New: Cobalt American Express

For the longest time, I've been using the Scotia Bank American Express Gold. Briefly, it has a 99$ annual fee, comes with premium insurance for tickets purchased with the card, and gives you a 4% return on gas, grocery, dining, and entertainment expenses. You have to redeem your 4% rewards in the way of travel in order to get the highest rate of return. Gas, grocery, dining, and entertainment cover a lot of purchases.

The downside to this card is that a) it is an AMEX (which is not as well accepted as other places), and b) non bonused spend receives a 1% return. If you buy your travel on this card, you will get great travel insurance, but you will get a poor rate of return.

Introducing the American Express Cobalt Card

 
I was recently looking at the American Express Cobalt Card. It's a new card that was recently introduced. You earn Membership Rewards points for the following:

• 5 points per dollar spent on dining and grocery store purchases
• 2 points per dollar on gas station, travel purchases, and commuter / transit purchases (no other credit card offers 2% return on travel with all the insurance premiums).
• 1 point per dollar on everything else

Again, not everyone accepts AMEX, which continues to be a major limitation. Its annual fee is slightly higher than the gold card at 120$ a month, payable in 10% installments.

What does one do with Membership Rewards (MR) points?

• Convert them at a 1:1 ratio with Air Canada's Aeroplan or Hilton HHonor's programs
• Convert them at a 1 : 0.75 ratio with Delta, British Airways, Etihad, Cathay Pacific, and Alitalia's frequent flyer points
• Convert them at a 1 : 0.5 ratio for Starwood Preferred Guest  
• Convert them to gift cards at a 0.83% return (3000 MR points for a 25$ gift card -- a poor value)
• Buy toasters at an even worse value

I have recently fallen out of favour of hoarding airline miles because of the difficulty in finding availability for fixed date travel (my work is not very flexible in what days I can leave). So one of the more interesting finds was their own reward chart.

• 15,000 points (max ticket value = 300$) for a select list of popular routes
• 20,000 points (max ticket value = 300$) for a travel to same or adjacent provinces/states
• 40,000 points (max ticket value = 700$) for North American travel
• 60,000 points (max ticket value = 900$) for European travel
• 100,000 points (max ticket value = 1,700$) for Asia/Pacific/Australia travel
• Or 1% back rebated to any other charged travel

If prices are above the max ticket value before tax, then you pay that in addition to the taxes.

This is potentially quite lucrative because it can be up to a 2c/point return on the popular YVR-YYC route (tickets are almost always above 300$ before taxes during times like Christmas). And if you earned 5 points per dollar spent at a restaurant, then that's potentially a 10% return.

The points earned on these airplane tickets themselves earn points, and they are not subjected to capacity controls.

I'm thinking about making the switch ...

revisiting old posts, updates: plastiq, wings, scotiabank amex gold

just wanted to quickly post to update on a few of my previous posts:

1. paying taxes with your credit card via plastiq.com. i did this back in april, and everything went through. as you may recall, they charge an additional 2% surcharge to make up for the fees. however, after doing the math, since i'd be given a cash rebate of 2% on the purchase price and the additional surcharge, i ended up saving $0.42 on my taxes. i was a bit worried when my notice of assessment revealed a balance still owing, so i registered for a canada revenue agency (CRA) account to investigate. as it turns out, my taxes were paid to the CRA on the same date as i paid them. i have no balance owing. and it turned out to be regular purchase as opposed to a cash advance. so plastiq.com works as advertised. i'll use it again next time.
2. buying products and getting them free using a mail-in-rebate. this time, it was for the quantum dish soap. i bought the product for around $6. and they rebated both the taxes and the postage. received the check $7.32 today. 
3. i did not end up doing the yyj-yvr-sea-yvr run for "aeroplan's earn your wings" contest. at 3.23c/mile and a full day's worth of travel, it didn't seem to be worthwhile to me. plus, as mentioned in previous posts, if you can't actually redeem the mile itself because of lack of seats, then the actual value of the mile approaches zero.
4. applying for and using the scotiabank american express gold card. as per my previous post, i did indeed keep using my 2% MBNA cash back card for most of my everyday purchases. for gas, grocery, dining, and entertainment, i signed up for the scotia bank card for 4% travel rewards. the card works like a charm and indeed rewards me for what i should be rewarded for. no troubles there. however, the application process was frustrating and repetitive.

• they wanted proof of income, so i had to fax in my pay stub. i've had that happen before, so that's fine
• they wanted proof of my identity, so i had to go into the branch to meet with a banking representative (not just an ordinary teller) so that i could sign some forms. i had to go in during specific work hours for this. they also wanted me to provide proof of address and employment, and so they suggested that i bring my pay stub in again. i take that as evidence that their departments don't talk to one another, which is never a good sign.
• they wouldn't let me have online access to my account initially as i was not a scotia customer. however, when i came back at a later time to submit a voided check for pre-authorized debit, without batting an eye, the teller simply created a customer card and login for me. so for now i'm a happy customer.

so i said good-bye to my SPG amex yesterday ...

i love the starwood preferred guest (spg) program. the starwood group of hotels include all the sheratons, westins, four points, alofts, Ws etc of the world. like airline mileage programs, the more you stay, the more points you earn, the more free nights you get. it's very similar to the marriott rewards, the hilton hhonors, the priority clubs etc. i know it sounds so basic, but i'm so surprised by how few people know about these hotel programs.

anyway, i like it because a free night at one of their mid-range hotels is roughly 7,000 points, sometimes you get them cheaper, sometimes you get them pricier. my SEA hotels would normally cost 115$  and at 7,000 points, it's like getting a 1.5c per point value. when i go to SFO, i lucked out and got a 250$ hotel room for 3,000 points, or 8c per point value. the other real value is that one can transfer these points to one of 29 airline programs, most at a 1 spg point to 1.25 airline mile ratio. but that's only a like. i love it because of the potential perks of status. that's for another post.

for three years, i was carrying around the spg amex card. it was a nice card because you earned 1 point per dollar spent (so if you carry through the math, it's like getting 1.25 aeroplan or american aadvantage miles per dollar spent on the card). in contrast to the CIBC aerogold visa or the RBC avion visa which only gets you, roughly, 1 airline point per dollar spent.

the first year i had the card, it was a promo: first year's annual fee waived. the second year, i naively paid the 120$ annual fee in return for 5,000 bonus points. the third year, i called in threatening to cancel the card, and they quickly gave me 125$ in banana republic gift cards. it was renewal time, and they were refusing to do it again.

time to quickly do the math. 12,000 cents (120$ annual fee) just for the ability to earn the points. i spent 24,000$ on the card last year, so i suspect it will be the same next year). 12,000/24,000 = 0.5c per point earned. so the value of each point earned was reduced by 0.5c. and given how difficult booking reward seats can be sometimes (i value an airline mile at ~2c per mile nowadays), how it's rare to get such a great value on hotel room nights, and how my current no-fee MBNA mastercard gives me a 2% return in cash back anyway, i decided that it was better to stick with my cash back card.

but now i'm left wondering whether i want to replace the amex with something else. scotia bank's amex gold card looks really appealing. if i can spend 5,000$ a year on groceries, gas, dining, and entertainment, i'll break even with the annual fee. and then everything else will be a 4% return. it's something to think about.