5 articles Credit cards

American Express Cobalt credit card review: a top points earner for certain people

The American Express Cobalt credit card earns 5 points per dollar spent at grocery stores and restaurants, and even with a $10 per month fee (essentially $120 per year), I find the points reason enough to continue to hold the card.

5 points per dollar on food-related purchases, but not 5% cash back

If you are somebody who pays off your credit card balance every month, then the card benefits are important while the interest rate is not. Top of the benefits list for the Amex Cobalt is that the points are redeemable for travel purchases at a rate of 1000 points for $10 back, or essentially each point is worth 1 cent. These travel purchases can be made anywhere and then you redeem points after the fact; or you can book through American Express’s travel agency and apply the points directly at the time of purchase.

This works out to 5% back on food-related purchases when your points are redeemed against travel purchases… until you deduct the $10 monthly fee (and technically you should factor in the travel purchases made on the card too). So for this to work for you, you have to 1) shop at grocery stores that accept American Express and/or eat out a lot at restaurants / coffee shops / bars that accept American Express; 2) make enough food-related purchases each month to offset the $10 monthly fee; and 3) make enough travel purchases each year against which to use those points. At $1000 per month spent at grocery stores and restaurants you get $40 of travel points after subtracting the monthly fee. That’s a 4% value. At $500 per month spent at grocery stores and restaurants you get $15 of travel points after subtracting the monthly fee. That’s a 3% value.

If you redeem the points for non-travel purchases, then 1000 points only get you $7 back. Using the $1000 grocery store and restaurant monthly spending example, that’s a 2.8% value. At $500 of food-related purchases, that’s a 2.1% value.

There are many other things you can do with the points, called Membership Rewards (MR) points. Because the Cobalt earns points to the “MR Select” tier, you cannot transfer the points directly to Aeroplan or other airline programs directly. You can, however, transfer to Marriott Bonvoy or Hilton Honors. In the case of Marriott Bonvoy, you can transfer at a rate of 1 MR point to 1.2 Marriott Bonvoy points. You can then transfer Marriott Bonvoy points to Aeroplan miles at a rate of 3 Marriott Bonvoy points to 1 Aeroplan mile. That means an MR point is worth 0.4 Aeroplan miles or more, depending on whether you transfer enough to get a bonus (if you transfer 60,000 Marriott Bonvoy points to Aeroplan miles, you get 20,000 + 5,000 bonus Aeroplan miles) or transfer during a promotional period. I won’t get into all the ways one can value or redeem these other points and miles.

You can also use the American Express Fixed Points Travel Program. This could get you a higher value per point.

Lastly, you can redeem points on the Membership Rewards store for items such as kitchen appliances and electronics. This is likely to get you a lower value per point!

Earning rates for other purchases

You get 2 points per dollar spent on travel, gas, and transit purchases, and 1 point for all other purchases. I try not to use the Cobalt for anything other than grocery store and restaurant purchases, as well as the travel purchases I’m going to redeem against. For some people, the Cobalt might be worth it for non-food purchases, but for me I prefer the rewards I can get on such purchases with other credit cards.

Monthly fees, not annual fees

The Amex Cobalt is unique in that it charges a monthly fee (of $10) rather than an annual fee or of course no fee at all. The monthly versus annual fee element does not make a material difference for me; in the past when I cancelled cards with annual fees, I always did so right before the yearly fee date. I’ve also heard of other annual fee cards giving you partial rebates if you cancel mid-way through the year.

Supplementary / additional cards are free, which can useful if you’re not the only one in the family who does the grocery shopping.

Sign-up bonus

The sign-up bonus for the Cobalt is spread across 12 months, presumably to match how the fee is monthly, and so that people are not tempted to cancel the card earlier than a year in. You get 2,500 bonus points for every month in which you spend at least $500 on any purchases on the card. This adds up to 30,000 points in the first year if you meet the minimum every month. That puts the minimum spend in a year at $6,000 to get the full bonus.

Points accrue immediately

It’s worth mentioning that you get the Membership Rewards points as soon as a purchase posts to your account. You can also use those points immediately. This is unlike some cards where the points might accrue monthly and in some cases you can only redeem them yearly.

Insurance benefits

If you’re under 65 years of age, the Cobalt provides out of province and country emergency medical insurance for trips of up to 15 days long. There is also flight delay insurance, baggage delay insurance, hotel/motel burglary insurance, car rental theft and damage insurance, and more. A missing travel insurance on the Cobalt is trip cancellation insurance.

