American Express entered the cash back credit card market in 2014 when it introduced its no-fee SimplyCash Card along with an annual fee card called SimplyCash Preferred. Today, Amex announced some changes meant to enhance the value of its SimplyCash Preferred Card. The feature most widely promoted will be its new 2 percent cash back rate on all purchases. What quietly changed is the annual fee increased by $20 and the amount of cash back you can earn during the bonus period has decreased by $100. Here’s what’s new and how it all breaks down:
New SimplyCash Preferred Card by American Express
As mentioned, the biggest change is that cardholders can now earn 2 percent cash back on every purchase in any category with no limit on how much cash back you can earn at 2 percent. A six-month introductory bonus period gives cardholders 5 percent cash back on all purchases in any category up to a maximum of $300 cash back ($6,000 spent during that period). The annual fee is now $99 (up from $79) and supplementary cards are free. Cash back earnings will continue to be applied to your account annually as a statement credit.
How much can you earn with this card? Let’s assume a new cardholder spends $2,000 per month on the SimplyCash Preferred Card in the first year:
- Bonus six months x $1,000 @ 5 percent = $300 cash back
- Bonus six months x $1,000 @ 2 percent = $120 cash back
- Remainder of the year x $12,000 @ 2 percent = $240 cash back
- Total cash back in first year = $660
Subtract the $99 annual fee and the new cardholder will have earned $561 in the first year – a nice 2.34 percent earn rate on your spending. In subsequent years, with no bonus period and just a straight 2 percent cash back rate, the cardholder will earn $480 cash back, and when you subtract the annual fee will be left with $381. That’s an average earn rate of 1.59 percent on your spending.
*It should be noted that existing cardholders will continue to pay a $79 annual fee. Former or current cardholders can apply for the new card, however they will not be eligible for the 5 percent welcome rate period.
Old SimplyCash Preferred Card
Prior to today, the SimplyCash Preferred Card from American Express came with a $79 annual fee and offered 1.5 percent cash back on all purchases. The six-month introductory bonus period gave cardholders 5 percent back on all purchases (any category), up to a maximum of $400 cash back ($8,000 spent during that period).
Someone who spent $24,000 per year on the SimplyCash Preferred Card would have earned $640 cash back in year one. Take out the $79 annual fee and they’re left with $561 in the first year – the exact same total as one would earn with the New SimplyCash Preferred Card.
In subsequent years cardholders that spent $2,000 per month would have earned $360 in a year ($281 after the annual fee). That’s $100 less than you can now earn each year with the new card. So for ongoing and everyday use, the New SimplyCash Preferred Card from American Express is definitely an improvement over the old version of the card.
How Does the New Card Stack Up?
The 2 percent cash back rate on every purchase also puts this card inline with the MBNA Rewards World Elite MasterCard, a card which also offers 2 points for every dollar spent and comes with an annual fee of $89, and is widely considered to be one of (if not the) best cash back credit card on the market.
The main difference between the two cards comes down to the welcome bonus: MBNA offers 10,000 bonus points ($100), while Amex offers the 5 percent cash back welcome rate (up to $300) for the first six months. If one can maximize the welcome rate on the SimplyCash Preferred Card ($1,000 per month in spending for six months) then the $200 additional cash back dollars earned will more than make up for the $10 per year advantage that the MBNA Rewards World Elite MasterCard offers after year one.
Overall the changes to the SimplyCash Preferred Card seem positive as it puts this card right back into the conversation for the best cash back credit card on the market (along with MBNA Rewards World Elite MasterCard and the Scotia Momentum Visa Infinite). As always, where you do your shopping matters and so if you shop regularly at retailers that do not accept American Express cards then this card isn’t for you (Costco and Loblaws stores come to mind).
Given the recent news of Tangerine downgrading its Money-Back Card, and Chase closing its Amazon.ca Rewards Visa to new applicants, this is a welcome change for the Canadian rewards credit card market and one that should be received positively from fans of cash back in particular.