit Card

Since the American Express Blue Sky card is really a cash back card with some redemption restrictions, you’d be better off first applying for the American Express Blue Cash Preferred Credit Card–due to lofty cashback rewards in some high-spend categories (e.g. 6% cashback for supermarkets). The Discover Escape Card is actually nearly identical to Blue Sky in terms of redemption restrictions, but offers a much more savory 2% cash back rate, and would be a better choice as well.

In short, the American Express Blue Sky card only deserves a place in your portfolio if you can’t get one of the cash back cards ranked higher on the Plastic Ranking Engine, like the two mentioned above.

Blue Sky from Amex
Apply for Amex Blue Sky

Last Reviewed: 8/5/2010

The Capital One No Hassle Cash Rewards credit card is a fairly straightforward cashback credit card. It’s not an all-star card, but neither is it a laggard–somewhat North of middle-of-the-pack. One callout is that Capital One tends to tailor their offers based on your credit worthiness. In the case of the No Hassle Cash Rewards card, both the purchase APR and the annual fee vary depending on your credit score. We call out those differences below.

*Based on PlasticIQ’s standard spending profile for 3 years of card usage. Includes impact of various fees, including annual fees and international fees.

Capital One No Hassle Cash Rewards

Here’s a quick table summarizing some of the key features of the No Hassle Rewards card:

Capital One No Hassle Cash Rewards Expenses and Fees

There seems to be some “noise” and controversy in the blogosphere about Capital One’s international transaction fees. According to CapitalOne’s own terms and conditions, they do not charge international transaction fees. However, I have come across various posts around the web claiming that CapitalOne offers an unfavorable exchange rate (since all transactions made with your No Hassle Cash Rewards Card in a foreign currency need to be converted to US dollars).

If you do decide to use the Capital One card for travel overseas, make sure you keep an eye on what sort of exchange rate you are getting. It would be an interesting experiment to purchase an identical object (say, a pack of gum) at nearly the same time with this card and a card from another issuer, and see how the exchange rates compare.

PlasticIQ’s Final Assessment of the No Hassle Cash Rewards Card

The 2% cashback at supermarkets and gas stations isn’t bad at all, and if the international exchange rate issue turns out not to be an issue, then there might be a role for this card in your portfolio. If you are interested in cash rewards, then you should check out our post, 3 Best Cash-Back Credit Cards for some excellent ideas on plastic.

Last Reviewed: 8/1/2010

While the Bank of America Accelerated Cash Rewards card currently ranks 5th out of 32 cashback cards, as the table below shows, this card will earn you significantly less than the top-ranked Discover Escape and American Express Blue Cash Preferred Card.  In short, PlasticIQ wouldn’t recommend this card for your portfolio unless you get rejected by higher ranked cards as presented by the PIQ Ranking Engine.

*Based on PlasticIQ’s standard spending profile for 3 years of card usage. Includes impact of various fees, including annual fees and international fees. Assumes cardholder nevercarries a balance.

Bank of America Accelerated Cash Rewards

Here’s a quick table summarizing some of the key features of the card:

Follow this link to see the full and current list of terms and conditions as provided by Bank Of America.

Bank of America Accelerated Cash Rewards Expenses and Fees

This BofA card doesn’t carry an annual fee (like most cashback cards), and does boast a relatively low 1% foreign transaction fee (since it’s an American Express card). The 4% balance transfer fee is onerous, and a sign of the times.

Wrapping up: PlasticIQ’s Position on the Bank of America Accelerated Cash Rewards Credit Card

As mentioned above, this card is simple unremarkable. The 1.25% cashback does succeed in pulling the BofA Accelerated Cash Rewards card ahead of the 1% cashback pack, but not by a whole lot. The lack of special bonus categories also really hurts its prospects for greatness. It’s lack of an annual fee and low 1% foreign transaction fee are nice, but not enough to really move the needle on PIQ’s recommendation to avoid this card unless you just can’t get a hotter date.

Last Updated: 5/30/2011

The Penfed Visa Platinum Gas card might be called a hidden gem. The value proposition of this card is very straightforward: its awesome for gas rewards (5% cashback)–but plain Jane on all other purchases (1% cashback).  If you maintain a portfolio of credit cards to max out rewards across all major categories, the Penfed Visa Platinum is a must, but you should only use it to make gas purchases.

How to Get the Penfed Visa Cashback Card

Well, its quite simple really—just join the Penfed Credit Union! The Penfed website specifies 7 primary ways to join their credit union—a prerequisite for getting at this precious little gem. Most of the qualification methods involve either being in the military, the government, and even the Red Cross.

However, if methods 1-6 don’t apply to you, which they may very well not, method 7 is a surefire way in. Method 7 requires you to join the National Military Family Association. Apparently any old civilian can become a member. A 1-year membership fee will cost you $20, and the good news is you do not need to maintain your NMFA membership once you get into the Penfed Credit Union.

