We’re Beating our Cash Back Record with AMEX

by Kevin on June 4, 2008

We use our American Express Blue Cash card to pay for just about everything. I’m practically a walking billboard for the company — I love our Blue Cash card. Our card year runs August – July, if I remember correctly. With the Blue Cash card, cash back rewards are on two-tiered system. You earn one percentage for groceries, gas, and drug store purchases, and a separate lower percentage for everything else. The tiers look like this:

Blue Cash® from American Express®
Tier 1: $0-6,500 in charges: 1% gas, groceries, drug stores and 0.5% everything else

Tier 2: $6,500.01 or more: $5% gas, groceries, drug stores and 1.5% everything else

If you never carry a balance, this is a fantastic card to use. You are guaranteed to earn a little bit of money on every single purchase. However, you must remember to pay off the balance every month. Carrying a balance will incur interest charges, which effectively are reducing the cash back benefit for you.

Last year we earned somewhere around $432.17 worth of cash back. Last (card) year was a big year for us — we got married, went on a honeymoon, etc. This (card) year has also been a pretty big year for us, too. We bought a house last September and of course that involved a lot of charging to buy supplies, furniture, and all the knick-knacks to go with a house.

So far this year, we’ve earned $375.61! Back in March we had earned only $279 in cash back — so a nice increase. This is all for using our credit card just like we would a debit card. Gas and grocery prices have been increasing as well, but at least it is nice to know that we are earning a little bit of that money back. We didn’t pay for another honeymoon, so I’m not sure if we will beat our original cash back amount from last year, but we’ll see.

A quick reminder: credit cards are not evil. Credit cards are a tool, just like anything else. I love my AMEX card because it garners protection for my purchases online and offline and gives me a single payment for a majority of purchases. On top of that, no one has direct access to my bank account if the card is stolen.

Strangely enough, the day I wrote this article CNN Money put up one called “Raw Deal: Rewards programs are a real ripoff“… something I disagree with greatly. They may be complicated, and there are a fair share of bad ones out there… but they are not a rip off.

Someone explain to me how $400 in cash back — free money for every day purchases — is a rip off. And don’t tell me it’s because we spend more than we would otherwise because we stick to a budget!

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The Banana Roundup : Week 23 : Personal Finance
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JoeTaxpayer June 4, 2008 at 8:54 am

I am editing a post for my blog that I started when I saw that CNN story. I think stories like this appeal to emotion, good headline but poor content.

I use Amex Open. It rebates 5% on gas from dollar one. I calculate the rebate at $600+/yr on just that. Same 5% on any office supply store purchases.
A Fidelity Mastercard that gives 2% (they changed to 1.5 for new applicants, but I kept the 2%) into a 529 account. My child is 10 and we will have a full semester of college paid free with the cards rebates. We only charge what we can pay in full each month. As you point out, Dave Ramsey is just wrong on the evil credit card point.
Bad analogy – because drinking and driving is bad, and alcoholism certainly ruins many families doesn’t make my one beer at a dinner or party, bad.
There is responsible credit card use. We prove that. If one will be too tempted and run the card up on purchases they cannot pay in full, they are just like the alcoholic who cannot have one drink, and should use cash only. Me, I’ll enjoy the rebates.

Ashley @ Wide Open Wallet June 4, 2008 at 10:56 am

I agree with you. Credit cards are not evil. I don’t think that the rewards programs are a rip off. I didn’t read the CNN article, but if you know the rules of your rewards program and it doesn’t have an annual fee, then I think it can work for you.

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