American Express has an incredibly large and complicated product line with a slew of cards of different colors and costs which have overlapping benefits. I now find myself with 3 Amex cards (Gold Rewards, Blue Cash, In NYC) each with their own rewards system. The Gold Rewards card has a $110 annual fee but I got it free for 1 year. That's about to expire so I need to figure out what cards I should keep or apply for to maximize my rewards.
Amex Membership Rewards (MR) basically gives you one point for each dollar you spend. These points are redeemable for rewards. 5000 points gets you a $50 Amex rewards card. So basically it's 1% back in the form of a gift card. Just don't go buy a digital camera or something else in the Amex rewards catalog. That's when they really screw you. So from here on, we'll say MR is 1% back.
The Amex Blue Cash card gives you 0.5% cash back for the first $6500 you spend and then 1.5% cash back afterwards. So it's not until you spend $13000 in a year that this card is worthwhile. I say throw it out.
The Amex NYC card gives you a point for each dollar which is redeemable for gift certificates to NY restaurants. It's effectively 1% but your retailer options are limited, so throw it out.
Now, as for the MR cards...There are two which gives you MR with no annual fee: the Blue card (not Blue cash) and the Optima card. So either of these will work and are probably your best bet. The Gold Rewards card has other benefits like free roadside, etc. but those benefits are rarely used.
I've concluded that the best Amex deal will give you 1% back in amex gift cards. However, slightly more convenient is the Citibank Dividend Rewards card which gives you 1% cash back. They mail you a check whenever you have $50 built up. So if you are going for the 1%, the Citibank card is the way to go.
I love American Express and feel they offer the best protection on your purchases. For example if you purchase something and you break it (I broke my camera in Vegas once), they will refund your money. It works, I've used it. So I always prefer to use Amex cards for my large, risky purchases.
So I'll keep my Citibank card and apply for an Amex Blue card. Both give me 1% back in one form or another. For most people, this is what you should do. Now it gets more complicated...
I've always been very anti airlines miles. I never understood people who are all about their airlines credit cards since I never felt the miles were worth the 1% I can get back from Citibank (especially if you factor in the taxes you still pay, black out dates, etc). A domestic ticket costs $280 or 25000 points. 25000 points gets me $250 in cash. I'll take the cash and travel flexibility. Thanks.
Sean pointed out an interesting scheme for using your MR points to get airline miles and redeeming them for business class tickets which actually works out to be a great deal. For some reason, a couple airlines are charging very few miles for international tickets. Delta charges you 70,000 miles to India economy, or 120,000 miles for business class. An upgrade from economy to business costs 50,000 miles. Luckily you aren't flying on Delta (which is crap) but on SQ which is one of the best flights to India (and a partner of Delta).
A flight to India costs around $1500 and business class costs around $6500!
If you had 70,000 MR points, you could get:
$700 cash back
a ticket to India worth $1500
If you had 120,000 MR Points you could get:
$1200 cash back
a business class ticket to india worth $6500!!!
If you had 50,000 MR Points you could get:
$500 cash back
a upgrade to a business class ticket to india worth $4000!!!
On top of that, if you get the Starwoods Amex card, you get 1.25 miles per MR point. But it has an annual fee of $30. So it's only worth it if you spend $12k per year or more.
Even if you wouldn't have spent $6500 to fly business class, I think it's worth it for these 20-24 hour flights because otherwise you arrive totally beat. It effectively costs you $500 or less to upgrade which is a fraction of the normal cost.
So the bottom line is, the best way to use your miles is to upgrade tickets to business class (not to buy tickets with the miles). Amex lets you convert your rewards points to miles. Get the Amex Blue card which has no annual fee and gives you MR. With the Blue, you can always decide to skip this scheme and just get your 1% gift card.
All of a sudden, I'm all about my airline credit cards...
Update Just saw the Amex Blue Sky card. It gives you 1 point for every mile. And for every 7500 points you get $100 credit on your card for any travel purchases. This actually works out to be 1.33% cash back.
So if you want the cash back, get Blue Sky to get 1.3%. If you want miles, get Blue which has MR. If you aren't sure, get Blue since you can use your miles for MR or cash (though only 1%).
