The American Express Cobalt® Card is worth it and is a favourite among point enthusiasts because of its capacity to generate 5 Membership Rewards per dollar on restaurants and grocery-coded purchases. Those words, grocery-coded purchases, are very important to remember because it doesn’t apply only to groceries but to everything you can buy there, including gift cards.
In this article, we’ll go into an in-depth analysis of why the American Express Cobalt® Card is worth it and whether it has its place in your wallet in the long term.
Is the Amex Cobalt worth it - The first year
Nothing beats a generous welcome bonus, and the American Express Cobalt® Card is worth it for that reason alone.
During the first year, you can earn 2500 Membership Rewards for every month (statement) where you reach $500 in spending. It doesn’t matter if you hit that amount in the 1X, 2X, 3X or 5X categories; you must get to $500.
Indeed, the rewards are divided as such:
- Earn 5x the points on eligible eats and drinks in Canada, including groceries and food delivery
- Earn 3x the points on eligible streaming subscriptions in Canada
- Earn 2 points for every $1 spent on eligible transit & gas purchases in Canada and eligible travel purchases
- Earn 1 point for every $1 in Card purchases everywhere else
Therefore, if you spend $500 only in the 1X category, you will get a return of 500 points on your purchase in addition to the bonus of 2,500 points.
If you put the same amount in 5X coded stores such as groceries, you will have 2,500 points for your food and the same 2,500 bonus points.
Here’s how to maximize your purchases in the 5X the points spending categories, earning 60,000 points in your first year:
|1||$500||2,500 points||2,500 points||5,000 points|
|2||$500||2,500 points||2,500 points||5,000 points|
|3||$500||2 500 points||2 500 points||5 000 points|
|4||$500||2,500 points||2,500 points||5,000 points|
|5||$500||2,500 points||2,500 points||5,000 points|
|6||$500||2,500 points||2,500 points||5,000 points|
|7||$500||2,500 points||2,500 points||5,000 points|
|8||$500||2,500 points||2,500 points||5,000 points|
|9||$500||2,500 points||2,500 points||5,000 points|
|10||$500||2,500 points||2,500 points||5,000 points|
|11||$500||2,500 points||2,500 points||5,000 points|
|12||$500||2,500 points||2,500 points||5,000 points|
|Total||$6,000||30,000 points||30,000 points||60,000 points|
Earning 60,000 points against $6,000 in purchases in 12 months is a 10% minimum return if you use yours as cashback (a $600 value) or more if you transfer them to other programs and maximize their worth. After subtracting the fees over the same period, you come out with a net $445 gain in the first year.
Is the Amex Cobalt worth it - Subsequent years
After the first year, the points flow will start to skimmers; you will always earn more by unlocking a generous welcome bonus compared to organic spending.
However, the American Express Cobalt® Card is worth it since it’s the best credit card for organic spending, with its capacity to generate 5 Membership Rewards per dollar in restaurants and grocery-coded purchases.
There is no other credit card that can match that, and you need credit cards for organic spending in your wallet; even if you have enough expenses to unlock a new bonus every week, you cannot possibly subscribe to a new credit card every week.
It actually advised seeing this as a marathon and spacing out your credit inquiries between at least 6 to 9 months (veterans at this game will talk about 3 months, but it’s all relative depending on your personal situation).
Consequently, you have to rely on a card such as the American Express Cobalt® Card to maximize rewards during those ‘’in between’’ periods.
Sure, other cards earn 5% cashback or 5X the points for groceries. Actually, the Scotiabank Gold American Express Card even gives 6 Scene+ points per dollar at IGA, which translates to a 6% cashback return.
However, not all points are created equal. Indeed, Membership Rewards have a minimal fixed value when redeemed as cashback, which is already a solid 5%.
Still, they can be worth a lot more when you transfer them to an airline or hotel loyalty program and make good use of your newly acquired type of points (Aeroplan, Avios, Flying Blue, Marriott Bonvoy, Hilton Honors, etc.) Therefore, it all depends on what you mean to do with your points; more on that later in this article.
When considering the monthly fees, is the American Express Cobalt® Card still worth it after the first year?
To offset a $12.99 monthly fee, you would need to spend a minimum of:
- $260 in 5X categories exclusively
- $433 in 3X categories exclusively
- $650 in 2X categories exclusively
- $1299 in 1X categories exclusively
When you mix and match the categories, you can offset the fees with purchases between $260 and $1299. As we mentioned earlier, the Cobalt strong point is to be deployed in 5X categories and certainly not in the 1X sector where any welcome bonus will beat it.
With the current cost of living, spending $260 on groceries and restaurants each month is very realistic; in our household, we usually reach it within the first week of our statement cycle.
When you pair that with the famous gift card strategy and generate 5X on a wide variety of purchases that would normally only earn 1X, such as Amazon or Ikea, to name two, when there’s over hundreds of stores, the points flow will start to come in faster than any other card.
Is the Amex Cobalt worth it - Opportunity Costs
Since we are only offsetting the fees with $260 in groceries, we will truly only start to make a profitable return after that amount. Then, after the first year, wouldn’t it be more advantageous to begin earning 3% rewards for those first $260 in groceries with a card no fees like the BMO CashBack® Mastercard®* or the PC Financial World Elite Mastercard instead?
