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.
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. 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.
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.
We covered our first month of spending in a post back in October, that first month saw us above $4,500 in spend. Now we look at month two – and we’re pretty close to that number again at just over $4,200 in spend between September 21 and October 20. That puts us around $8,700 for 2 months or about $52,000 for the year. About $2,000 less for the year than anticipated after our first month of spending but still well above the $30,000 cap on the 5x Eats & Drinks category.
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.
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. 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