You also are required to open a Penfed savings account (they call it a “Regular Share” account) and fund it with at least $5. All in all, I’d say Penfed is making it pretty easy to join and get this card if you have the desire.

PenFed Visa Platinum Card Rewards

Here’s a quick table summarizing some of the key features of the card:

Follow this link to see the full and current list of terms and conditions as provided by PenFed Credit Union.

Penfed Platinum Visa Rewards Details

This is a very uncomplicated card—undoubtedly one of the differences between credit unions and big banks. There’s nothing tricky or otherwise sly about the terms and conditions of the Penfed Visa Platinum Cashback Rewards card, and the table above pretty much sums up the situation. The real kicker here is the 5% gas cashback, which is downright awesome.

Wrapping up: Best Strategy for the PenFed Visa Platinum Cashback Credit Card

The Penfed Visa warrants a seat in your wallet as your go-to gas purchase credit card, but you shouldn’t use it for any other purchases if you can help it. For a complimentary category-killer card, check out our review of the American Express Blue Cash Preferred credit card, which offers 6% cash back at supermarkets.

Cards mentioned:

PenFed Visa Platinum Cashback Rewards Card	Amex Blue Cash Preferred Card
Apply for PenFed Visa Platinum Cashback Card	Apply for Amex Blue Cash Preferred

Note: As of 4/30/2011, American Express replaced the Amex Blue Cash Card (which is no longer available), with 2 new credit cards: the Amex Blue Cash Everyday Card, and the Amex BlueCash Preferred Card.  While the Everyday Card is slightly inferior to the old Blue Cash card at higher levels of spend (say, >$1,000 per month of spend on the card), it does outperform at lower levels of spend.

However, the real gem is the new American Express Blue Cash Preferred Card–which simply dominates it’s predecessor and consistently appears at or right near the top.

Follow this link to read PlasticIQ’s review of the American Express Blue Cash Preferred Card.

Last Reviewed: 7/23/2010
The Amex Blue Cash Card (NO LONGER AVAILABLE) is a force to be reckoned with, ranking near the top of the pack if you spend enough on the card. If used skillfully, Blue Cash can earn an effective cashback rate of 3% or even more.

The rewards scheme for this card needs a bit of explaining, so it’s a good thing you stumbled across this article.

Warning: if you think you will spend materially less than $1,000 or so per month with Blue Cash,  this may not be the card for you.  In order to hit the “big rewards” (read more below) you need to reach $6,500 per year in spend, and if you are only spending say $500 per month, you won’t reach that higher tier each year.

American Express Blue Cash Rewards

Here’s a quick table summarizing some of the key features of the card:

American Express Blue Cash Rewards Details

The Blue Cash card has a split category tiered rewards structure (that sounds complex!). Basically, AMEX separates out spend into “everyday purchases”, which include spending at supermarkets, gas stations and drug stores, and “all other purchases”, which includes any other purchases not falling into the former bucket. Purchases at superstores or warehouse clubs do not qualify as Everyday Purchases.

On the first $6,500 of spend per year, Everyday Purchases earn 1% cashback, while all other purchases earn only 0.5% cashback. Once you spend $6,500 you move up to the next rewards tier, where Everyday Purchases earn a whopping 5% cashback, and all other purchases earn 1.25%. The table below lays this all out in an easy-to-digest format.

The Best Strategy To Maximize the Value of the American Express Blue Cash Card

As you can see, for your first $6,500 of spend each year, the Amex Blue Cash card is actually inferior to any plain vanilla 1% cash back card. It’s not until you get above that threshold that it becomes a powerhouse–especially if you use it just for Everyday Purchases.

In the hands of the right person, the Amex Blue Cashback Card can be a deadly weapon. The strategy is quite straightforward, as follows:

• Use Blue Cash on any and all purchases until you hit the $6,500 ceiling which propels you into the next earnings tier for the year.
• Once you hit the next tier, immediately stop using the card for any purchases except those classified as “everyday purchases”.

If you follow this strategy, you can turn a good cashback program into a great one. The table below shows what the effective cashback rate of the Blue Cash card could be while varying 2 key assumptions: the number of months it takes you to hit the $6,500 spend threshold before moving to the more profitable rewards tier, and the amount you spend each month on Everyday Purchases. The other key assumption that PlasticIQ makes is that once you hit the $6,500 tier, you only use the AMEX Blue Cash card for Everyday Purchases.

As the table higlights, it’s entirely possible to have the American Express Blue Cash card performing at around 2.75% to 3.00% effective cashback for a given year, if used skillfully.  If we use 2% cashback as a minimum threshold for owning this card, and assuming it takes you a full 4 months to reach the next tier, you would only need to spend about $350 per month on Everyday Purchase categories to hit the 2% annualized cashback rate.

