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Tuesday, October 15, 2019

Tracking our spend on the American Express Cobalt Card to see how we fare with the $30K cap on 5x points


Not only does Rewards Canada rank the American Express Cobalt Card as the number one travel rewards credit card in Canada but it is also the number one card in our own wallets. Since it was introduced in late 2017 the card has been the one to match in terms of earning points. However since it is so good at earning points in the Eats & Drinks category American Express found themselves in a bit of a pickle.

Related: American Express Cobalt Card Resources on Rewards Canada


You see, by earning 5x points on Eat & Drinks it meant you could buy anything at a grocery store and earn 5x points on it. I even recommended going to the grocery store to buy gift cards for places you would shop at where you would only earn 1 point on this card or maybe 2 points on some other card.  The fact that you could do this didn't go unnoticed by some people in the miles and points community, namely manufactured spenders. Word is some people were putting through four figures on their card everyday at grocery stores buying prepaid cards that could be cashed out to pay down the balance on the card. Good for them, there are loopholes that can and will be taken advantage of whenever a good credit card or loyalty program earn or burn perk is available. It is the nature of this game and when it's out there, people will use it and then the programs or card issuers will do what they can to quell that loophole. That is exactly what American Express did earlier this year when they announced the 5x points category multiplier will be capped at $30,000 annually. Since August 20th that cap has been in effect. For the vast majority of Cobalt cardmembers this isn't a big deal at all - they fall under that amount and won't even have to worry about it. The manufactured spenders - well that's a different story, you know how they feel about it. But there is also a third category, those who legitimately spent a lot on food and drink. There are people who can easily spend more than $30,000 a year on food and drinks and they range from large families to affluent families to salespeople taking clients out to lunch or dinner on a daily basis and a whole slew of others.

Related: Are the American Express Cobalt Card category multipliers available globally?

So I decided to see where the Rewards Canada family will fall into, the first category of not even having to worry about hitting $30K or the third category of easily spending more than $30K per year. We don't do manufactured spending in our family as we only occasionally purchase gift cards at grocery stores, and by occasional I mean maybe 2-3 per year for ourselves and 3-4 for our kid's teachers and coaches. Ultimately, knowing our spending habits I know we'll fall into the third category of spending over $30K on the card in this category. Now that we are a little past one month of the cap coming into effect I looked into our spending for the 5x Eats & Drinks category to see how we were coming along. Well, I can tell you that from August 20 to September 20 we spent quite a bit. In fact we were north of $4,500. That puts us at $54,000 in that category for a 12 month period which means $24,000 of that spending would only earn 1 point per dollar instead of 5.

So what should we do, or you do, if you are in the same boat?

My plan is to utilize other cards once we are that $30,000 level on our main Cobalt card. The first card we will use once we hit that level will be our other Cobalt card! You see, my wife has her own Cobalt card account and I have mine. Her Cobalt card is the primary one in the family (my kids and I each have supplementary cards for it) but once we get to $30K on it we can start using my Cobalt Card. By having two separate Cobalt Cards we have effectively doubled our 5x points earning capability to $60,000 per year. Sure we have to pay two annual fees but the points earned are worth a heck of lot more than the fees paid. We also have the option of using The Platinum Card from American Express that are in our wallets for dining purchases since it earns 3x points on those purchases. I may actually go ahead with that last option for some of the spending since the 3x points on The Platinum Card equate to 3 Aeroplan Miles per dollar on dining, which in most cases is more than the Cobalt card if you convert Cobalt's Membership Rewards Select points to Marriott and then to Aeroplan.

Related: Membership Rewards Use Points for Purchases explained

I will continue to track the spending on a month to month basis to see where this will go over the course of the year. Was this first month just an anomaly being so high or will it continue at that rate? By tracking I'll be able to see when we get close to hitting $30K and start planning on pulling out the other cards for payments.

Do you have the American Express Cobalt card? Where do you sit with it and the new $30K cap? How are you doing after one month? Is it something you don't even have to worry about? Are you PO'd that your manufactured spending has been capped? Or are you just a big time spender and wondering what to do when you hit that $30K? Talk to us in the comments section below!

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