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The American Express® Gold Card made waves when it was reimagined a couple of years ago. The oft-forgotten card in the American Express lineup was suddenly a top pick for restaurant rewards, beating out Chase's then-leading Chase Sapphire Reserve® by offering 4x Membership Rewards® points per dollar.
But that wasn't all it did. The card became competition for the issuer's own Blue Cash Preferred® Card from American Express with 4x points per dollar on groceries, on up to $25,000 in purchases each year. Add in the $120 dining credit, and the Amex Gold Card instantly became a foodie must-have.
Of course, with its $250 annual fee, it wasn't just purchase rewards that lured in cardholders like me. No, I was smitten with its sign-up bonus: a whopping 50,000 Membership Rewards® points (it's up to 60,000 now). Pre-quarantine life was full of travel, and enough points to make it to Europe in business class was an easy sell.
Now that the sign-up bonus novelty has worn off, however, it's time to really determine if my Gold Card is holding up its end of the annual-fee bargain. If I can't justify the cost through purchase rewards, perks, and cardholder benefits, I'll need to ditch the dead weight and look for some alternatives.
Is the $250 annual fee really worth it?
Given the breadth of the market for cards without annual fees, it's entirely possible to earn exceptional credit card rewards without ever paying a cent in annual fees. That said, annual fees can be well worth the price if you're getting enough rewards and benefits from your card.
My first year with my Gold Card, I turned my sign-up bonus and purchase rewards into thousands of dollars in free flights -- well worth that first year's fee. This year, I earned significantly fewer rewards: My 2020 total was around 14,500 points, less than a quarter of the previous year's haul.
As far as the dining credit is concerned, well, it turned out to be pretty hard for me to earn. For one thing, while it's called an annual credit, it actually has a monthly cap of $10. Moreover, most of the restaurants aren't available in my area, and I'm just not a huge Grubhub fan. I only took advantage of $30 of the $120 potential maximum.
While these are the obvious perks, the Amex Gold Card does offer a few other benefits. For instance, cardholders get discounts on stays at Amex's Hotel Collection, enjoy baggage insurance, and can take advantage of Amex's Global Assist® Hotline. Unfortunately, 2020 didn't allow me to leverage any of these perks -- and 2021 isn't looking so hot for travel, either.
With limited usable benefits and a dining credit that I simply don't maximize, my Gold Card's value relies pretty heavily on its purchase rewards. But determining how much those rewards are worth isn't a simple task.
The nebulous value of rewards points
The crux of the question about the overall value of the Amex Gold Card is the value potential of Membership Rewards® points. But that value is entirely subjective, relying on how you plan to actually redeem your points -- and what kind of deal you can find in the process.
At worst, the 14,500 points I earned could be redeemed for cash back through Amex at a rate of $0.006 per point, or $87 dollars in cash back. This is an absolutely terrible way to redeem Membership Rewards® points and should be avoided unless there's truly no other option.
At best, my 14,500 in points could be worth up to 20,300 hotel or airline points, assuming a partner transfer and a good transfer bonus (30% to 40% transfer bonuses are offered for various partners during the year). Depending on the hotel or airline -- and the specific redemption -- transferring could yield $0.04 per point or more, giving my points a potential value upwards of $580.
When I opened the card, I did so with every intention of putting my rewards to smart use through travel. But the world being as it is, those intentions aren't likely to come to fruition any time soon.
This begs the question: Do I hold onto my Gold Card in the hopes that I'll get my annual fee's worth of value from those rewards some time in the unknown future? Or do I cancel now, cash out for cash back -- and cut my losses? Or is there a third alternative?
Keep earning and hoping, cancel and run -- or split the difference?
In the end, I think I'm going to go with door number three: Get another Membership Rewards® card -- one without a $250 annual fee. As it happens, as long as I have at least one card that earns Membership Rewards® points, I can keep my existing points. Amex pools your Membership Rewards® across accounts automatically.
You can't do a product change (i.e., keep your account but swap your card for another one from the same issuer) from a charge card to a revolving card, so a new card is the only option.
If I didn't have another grocery rewards card, I'd probably go with the Amex EveryDay® Preferred Credit Card. It offers 3x points per dollar on groceries, albeit with a lower $6,000 annual spending limit, and a more reasonable $95 annual fee. The no-annual-fee Amex EveryDay® Credit Card would also be an option.
Since I already have a Blue Cash Preferred® Card that almost pays for itself with streaming rewards, I'll wind up transferring my grocery spending there for the 6% cash back (the same $6,000 annual spending cap applies). But the Blue Cash Preferred® earns cash back, not Membership Rewards®, so I'll need to add on a new points card, too.
For that, I'm leaning toward the Amex Blue Business® Plus card. Being self-employed means I'm a sole-proprietor, making a business credit card an option. And the Blue Business Plus® is a solid no-annual-fee card that earns 2x points per dollar on every purchase for the first $50,000 in purchases every year.
So, by replacing my Gold Card with a Blue Business Plus® card, I could eliminate an annual fee, save my points, and earn bonus rewards on all my business expenses -- even those that don't fit into most bonus categories. Win-win-win!