PIQ Strategy Tip: Getting to the $6,500 Threshold Faster

Here are a couple of tips on how to get to that critical $6,500 spend threshold as fast as possible.

• Besides the already-stated advice of making sure to use your Amex Blue Cash card everywhere possible prior to hitting the $6,500 threshold, make sure you get an extra card for your significant other. You could even get one for your parents etc, but it might introduce some extra administrative overhead in terms of squaring up the monthly billing.
• Purchase $1 coins from the US Mint. You can purchase 4 boxes every 10 days with free shipping–that’s roughly an extra $3,000 of spend on your Blue Cash card in 1 month. That ought to give you the turbo boost you’re looking for. Just be sure to use the program in good faith, and spend the coins at retail establishments, versus just depositing in the bank. Here’s the link to the exact page where you can make these purchases.

American Express Blue Cash Expenses and Fees

The AMEX Blue Cash card has no annual fees or rewards program fees. However, you are charged 2.7% of each international transaction after conversion to USD.

PlasticIQ’s Final Assessment of the American Express Blue Cash Card

Hopefully by now PlasticIQ’s conclusion is clear: if you have the discipline, after getting to the better rewards tier (that is, after spending $6,500 in any 12 month period), to just use the card for Everyday Purchases (supermarkets, gas stations, and drug stores) and you spend at least $350 per month on Everyday Purchases, this card could be the top ranked cashback card for you. Even without these assumptions, it’s highly likely that Blue Cash will still be an awesome addition to your wallet.

Blue Cash Preferred from Amex
Apply for Amex Blue Cash Preferred

There are three levels of Amex Rewards—Membership Rewards Express, Membership Rewards (which is what this article is focused on), and Membership Rewards First. We have blogged separately about the Express program in our post What is the value of American Express Membership Rewards Express Program Points? Who knows, maybe someday you too can be cool and own an Amex Red card like Bono (hint: you’ll need to become a UK resident first!).

If you don’t have much patience for analysis, and just want to check out an Amex card on steroids, read PlasticIQ’s review of the American Express Blue Cash Preferred Card. It routinely finishes at the top of the heap per the PlasticIQ Ranking Engine and won’t disappoint you.

Myriad Ways to Redeem your Amex MR Points

Amex presents cardholders with a dizzying array of redemption options, including gift cards, statement credits (like cash), travel, and more. The table right here summarizes our estimates of the value of your MR points under each method, but if you want to understand how we arrived at these numbers, do read on.

Major Differences Between Amex Membership Rewards and Amex Membership Rewards Express Programs

There are at least two major differences  between the full Membership Rewards program and its little brother, the Express program—at least from a value of points perspective.  The first difference is that the full rewards program enables you to transfer your points into mileage programs at (as of press) 16 different airlines, including such well-known brands as JetBlue, Delta, British Air, ANA, Singapore Airlines and others. Follow this link to see their full list of Amex partners. The program also enables you to transfer points into certain hotel frequent stay programs, such as the Hilton Honors program and the Starwood Preferred Guest Program.

The second major difference has to do with Amex’s Pay With Points program, which enables cardmembers to directly purchase airline tickets, hotel reservations, cruise packages, and bundled vacations directly from the American Express website.  The full Membership Rewards program offers a far superior conversion rate of $0.01 per MR point versus only $0.005 per point for the Amex Membership Rewards Express Program.

How Much Are MR Points Worth When You Use The Pay With Points Program?

As the table below highlights, when you use Pay With Points to redeem for airfare, your Membership Rewards Points will be worth $0.01. Other redemption combinations come in at somewhat lower valuations.

Value of Amex Membership Rewards Points When Transferring Into Flying or Hotel Loyalty Programs

Unlike the Amex MR Express Program, the full Membership Rewards Program allows you to transfer your hard-earned MR points into any number of (as of press) 16 different airlines and 6 different hotel chains. We’ve tried to analyze at least some of the more popular programs to arrive at redemption estimates. Check out the table below:

As you can see, you’ll fare much better (pun call-out!) going with airline redemptions versus hotel redemptions. While we realize this list is by no means exhaustive (and we will expand it over time), we do believe it’s directionally reflective of the value you’ll get for your MR points when transferring into loyalty programs.

Unfortunately, there’s no way to redeem your Amex MR points for the below (hey it’s a long post, I needed a break):

So, What Are Your Membership Rewards Points Worth When Redeeming for Gift Cards

Unlike some other redemption types, the value of your points here is much easier and straightforward to calculate. While they offer dozens of gift cards across shopping, restaurant and other categories, value almost always peaks out at $0.01 per point, and sometimes dips below that. The table below provides a small sampling for your delight. Note that we’ve also included the value of the Shop With Amazon program in the table below.

So, if Cash is King, What’s the King Worth?

