Okay, I have analyzed a few credit cards and a number of people have posted comments about the American Express, so I am going to write about it now too.
I have a whole line of credit card posts trying to figure out which travel rewards program gives the best value. In my last articles, I came to the conclusion that the CIBC Aeroplan Visa cards probably work the best for most people, but it still depends. You can read my Air Miles Versus Aeroplan article to see more about it.
American Express
I was surprised that I didn’t know about this card yet. Basically, it is a no fees credit card that pays one airmile for every $20 spent or for a $50 annual fee you can get 1 airmile for every $15 spent.
Compared to Mosaik Mastercard
There is no comparison. The American Express Air Miles card is better. Mosaik’s is no fees for 1 airmile for $40, $35 for 1/$20, and $75 for 1/$15. In my calculations for how much you would have to spend to make the feeds worth it, I figured out it was at least $4,000/year and upwards of $12,000/year. With the AMEX, you get 1 for $20 right off the bat.
Should I Upgrade My American Express Air Miles Card
First you have to ask how much you value an airmile. I personally value them at around $0.20 each. You can read about how in my Collecting Air Miles and their Value article.
If you pay the $50 fee every year, you need to spend enough to at least recover that value in extra airmiles you would get from being upgraded.
At $0.20 per airmile, this means you need to earn at least 250 more airmiles over the course of the year. The magic number for this is $15,000/year. So if you spend over $15,000 a year on your AMEX card, then it is worth the upgrade, because you will get that amount back in Airmiles. This isn’t exact, it depends on what you use your airmiles for. Entertainment rewards have higher return than travel and gift cards, but you need to figure this out on your own.
The raw formula where V is the value of an airmiles is:
MoneySpent = 3000 / V
So 3000 divided by what you value an airmiles to be will be the amount of money you need to spend to justify the annual fee of $50. If you want the proof of this formula, post a comment or send me a message through the contact page.
Return Rate for the AMEX Airmiles Card
This is a percentage I calculate as to how much money you are getting back. Since I value an Airmile at $0.20 and you get 1 for every $20 you spend on the basic card, this comes out to exactly a 1% return rate. The same as a lot of the 1% cash back cards. Compared to Aeroplan and the Airmiles cards though, this is the best rate for a “no fee” card. Pretty hard to beat.