Other benefits

Occasionally, American Express runs promotions, usually for extra points, on the Cobalt. There is no regular schedule or promise that such promotions will happen in the future, and sometimes they are targeted only at certain cardholders. As such, I try to consider them as “nice to have” rather than a main reason to keep the card. The promotions that I have benefited from were:

  • In December 2017, you got 10 points per dollar spent on food-related purchases (up to $2,000 in total spend), rather than 5 points per dollar
  • On November 26, 2018, you got 5 points per dollar spent on Amazon.ca (up to $500 in total spend)
  • From December 17-19, 2018 you got 10 points per dollar spent on Amazon.ca (up to $1,000 in total spend)

I’ve also seen offers for Etsy, Holt Renfrew, Levi’s, and special dining events.

Other similar and complementary cards

American Express is accepted at fewer places than Visa or Mastercard, and the Cobalt card becomes much less interesting if your main grocery store(s) don’t take Amex. There are competitor cards such as the Scotiabank Momentum Visa Infinite and the CIBC Dividend Visa Infinite, both also with annual fees, that give you 4% cash back (not points) on gas and groceries, although not restaurants.

If you make a lot of purchases in US dollars or other foreign currencies, there are quite a few cards that do not charge a 2.5% foreign exchange fee, such as the Rogers World Elite Mastercard (no annual fee), the Scotiabank Passport Visa Infinite ($139 annual fee), and the Hometrust Preferred Visa (no annual fee).

You could also optimize your earning rate in the other spending categories with cards tied to other programs like frequent flyer miles on WestJet or Aeroplan.

Canadian credit cards that waive foreign currency transaction fees

Most credit cards charge a 2.5% transaction fee on top of the exchange rate on US-dollar and other foreign currency transactions. There are a few credit cards that currently do not charge this fee; they are all Chase-issued cards:

They are worth considering if you do a fair amount of purchases each year outside of Canada. $1000 of purchases would typically cost an extra $25 in transaction fees; $5000 would typically add another $125 in transaction fees. Of course, there are many other factors to consider when choosing a credit card, such as rewards program, annual fee, insurance benefits, customer service, interest rates (if you do not pay your balance in full each month), and much more.

If you have a US-dollar bank account, you could also look into US-dollar credit cards, such as this one from BMO that has a $25 annual fee ($35 starting September 1, 2012) that is waived if you spend at least $1000 US in a year. This saves you the transaction fee for US purchases, saves you the exchange rate buy-sell spread (since you almost never get the mid-rate), and insulates you from exchange rate fluctuations. At the moment there are no Canadian-issued, US-dollar credit cards without an annual fee (except when part of a banking bundle or with a minimum spend).

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American Express Business Gold Rewards credit card review

The heavily advertised American Express Business Gold Rewards credit card has a few intriguing features:

  • a welcome bonus of 25,000 Membership Rewards points if you spend $3,000 in the first 3 months; convertible to Aeroplan miles, SkyMiles, or Asia Miles. 25,000 Aeroplan points is good for an economy ticket within almost anywhere in Canada and the US.
  • annual fee waived for the first year; supplementary cards free for the first year as well
  • earn one point for every dollar spent

American Express Business Gold Rewards card

I signed up for this card for the bonus points and to see what it was like to have an American Express card. A note on applying for a business credit card: if you don’t own a business, you can still legitimately claim to run a business under your own name as long as you have even a small amount of outside income. Even though I own a business, I did not apply for this card under that business name.

Premium service

American Express is known for having the highest-spending users (not me!), relatively high annual fees, and for requiring merchants to sign separate and sometimes exclusive agreements with them. As a result, American Express takes good care of its customers. Three main things stood out to me:

  • The application process was easy. You can apply online and the approval process happens either immediately or within about a week if they need to verify any details. Once you’re approved, your card arrives in about another week. Customer service for this process was straightforward and friendly.
  • The online management interface is fully-featured and easy to use. Tasks like viewing past statements, signing up for e-statements, viewing spending reports broken down by type of purchase, changing account details, and making account requests are intuitive and accessible.
  • Points appear immediately. You don’t have to wait for your next statement for your account be credited with points. Transferring the points to Aeroplan is simple, and sometimes there are even redemption promotions.

As simple as those things sound, many credit card companies and banks fail to achieve such a pleasant level of service.

