Are the Amex cashback cards better than other rewards cards? And which of the two Amex cashback cards is best?
Last weekend we ran a general article on the best cashback credit cards – click here – looking at American Express, Visa and Mastercard options. This also looked at how they compare to the best Visa and Mastercard miles and points cards.
Today I want to take a more detailed look at the American Express options.
We tend not to focus on the two American Express Platinum Cashback cards much on Head for Points because they do not offer miles or points.
Miles and points from credit cards are not free
Avios, miles and points earned from credit cards are not free. You might think they are, because you have not explicitly handed over any money for them, but you have sacrificed something else – the money you would have received from using a cashback credit card instead.
Cashback Visa and Mastercard products are not hugely generous following the cap on interchange fees paid by retailers a few years ago. Most have cut their rewards down to 0.2% of your spending (ie 20p per £100) or so, which is what you get from John Lewis, Amazon or Barclays.
How do the American Express cashback credit cards work?
American Express has two different Platinum Cashback cards – the American Express Platinum Cashback credit card and the American Express Platinum Cashback Everyday credit card.
What is the difference between the two Amex Platinum Cashback cards?
Basically, the annual fee and the cashback tiers.
The Cashback card (£25 fee) pays you cashback at the following rate:
- 5% cashback on all your spending in the first three months, up to £2,500 of purchases
- 1% back if you spend under £10,000 from month 4 to month 12 (and annually thereafter)
- 1.25% back on your spend over £10,000 from month 4 to month 12 (and annually thereafter)
The Cashback card comes with a £25 annual fee. The Platinum Cashback credit card has a representative APR of 28.2% variable, including the £25 fee, based on a notional £1,200 credit limit. The interest rate on purchases is 22.9% variable.
The Cashback Everyday card (free) has a tiered reward system:
- 5% cashback on all your spending in the first three months, up to £2,000 of purchases
After the first three months, you will earn:
- 0.5% on the first £5,000 of spend (but you get nothing if you spend under £3,000)
- 1% back on your spend over £5,000
Cashback is paid in a lump sum at the end of each card year.
The Cashback Everyday card is free. It has a representative APR of 22.9% variable.
Which is the best card to get?
Time for a quick bit of maths.
The break-even point for getting the £25 card is £10,000 of spending per year. For everyone except the highest spenders, you are better off with the free Platinum Cashback Everyday card.
spend £9,000 per year and you will receive £65 on the free Platinum Cashback Everyday and the same £65 on the Platinum Cashback card, adjusting for the fee
spend £11,000 per year and you will receive £85 on the free Platinum Cashback Everyday and £87.50 on the Platinum Cashback card, adjusting for the fee
What is the sign-up bonus?
Both cards have the usual generous American Express sign-up bonuses:
The Amex Platinum Cashback card pays you 5% back on your spending in the first three months, to a maximum spend of £2,500 (so capped at £125 back).
The Amex Platinum Cashback Everyday card pays you 5% back on your spending in the first three months, to a maximum spend of £2,000 (so capped at £100 back).
However, unless you are planning on spending over £10,000 between month 4 and month 12, I would not necessarily be tempted by the extra £25 as the free card is better in the long term.
What more should I know?
You do not receive your cashback month by month. Instead, it is paid onto your Amex statement at the end of each card year. You cannot cancel the card early because you won’t receive your cashback.
However, this does not mean that it is more difficult to cancel the Cashback card with the £25 fee. This is because Amex will refund your fee, pro-rata, when you cancel. If you feel like dumping the card at any point, wait until the start of your next card year for the cashback from the previous year to arrive. You can then cancel, and should get back at least £23 of your £25 fee as a pro-rata refund.
American Express no longer has a minimum income requirement for its cards.
I am not suggesting that you should drop your existing reward credit cards and switch to cashback cards instead. It depends what value you place on your miles and points as well as the other benefits offered by these cards, such as the 2-4-1 voucher on the British Airways American Express. It is always good to be aware of the alternatives though.
If you do decide to go for one of these cards, I recommend the free Everyday card unless you plan to spend more than £10,000 per year.
Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibly to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points. The site discusses products offered by lenders but is not a lender itself. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as an independent credit broker.