Is 4X worth $250 per year? How much are those Amex Gold 4X categories (grocery & dining) worth?

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The new American Express® Gold Card offers an eye-popping 4 Membership Rewards points per dollar for spend at restaurants and grocery stores in the United States (grocery store 4X is limited to $25K spend per year).  That’s great.  Unfortunately, the card also offers a great big annual fee: $250.  Is 4X worth that fee?

First, consider that the card offers other valuable benefits:

  • $120 dining credit: $10 per month credit for spend at GrubHub, Seamless, The Cheesecake Factory, Ruth’s Chris Steakhouse, and Participating Shake Shack locations
  • $100 Airline Fee Credit: Get reimbursed for airline fees charged by your selected airline, up to $100 each calendar year.

If you already spend at least $10 per month with one of the dining credit merchants, then the dining credits should be nearly as good as cash back to you.  Otherwise, you will likely value this benefit far less than face value.

Similarly, the airline fee credit could be almost as good as cash if you know how to take full advantage of it (see: Amex Airline Fee Reimbursements. What still works?). Otherwise, you’ll probably value this benefit well below $100.

Personally, I’m sure that I’ll easily get the full $120 in dining credits each year.  And, I’ve gotten good at getting full value from airline fee reimbursements.  Still, it takes some effort to make sure to get all of those reimbursements, so I woudn’t value them at face value.  My advice is to decide what price you would pay if you had the option to buy a membership to these benefits.  For me, that would be maybe $80 for the dining credit and $80 for the airline fee reimbursement.  That leaves me with $250 – $80 – $80 = $90 that I would have to justify to keep this card year after year. If the card’s 4X categories are worth significantly more to me than $90, then I should keep the card.  Otherwise, I should cancel.

How much are 4X Membership Rewards points worth?

4X Membership Rewards points per dollar is exciting only to those who value Membership Rewards points at more than 1 cent per point.  If you use your Membership Rewards points to buy gift cards, merchandise, or travel (with one exception) then you shouldn’t value Membership Rewards points highly at all.

Others will see 4X Membership Rewards as an awesome perk:

  • American Express Platinum Card® for Schwab card holders can cash out points for 1.25 cents each.  4X value at 1.25 cents: 5% cash back.
  • Amex Business Platinum card holders can get a 35% points rebate when they redeem points through Amex Travel for either a First or Business class flight on any airline, or for any flights with their selected airline.  This makes points worth slightly over 1.5 cents each towards select airfare.  4X value at 1.5 cents:  6% back towards select airfare.
  • All Amex Gold cardholders can transfer points to airline partners.  The value of such transfers can range from very poor (less than 1 cent per point) to very high (e.g. 4 cents per point or higher).  We think that it is reasonable to expect to get 1.82 cents per point value, or more (see: Reasonable Redemption Values).  4X value at 1.82 cents:  7.28% back, towards award flights booked with transfer partners.

How much you value 4X Membership Rewards points depends on how you would use the points (see above).  Conservatively, I think it is fair to say that Membership Rewards points are worth at least 1.25 cents each.  After all, even if you don’t have a Schwab Platinum card, you can sign up for one and collect the 60K welcome bonus to more than offset the $550 annual fee, and then cash in all of your Membership Rewards points (across cards) at 1.25 cents per point.

So, if we agree that Membership Rewards points are conservatively worth at least 1.25 cents each, then we can say that earning 4X Membership Rewards is like earning at least 5% cash back.  How does 5% back compare to other alternatives for restaurant and grocery spend?  Let’s take a look…

4X Restaurants (US only)

Our Best Category Bonuses page shows cards that earn more than 2% back at restaurants.  The best of these, at the time of writing, and aside from the Amex Gold card are:

With 4X Membership Rewards being valued conservatively at 5% back, you can see that the Amex Gold card offers .5% to 1% more rewards for dining than its best competitors.  Since the Uber card has no annual fee, it arguably makes the best comparison to see what 4X Membership Rewards are worth, otherwise we’d have to factor in each alternative card’s annual fee in the comparison.  Paragraph summary: The 4X Membership Rewards points at restaurants benefit is worth 1 cent per dollar above the best fee-free alternative (the Uber Visa).

How much is this benefit worth to you?  Estimate your annual restaurant spend within the US and multiply by 1%.

Example:

  • You spend $150 per week at US restaurants
  • = $7,800 per year
  • x 1%
  • = $78 per year more in rewards than you would earn with the Uber Visa

4X Grocery (US only, $25K per year max)

Our Best Category Bonuses page shows cards that earn more than 2% back at grocery stores. The best of these that are still available at the time of writing, and aside from the Amex Gold card are as follows…

Best cards with low bonus category annual limits:

Best cards with no annual limits (or very high limits):

As we did with the 4X dining analysis, let’s use the best no-fee card for comparison.  That would be any one of the uncapped 3% cash back cards listed above.  When we value 4X Membership Rewards at 5%, we can see that the 4X Membership Rewards points at US grocery stores benefit is worth 2 cents per dollar above the best fee-free alternative.  This is true as long as your US grocery spend stays under $25K per year.  Once you go over $25K, you’ll only earn 1 Membership Rewards point per dollar.

How much is this benefit worth to you?  Estimate your annual grocery spend within the US and multiply by 2%, as long as the total is less than $25K.   If the total is over $25K you may want to do the first $25K with the Gold card and then use another card for spend above that threshold.

Example:

  • You spend $250 per week at US grocery stores
  • = $13,000 per year
  • x 2%
  • = $260 per year more in rewards than you would earn with a fee-free 3% cash back card.

Your worksheet

Fill out these values to determine how much the Amex Gold card is worth to you:

  • $120 Dining Credit. If I could buy this as a membership, I’d pay: ____________
  • $100 Airline Fee Credit. If I could buy this as a membership, I’d pay: ____________
  • 4X at US Restaurants:
    • Weekly restaurant spend: ____________
    • X 52 =  ____________
    • X .01 = ____________
  • 4X at US Grocery Stores (up to $25K):
    • Weekly grocery spend: ____________
    • X 52 =  ____________
    • X .02 = ____________
  • Total annual value: ____________

If the total annual value is significantly more than the annual fee, then keeping the card each year makes sense.

My worksheet (example)

Here are my values:

  • $120 Dining Credit. If I could buy this as a membership, I’d pay: $80
  • $100 Airline Fee Credit. If I could buy this as a membership, I’d pay: $80
  • 4X at US Restaurants:
    • Weekly restaurant spend: $150 (it’s probably much more than that actually)
    • X 52 =  $7,800
    • X .01 = $78
  • 4X at US Grocery Stores (up to $25K):
    • Weekly grocery spend: $200
    • X 52 =  $10,400
    • X .02 = $208
  • Total annual value: $80 + $80 + $78 + 208 = $446

$446 is significantly higher than the card’s $250 annual fee, so it’s definitely a keeper for me.

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