Extra perks

The main perk that I’ve benefited from is AMEX’s Front of the Line for buying event tickets. For the average person, Front of the Line provides two main benefits: pre-sales access and reserved seating blocks during normal sales. This is quite nice to have, but treat it more like an extra option when looking for seats. Sometimes, using other types of fan pre-sale codes, or buying tickets during the normal sales period early or with good timing luck can yield better seats. Tickets purchased through Front of the Line privileges are sometimes but not always better.

It’s not that widely accepted

I was a bit fearful that American Express would have a low acceptance rate, compared to Visa or MasterCard. For me in Vancouver, Canada, AMEX is accepted at noticeably fewer places, so much so that it has become an annoyance to ask companies whether they accept the card.

Lots of commonly frequented places accept American Express, such as London Drugs, parking machines, major grocery stores, and gas stations. However, I’ve had to use a Visa or MasterCard backup at several restaurants, retail stores such as Swimco, the dentist office, an optician store, and Choices Markets. Also, some online merchants that accept credit card payments through PayPal might not necessarily accept American Express, due to the need to sign a separate vendor agreement. The rate of American Express acceptance at places that I’ve been to that accept credit cards is potentially as bad as 50%.

Annual fee

After the first year of no-fee bliss, the annual fee is $180 for the first card and $50 for each supplementary card.

Aeroplan points

I cannot comment on the value of SkyMiles or Asia Miles, but I do collect Aeroplan points. The value of an Aeroplan point is open to debate, and depends on how you use your points. If you’re looking for an airline rewards card or even just a rewards card, is it worth it to collect Aeroplan points? Consider the following:

  • The reward chart is quite general, as it divides routes into broad regions. For example, most long-haul economy flights within Canada and the USA can be had for 25,000 points — you’re getting the most value if you fly from one corner of that area to the opposite corner.
  • It’s more worth it to the Aeroplan credit card reward points if you’re also collecting Aeroplan points elsewhere!
  • You cannot redeem all of your points at once, so there’s always some left over.
  • You still have to pay some airline ticket fees. If you end up redeeming Aeroplan points for a flight that you wouldn’t otherwise have taken, you’re technically spending more and also polluting the earth more!
  • The pool of available Aeroplan seats is smaller than the total available seats.

Conclusion

Some areas that I have not touched upon include interest rates and insurance features. These are not very important to me at the moment.

The sign-up bonus is certainly valuable, as is the reward structure. If you’re looking to earn Aeroplan points on an ongoing basis, there are cards from CIBC (such as the Aerogold Visa) with a lower annual fee and that give you more points per dollar spent. Also, there might be some other American Express cards with a more suitable fee + reward calculation structure.

As for rewards in general, I prefer a cash back card such as the MBNA Smart Cash credit card, which has no annual fee. When you get cash back, you can choose to spend it on whatever you want, and you don’t have so much of an issue with leftover points.

The deal breakers for me with the American Express Business Gold Rewards were the annual fee after the first year, and the high percentage of companies that simply didn’t accept it.

And a final note: the shiny gold card is a bit too flashy for my taste! Sometimes I feel that when I bring it out, I’m trying to appear wealthier or more obsessed with status than I actually am…

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CIBC bizline VISA: the optimal no-fee, no-reward credit card for Canadian small businesses

When searching for a Canadian personal credit card, there are tons of options without annual fees. I can then pick and choose from those options for the one with the best rewards structure.

When it comes to a business credit card, however, the options are a lot more limited. A good place to start is the RedFlagDeals.com credit card directory.

I run a relatively small web development company and 3 of us needed to have credit cards. Mainly, we wanted to simplify the administrative hassle around continuously writing cheques to reimburse our business purchases, which include travel expenses, equipment and supplies, external services, and meals and entertainment. After a rather thorough search, we ended up choosing the CIBC bizline VISA. Here’s why:

No fee

The annual fee for the CIBC bizline VISA is $0. You can have up to 9 additional cards at no extra charge.

No rewards or points

Generally, getting rewards from a credit card is considered beneficial. But after we weighed the fees (no matter how nominal) against the rewards on other cards, it simply wasn’t worth the administrative effort to us. Accounting for the fees and managing and using the points, not to mention any possible taxable benefits coming out of the rewards if awarded for personal use, actually seemed like a cost.

Without rewards, we can keep the purpose of the cards simple and as intended.

Accepted at many places

While American Express has a few tempting cards, for the purpose of putting as many business purchases as possible on a card, VISA and MasterCard are simply safer bets.

