Cash Back Rewards
The main benefit of this card is the cash back it offers. You can earn 3% cash back on gasoline at U.S. stand-alone gas stations, including at Costco, for purchases up to $4,000 per year (1% thereafter). You will get 2% cash back at restaurants, 2% cash back on eligible travel purchases. Lastly, you will get 1% cash back on other purchases, including at Costco. If you have an Executive Membership from Costco, then you get additional 1% cash back on non-gasoline purchases at Costco.
For me, here is the cash back math. we spend roughly $1800 in gasoline per year ($150/month). Plus, give or take, we spend about $1200 on restaurants per year. Also, we spend about $1000 per year on Costco warehouse items.
$1800 @ 3% = $54
$1200 @ 2% = $24
$1000 @ 2% = $20
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Total: $94
Let's assume that I would have gotten 1% cashback anyway because I use Citi Platinum card that also provides cash back at least anywhere MasterCard is accepted. Assume that I would have received $34 in cash back if I didn't have the AMEX TrueEarnings card. This means, AMEX TrueEarnings Card is bringing me additional $60 in cash backs per year, roughly speaking.
American Express Premium Rental Car Insurance
The other major benefit their Premium Rental Car Coverage program that you can enroll in for free. If you use AMEX card for your rental car, then you can simply decline the rental company's collision and damage waiver which is very costly. In exchange for using AMEX card and your voluntary enrollment into the American Express Premium Rental Car Insurance Coverage, they will automatically charge you $24.95 flat-rate amount for the entire duration of your rental period for up to 42 days. This CDW covers your damage or theft for up to $100,000, which is a very generous amount. This coverage becomes your primary coverage so that you don't have to claim it on your regular car insurance. Read my post on Rental Car Insurance Alternatives.
Apart from these two main benefits, AMEX card offers other standard freebies such as travel protection, access to local currencies, warantees on purchases and more. But, these items alone are not worth getting AMEX card.
At this moment, I am still thinking if I should open another credit card. Few years ago, I went through the process of closing my cards because I wasn't using them and I did not want the hassle of carrying them. Now, opening this card has got me rethinking on whether the benefits outweigh the costs.
I have been reading your blogs on Roth IRA and college savings fund. I have been thinking about investment ideas and found your blogs very useful and succinct.
ReplyDeleteJust wanted to say that before I commented about this article. I have this AMEX card from Costco and would definitely recommend it. Even though it has a $125 annual fee, the cash-back savings add up. In addition to the cash-back you mentioned, I get a 2% cashback check from Costco on all in-store purchases. Also, I get discounted rates(5-15%) on rental cars through http://costcotravel.com.
Jameel,
ReplyDeleteThanks for your kind words. I hope the information helps you achieve your financial and retirement dreams. I agree on the benefits of the Costco Amex card. It is a good deal considering the cash back benefits.