Is the New Amex Gold Card Really That Great? A Detailed Comparison with Other Cards

Last week American Express released the new Amex Gold Card that offers some compelling new benefits. Quite a few people, and some bloggers, got excited and immediately announced that it would be the demise of the Chase Sapphire Reserve card. I did a quick analysis of the two as well, but frankly it’s hard to compare the two since the “extra” benefits (those beyond the bonus points in spending categories) are so vastly different. In this post I will attempt to quantitatively value the benefits of the Amex Gold Card to the Chase Sapphire Reserve, Capital One Savor, and Citi ThankYou Premier cards to determine which is best for you.

And before I go on, you should be earning a bonus of 50,000 points on the Amex Gold Card. Any blogger (or person) that tells you it’s 25,000 is either interested in making money off of you OR not informed enough to know that there’s a better offer. In either case, that blogger/person is someone you should look to avoid going forward since they’re not truly interested in helping you.

With that being said, I will be comparing the following four credit cards (with links to bonus offers that I’ll discuss below):

• New American Express Gold Card (Referral link with 50K bonus points)
• Chase Sapphire Reserve (50K bonus points)
• Capital One Savor ($500 cash back)
• Citi ThankYou Premier (60K bonus points)

Why did I pick these cards? I wanted to pick one card from the major banks and also cards that offer similar points-earning structures. I had a long list that included the Chase Sapphire Preferred and other cards, but whittled it down to these four offerings.

Most people that read this blog and others are probably familiar with three of the four, with the Capital One Savor card being the exception. That card is of interest here because it is a cash back card that offers the following benefits:

• $95 annual fee, waived the first year
• 4% back on dining
• 4% back on entertainment
• 2% back on grocery stores
• 1% on everything else

Here’s what’s included in the “Entertainment” category “a movie, play, concert, sporting event, tourist attraction, theme park, aquarium, zoo, dance club, pool hall or bowling alley. Also, making purchases at record store and video rental locations.” Reports are that this does not include web streaming services like Netflix. The Citi ThankYou Premier also offers bonus points for the Entertainment category.

When you throw in a $500 sign-up bonus for the Savor card, you can see why it might be worth looking into. So without further delay, let’s compare.

Bonus Categories for Each Card

First let’s go over the bonus categories that each card offers, along with the annual fee that they charge.

 

At this point it’s best to mention the most confusing aspect to people that are new to credit card and other loyalty rewards programs: not all points are created equally. You’ll earn the following with each card:

• Amex Gold Card: you’ll earn Amex Membership Rewards Points
• Chase Sapphire Reserve: you’ll earn Chase Ultimate Rewards Points
• Capital One Savor Card: you’ll earn cash back (statement credits or checks)
• Citi ThankYou Premier: you’ll earn Citi ThankYou Points

The Capital One Savor is easy enough to understand – it’s straight cash back. But the other cards earn points that are difficult to value because each program allows you to use them differently. The difference in transfer partners alone can make them difficult to value. For the purposes of this post, I’m going to use what I consider to be fair market value for each of these points currencies:

• Amex Membership Rewards Points: 1.25 cents per point
• Chase Ultimate Rewards Points: 1.5 cents per point
• Citi ThankYou Points: 1.25 cents per point

These are not how much value you can get out of these points. As experts in loyalty programs know, you can sometimes get 10 times more (or better) than the value listed above, especially when you book first class flights. The values above are instead how much people are generally willing to pay for these points on the open market. If you prefer to use different values, you can adjust my calculations to see what your outcome would be. But in general, if you were able to cash out your points, these are values that would be considered “fair” to do so.

Average Spending in Bonus Categories

Using online news articles about the average spending of Americans, I made assumptions on how much a person/household would spend on their credit card in the categories listed above. This is not scientific in any way, and again you’ll have to adjust for your own spending, but this is meant to be a general guide of how much someone who gets these cards would spend per month/year. I settled on the following averages/totals:

• Dining: $400 month/ $4,800 year
• Groceries: $450 month/ $5,400 year
• Airline Tickets: $200 month/ $2,400 year
• Other Travel: $150 month/ $1,800 year
• Entertainment: $200 month/ $2,400 year
• All Other Purchases: $600 month/ $7,200 year

Note, I also made the assumption that you’ll put all spend on one card. Using combinations of cards to maximize points on all spend is always a good idea, but maximizing value that way is a topic for a different time. This post is intended to clarify which card would earn the most rewards if used exclusively.

And again, I understand if you take issue with the amounts I’m using. If you’re getting a travel rewards credit card with bonus categories, you’re presumably spending a fair amount of money in those categories. Adjust if you feel the need to.

Now we know how many bonus points/cash back each card earns, how much those points are valued, and we’ve estimated monthly/annual spend in the various categories. With that information we can determine how much value we’ll get out of each card for spending:

Monthly Spending/Earning

Annual Spending/Earning

 

As you can see, the new Amex Gold card beats out the other cards in value quite handily, with the Sapphire Reserve trailing by over $100. The big difference between the two can be attributed entirely to the grocery earning – you’ll earn 21,600 points with the Amex versus just 5,400 with the Sapphire Reserve. If you took out this grocery spend entirely, the Sapphire Reserve would win this comparison.

This, however, is not the entire picture. There are at least a few other factors to consider that determine a card’s value. The first we’ll compare is the sign-up bonus.

Sign-up Bonus Comparison

The sign-up bonus is usually the single greatest source of value that you’ll get with a credit card, at least in it’s first year. Typically you’ll see offers of 50,000 bonus points or more (if not you should reconsider getting the card) and those points are valuable as you can see from the charts above.