Consolidated statements

With the CIBC bizline VISA accout, each cardholder gets his/her own card and card number in his/her name. However, all cards on our account are tracked on the same statement. This contrasted with some other cards we looked at, where each card had a separate statement. We’re small enough that we can quickly tell which charge was by who and for what, and it is administratively easier to only have to deal with one statement.

An added bonus is that the CIBC online interface is quite nice to work with.

CIBC bizline VISA online interface

You can even break down transactions by type:

CIBC bizline VISA online spend report

Simple application process

You can apply for the CIBC bizline VISA completely online. The process took less than ten minutes for us. It asked for information including:

  • Primary cardholder’s address, phone number, date of birth, and income
  • Additional cardholders’ address, phone number, and date of birth
  • Business information: years in operation, annual revenue, business type, nature of business, primary bank

We received our cards about two weeks later.

When we had previously investigated getting credit cards through our primary financial institution (not CIBC), they wanted us to go into the branch, fill out significantly more information, and do credit checks on all of us. To be fair, that was not the main reason why we went with the CIBC bizline VISA (and we didn’t have anything to hide), but it didn’t help.
————————————————-

Miscellaneous details

  • The CIBC bizline VISA comes with a PIN, which is the first time I’ve ever had a card with a PIN. Extra security, but also an extra number to remember 🙂
  • We don’t ever intend on using our cards for actual credit loans, but the interest rate on the card is between 1.5% and 11% above CIBC’s prime rate.
  • The card doesn’t include many insurance benefits. However, for things such as travel medical insurance, we use our normal benefits provider.

As a whole, the CIBC bizline VISA is simple and straightforward. Several of us charge our business purchases to it, and we pay it off every month. That’s it.

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Searching for the right credit card program

Credit cards can play an important role in your financial portfolio. There are many credit card programs out there willing to give you free stuff for using their cards. Using a credit card more than a debit card often makes sense these days given that a lot of chequing accounts have limited use amounts for debit transactions to avoid fees.

If you carry a balance on your credit card then the first priority for picking a card should be ones offering low interest rates. The potential points you could earn are not worth the interest fees you will be charged. I will not be addressing low interest fee cards in this post — only ones with a points system (usually meaning high interest rates).

When picking a credit card points system you need to cost out the reward you will receive in order to compare. If there is a fee associated with the card in order to receive the points program, in my experience, this never equals out to a financial plus.

I want to share a good points program card I have found in my research. It’s the CIBC Shoppers Optimum Visa card. You receive 3,000 bonus points for signing up and then receive 5 points for every dollar you spend. Interest rate is 19.5%. You also receive 50% more points when you use your card at Shoppers Drug Mart with your Optimum card. If you spend $15,000 a year on your credit card (which is the amount I was using to compare cards), you will receive 75,000 Shoppers points, this equals their highest reward level of $150. This reward ‘cash’ can be used to buy anything at Shoppers Drug Mart. You can likely earn more than just the 75,000 points for $15,000 because of bonus points and extra redeeming programs through Shoppers (for example at certain times of the year for the 75,000 points you actually receive a reward of $200). It gives you the most value to reach their highest reward level before cashing in, although technically you can start redeeming for ‘cash’ at 3,500 points (value of $5). See the regular points table here.

Points earned at Shoppers are good value for money for two reasons. First, items available for purchase at Shoppers Drug Mart are extremely varied (you have a lot of choice on what to buy). Secondly, although you can choose to buy ‘fun’ items you can also use it to buy necessary items that would already be in your budget, thus saving money (ex: toothpaste, shampoo, makeup etc).

Credit card point systems are most associated with travel rewards. However it can be to your advantage to search for cards giving you rewards at retail stores you actually use. At a $15,000 level of spending travel rewards points will just not offer you yearly value. It would likely take you 2 to 3 years to save up points to receive a mid sized trip. So although over the long run, you might gain more ‘cash’ value from these cards, the long wait before you can redeem does not always make it. If you have a higher level of spending you can put on your credit card, these travel programs may offer you more value. If you want to pick a travel rewards program you should pick one tied to an existing travel rewards entity (not a private one) – for example Aeroplan or Airmiles – this is because you will be able to earn points faster since you can earn in other circumstances such as when you take a flight that is not bought on points.

Some locations to start your research are CIBC (they offer a fairly large collection of cards with points programs) – and Citizens Bank (who offer some innovative points programs tied to charities).

The bottom line when searching out a credit card points system is to estimate how much you can put on a card a year, how many points that will earn you, and what the ‘cash’ value of those points are. This will help you make an informed decision and make your money do some work for you.

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