American Express Canada has announced the introduction of a $30,000 annual purchase limit for the 5 point/dollar categories of the American Express Cobalt™ Card.
American Express Cobalt card features
The American Express Cobalt™ Card is the travel hacker’s favourite card in Canada. What we like most of all is the flexibility of the card in terms of the redeeming points… but also how quickly one can earn them.
Use of Select Membership Rewards
There are many different ways to use your Membership Rewards!
- maximise them using the fixed price schedule for certain air tickets
- use them against travel purchases like Airbnb
- redeem them for credit against everyday purchases
- transfer them at a ratio og 5:6 to Marriott Bonvoy for free hotel nights
- transfer them to Marriott Bonvoy points, which have the advantage ofbeing transferable to miles with airline programs like Aeroplan!
Airbnb users will be glad…
… and so will users of airlines that do not have a loyalty program, like Air Transat!
But before you can use points… you have to earn them!
Earning Membership Rewards
The American Express Cobalt™ Card point earning rate is unbeatable:
|Points / Dollar||Type of business|
|5||Restaurants / Fast food
Coffee shops or restaurants / Bars
Grocery / Convenience Stores
Food and grocery delivery
Local public transport
(subway, tramway, taxis, limousines, carpooling services)
By including grocery stores (e.g. Metro, Super C) and convenience stores (e.g. Couche-Tard…), American Express opened the door to many other uses… such as the purchase of gift cards for other businesses, or MyVanilla cards.
Obviously, this was no longer profitable for American Express: instead of reducing the earning rate of 5 points/dollar, American Express preferred to impose an annual cap.
Annual cap for 5 point/$ categories
So, as of August 20, 2019, an annual cap of $30,000 in purchases is applied on the 5 point/dollar categories.
If the $30,000 limit is exceeded, the rate will drop from 5 points to 1 point/dollar of purchase.
This limit will be reset each year on the anniversary date of the account.
So you can continue to earn with no cap until August 19, 2019.
What to do with this change?
$30,000/year is still $2,500/month for the 5 point/dollar category… more than enough for the original target audience of the American Express Cobalt™ Card, namely “millennials“, and indeed for the vast majority of card users!
However, those who had been using the MyVanilla card in addition to the American Express Cobalt™ Card to pay for all their expenses (Costco, Dentist, Renovations…), will have to take into account this $30,000 annual cap in the 5 points/dollar categories!
It could have been worse: a decrease in the earning rate to 4 or even 3 points/ dollar, which would have hit everyone! Here, American Express wants to blow the whistle on those who abuse the card.
In addition to MyVanilla cards users, some cardholders were putting their business expenses (meal expenses) on the card. Perhaps they will have to redirect to the Marriott Bonvoy™ Business American Express® Card which offers 3 Marriott Bonvoy points per dollar for restaurants.