The Amex Gold, however, has added an extra sign-up bonus at its launch: you’ll earn 20% back in restaurant purchases on the first $500 spent in the first 3 months. Put more simply, if you spend $500 on restaurant purchases in the first 3 months, you’ll get $100 back. It’s a somewhat unique bonus that adds significant value to a card that has a high annual fee that isn’t waived the first year. Here are the current bonuses to each credit card we’re comparing, along with the value of those bonuses.

Using the same point values as earlier in the post, you’ll see that the extra $100 restaurant bonus (again, I’m assuming if you’re getting this card that you’ll be able to achieve this extra bonus) makes it very competitive compared to the others. It’s also where the Capital One Savor card starts to trail off compared to the others. Unless you’re a staunch believer of “cash is king,” you should be swayed away by the value of the other sign-up bonuses.

But, of course, there are also other benefits that some of these cards offer. Let’s see how to quantify those.

Comparison of Other Benefits and Rebates

This section is really devoted to just the Amex Gold and Sapphire Reserve, as the other two don’t really offer any benefits that can be used annually/reliably. The Amex Gold card offers a $100 annual airline fee credit and a $10/month use-it-or-lose-it credit to a limited number of food delivery services and restaurants. The Sapphire Reserve offers a straight $300 travel credit on most travel-related purchases.

As I mentioned in my earlier reviews of the Amex Gold card, Amex is being customer-unfriendly with how they give bonuses. By that I mean they make it intentionally difficult to use these benefits by restricting them. For the airline fee credit, you have to first select the airline from a limited list, and it doesn’t apply to airfare (at least it’s not supposed to). The $10/month credit is for a limited number of restaurants and isn’t as easy to use as a straight annual credit would be. Amex is hoping and expecting breakage, which is the term used for benefits/credits that go unused.

Still, you can purchase gift cards for some airlines using the airline fee credit, so I think it’s fair to assume we can get the full $100 value out of that if you’re a frequent traveler. I’m not so sure about the $10/month credit to a limited number of restaurants. I think it’s more than fair to assume that half of these credits would go unused, so I’m going to value that benefit at only $60.

At the same time, the Sapphire Reserve offers Priority Pass Select lounge membership included with the card. If you’ve used these lounges in the past, you’ll know that it can be a lifesaver. On international trips it allows you to have a hot meal, free wifi, and a shower in many instances. More recently, Priority Pass has been adding restaurants at various airports around the country to its list of lounges. My brother used his recently at DEN with his wife and two kids to get nearly $100 off his bill:

So it’s hard to value this benefit. I can easily see how it could be worth $1,000 to some people or $0 to others that already have lounge access through other means. I’m going to take a conservative approach and use a value of $150 for this benefit.

Here’s where we end up for these extra benefits:

 

There’s no doubt the Sapphire Reserve wins this category, as one would expect for such a large annual fee. And again, these numbers could go up or down depending on how you travel, so adjust accordingly.

Final Valuations By Card

Now that we’ve covered the essential costs, bonuses, and benefits, we can compare the actual value of these cards. I would propose everyone look at these two different ways. First as a “first year value” that includes things like the sign-up bonus and any waived annual fees, and second as a “second year value” that does not include those. This will help you decide if the card is one to keep or not.

First Year Value

Here’s the calculation broken down:

• Year 1 Value = Annual value of points from spending + sign-up bonus points + Other Benefits
• Year 1 Cost = Annual Fee, if any
• Net Value = Year 1 Value minus Year 1 Cost

As you can see, the difference between the Amex Gold and Sapphire Reserve is negligible, and the ThankYou Premier was able to keep close because of its larger 60,000 point bonus. The Capital One Savor card, while offering compelling cash back categories, simply falls behind because the value of points is generally greater.

Again, this is a general guideline using my assumptions above. Your numbers could vary significantly if your spend/travel patterns are very different than what I detailed above.

Let’s see how the cards compare after the first year.

Second Year Value

Every card’s Net Value gets cut by more than half in subsequent years due to the lack of the sign-up bonus. The Amex Gold and Sapphire Reserve remain close, while the Citi ThankYou Premier drops off a cliff and the Capital One Savor remains noncompetitive.

 

Summary

So what did we learn, and what’s the “right” answer? I think we learned that it’s not black and white as to which card you should choose. It’s fair to rule out the Capital One Savor card, as its return simply doesn’t match up to the others. The Citi ThankYou Premier performed better than I expected, due almost entirely to the fact that it’s sign-up bonus is at 60,000 points right now. If you don’t have that card already, I think it’s worth getting at this higher bonus. You might also find additional value in the Citi Price Rewind benefit.

Then it comes down to the Amex Gold card and the Sapphire Reserve. If you’re deciding between the two, I think the answer comes down to how much you’ll use and value Priority Pass lounges. If you’ll be a heavy user of those lounges, the Sapphire Reserve is likely the right card for you.

On the other hand, if you’re in my situation and already had the Sapphire Reserve card, I think the decision is actually easier after this analysis. The first year value of the Amex Gold card is over $1300 – that’s something you want to take advantage of regardless of anything else. At that point your decision comes to whether or not to cancel the Sapphire Reserve. Let’s put it this way – if you’re reading this post you’re probably a traveler, and will get the entire $300 annual travel credit back. That leaves an effective annual fee of $150 for the Sapphire Reserve. If you value Priority Pass membership more than that, you keep the card. If you value it less, you can cancel it.

But at least in my wallet, I’m deciding to keep both cards. Yes the annual fees of $250 + $450 are starting to get extremely high, but keep in mind they’re offset by many benefits and, for new cards, sign-up bonuses. These more than compensate for the annual fees as you can see above.

I say go ahead and sign-up for the new American Express Gold card, and make sure you earn 50,000 bonus points to do so by using someone’s (even your own) referral link. Then make sure you read my last post on the Five Things to Do When You Get Your New American Express (Rose) Gold Card.