That is called the cost of opportunity by using a card instead of another. To answer if the American Express Cobalt® Card is worth it or not when we consider that, we must do some math.
Let’s see what happens when we put $260 on each card over a month:
We can clearly see that the BMO CashBack® Mastercard®* has a positive net gain, while we only just offset the monthly fees with the American Express Cobalt® Card after charging 260$ for groceries on the respective cards.
Where the difference is noted when you take into consideration the following:
- The TOTAL amount you can put in the 5X category on the Cobalt card
- The use of promotional Amex offers
- The use of your Membership Rewards
Indeed, let’s see what happens with the same comparison when you spend $750 monthly in groceries after the first year, i.e. when there are no more bonuses.
While you only start to get a higher net gain after offsetting the fees, the total amount you spend will mainly answer whether the American Express Cobalt® Card is worth it for you or not.
An important amount in that category is easy for a large family, but what if you are alone?
You must take the time to analyze your habits and identify all the purchases that can be maximized with the gift card strategy.
Indeed, when we say $750 in groceries, we mean “grocery-coded purchases’’ with $100–150 of gas here and there, $100 on Amazon, $100 for your SAQ wine, $100 for those new summer shorts at Simons, an expensive restaurant date, etc. It adds up fast when we optimize every penny spent, even alone!
Then, there are many promotional American Express offers. While they may not all apply to you, they can usually reduce the fees significantly, if not completely, over time. From my experience with Amex offers, it was always the case year after year.
I don’t benefit from offers each month, but sometimes, one will cover two months, such as the $25 credit after $75 at Voilà IGA or the recurrent Shop Small Event.
When you tally up everything, it’s not hard to come out positive; more often than not, it would look like Amex is paying me to use their cards, and the American Express Cobalt® Card is worth it!
Finally, we compared the value of Membership Rewards as cashback in the illustrations above; 3,750 points do equal minimally $37.50, but if you transfer them to Aeroplan (among others), they can be worth anywhere between $75 and $250 depending on how you use them.
Redeeming Aeroplan points at a 2 ¢ is not a difficult feat.
For example, for a family of four holiday in San Diego, you can easily achieve that valuation while flying in economy class.
($2,766$- 546.68) ÷ 98,400 × 100 = 2.26 ¢
Past the first year, you would need to spend about $20,000 in the 5X categories to earn 100,000 Membership Rewards or 100,000 Aeroplan points since they transfer at a 1:1 ratio.
That means you can choose between a $1,000$ cashback or enough points to cover over $2,000 worth of airfare for the whole family when you factor in the monthly fees and taxes you must pay on a reward ticket.
If you used your BMO CashBack® Mastercard®* instead for the same amount spent, you would only get a $600 cashback return, which isn’t enough to cover one plane ticket to San Diego for the same flight with Air Canada.
A free (or almost free) family trip every year or two sounds much better than a mere $600 cash-back return for the same household expenses!
If you prefer to fly in business or first class, we will talk about a 5–10 ¢ valuation for the same Membership Rewards points.
You can see that the American Express Cobalt® Card can be much more worth it if you use the points for travel, even if it already came out on top as a cashback credit card.
Is the Amex Cobalt worth it - When Amex is not accepted
Some will opt to do their groceries exclusively at stores that do not accept Amex, such as Maxi or Costco, to save money at the source.
The same questions apply regarding the maximization of what you can purchase in grocery-coded places with the American Express Cobalt® Card. Even if the bulk of your groceries are made at Maxi and Costco, how much are you spending on Amazon? And Walmart? And at SAQ?
Also, fuel is cheaper at Costco, so is the 5X gift card strategy worth it? It depends on the amount and if there is a pump at your Costco! In my case, my closest warehouse doesn’t have fuel, so it doesn’t apply to me. Do yours? Do you go there often? The answer will come after some math, according to your situation.
You could be surprised! I compared the price of diapers at Costco and on Amazon; while the price was cheaper at Costco, the value of the points I would earn with my American Express Cobalt® Card + gift card strategy + points usage combination was greater with Amazon.
Of course, I still make a lot of purchases at Costco and Maxi if it makes more sense financially. Still, I carefully select what I buy where and choose another credit card to maximize my return (usually one where I am working on meeting a minimum required spending).
Another thing to consider is switching from Maxi to Super C, which has similar pricing.
People often consider changing jobs for a better return on their time; why not change your spending habits for the same reason? Is earning $1,000 worth (or more) better than $600 to you?
Super C is too far? Well, people usually don’t mind spending a bit more time commuting for a better-paid job, too, don’t they?
For the first year, it’s a no-brainer with its welcome bonus. Afterwards, the points flow will come in slower for obvious reasons.
Whether the American Express Cobalt® Card is worth it for you in the long term will depend on the math of your situation. However, more often than not, it is a card you should have and keep in your wallet for a generous, steady flow of cashback or travel rewards.
If you are considering cancelling your card, you should carefully consider it. Amex does not like people who reapply for products they already held; it’s best to be certain you won’t change your mind about it.