Of course, we would be remiss if we didn’t tell you how much your MR points would be worth if you converted them directly into cash. The short answer is–not much. There are 2 ways to get rewards which are basically the equivalent of cash: redeem for either Visa Cash Cards, or get statement credits through the EveryDay Charges program.

How Does the EveryDay Charges Program Work?

It’s fairly straightforward. You just log into your Amex credit card account, select the charges you want to pay with your points, and follow the instructions from there. The real question is, what value do you get for your points.

As you can see, while neither redemption option gets you close to the baseline $0.01 per point, the Amex gift cards (which can be used anywhere that American Express is accepted) outperform the statement credits, although there’s always the risk that you could lose the card! Choose your poison, or, better yet, avoid both of these options altogether.

PlasticIQ’s Final Assessment of the American Express Membership Rewards Program

It appears that the AMEX Membership Rewards Program has a modest edge over the AMEX MR Express Program due to the ability to transfer AMEX points into various frequent flyer programs, and also due to the superior Pay-With-Points redemption rate (twice that of the MR Express Program). It appears that transferring into flying programs will yield a value slightly north of $0.0105 per MR point.

Now if you are just looking for the best all-around Amex rewards card, we’d be remiss to not point you to PlasticIQ’s review of the Amex Blue Cash Preferred Card. It’s a straight-up cash back card, and our favorite amongst all Amex cards due to its bone-crushing rewards program.

Amex Blue Cash Preferred Credit Card
Apply for Amex Blue Cash Preferred

There are actually 2 tiers of the American Express Membership Rewards Program—the MR tier (this is the “full” program) and the Express Tier (which is identical to the MR tier except that you can’t transfer points to other frequent flyer/hotel programs). The Express Rewards program typically applies to AMEX cards that don’t charge annual fees, such as Blue From American Express.

Since the Express Program offers fewer redemption options than the full MR tier, you might feel like you’re getting hit below the belt (and it turns out to be true!) as the value of the points earned in the Express program is worth less than the same number of points earned through the MR program.

The American Express Membership Rewards Express Program offers a number of ways to redeem points, including cash and non-cash gift cards, booking of flights directly, shopping, etc. As such, to assess the value of the program, we need to assess the value of each redemption option, and determine the best redemption approaches.

By the way, if you’re simply looking for an awesome Amex rewards card, check out our review of the Amex Blue Cash Preferred Credit Card. As a bit of plastic foreplay, Blue Preferred offers a whopping 6% cash back on supermarket purchases;)

Value of Amex MR Express Points When Redeeming for Various Rewards

As you can see from the table below, the highest value attainable for the Express Rewards Program is $0.01–before adjusting for non-cash penalties. However, on an adjusted basis, we estimate the highest cash-equivalent value you can get from these points is $0.0090 per point. This is because there is no way to get direct cash out of this program at $0.01 per point, and cash is always superior all else equal. The next best option is gift cards, but since gift cards are never as good as cash-in-hand, we apply a penalty to adjust for this fact.  For an explanation of why we apply this penalty, check out our post Why does PlasticIQ Penalize the Value of Non-Cash Rewards?

The Giftcard Black Hole

One way to earn a nominal value of $0.01 per Express Point is to get a gift card. However, we firmly believe that gift card nominal values should be penalized for the following reasons.

• Gift cards limit your ability to comparison shop. You are stuck with that merchant.
• There is a small risk (but moreso in this economic environment) that any given retailer could go belly-up.
• According to an article on unused card values by consulting firm Tower Group, $8B was lost by consumers in 2006 who let their gift cards go unused (lost, expired, ignored).

So PlasticIQ believes gift cards should be valued, generally, at 90% of their face value. To validate our discount, PIQ investigated completed sales of gift cards on EBAY and discovered that most sales closed at around 80-85 cents on the dollar—so our 90 cents on the dollar estimate seems reasonable, maybe even generous.

If you want to read a little more about PlasticIQ ranting on gift cards, you can read our post, 5 Reasons Why Gift Cards Suck.

Pay With Points Option

The American Express Membership Rewards Express program also allows you to purchase airline tickets directly with their “Pay With Points”program.   However, a little-published fact (until after you get the card!) is that, unlike with full Membership Rewards points, the MR Express points redeem at only 50% of full value–a crushing blow to the value of the Express Program (thanks to a reader, Rob, for pointing this out!).  For example, to buy a $200 airline ticket, you’d need 40,000 MR Express Points.

The Final Analysis

In conclusion, PlasticIQ estimates the value of an American Express MR Express point to be just a bit south of $0.01 per point—we’ve placed a value of $0.0090 per point, as we assume that the primary mode of redemption/usage of points will be through gift cards. If you are looking for strong performance from an Amex credit card, read our review of the Amex Blue Cash Preferred Card.

Amex Blue Cash Preferred Credit Card
Apply for Amex Blue Cash Preferred