Basic math for AMEX AF

[Anonymous]

---

@budugu wrote:

TLDR - MR is not easy. If you dont value the "perks or credits or cs", literally every other card will be better! 

---

Hahaha.  This!! ^^^

[Citylights18]

I start with any AF and convert it into points. That mean $250 AF is the same as 25,000 points and $550 AF is the same as 55,000 points.

If the AMEX Gold is offering you 4x dining/grocery you would have to spend irrespective of the perks 6,250 to break even. For the AMEX Green with 3x dine/3x travel you would need to spend 5,000 across categories to break even. That doesn't count of course every day spend or bonus point opportunties.

But if you already have the AMEX Green then to add a $250 gold card then you would need to spend 6,250 on food and 5,000 travel (total 11,250) so it becomes harder. But if you put all of your spend on an $550 AMEX Platinum figuring a 1.5 point average that would need about 36,700 of total annual spend to cover which is doable. If you had also the Gold/Green combo at the spend above, that average on the Platinum would go down to about 1.2 so to spend enough to break even just on spend then requires 55,000/1.2 + 6,250 + 5,000 = 57,083 which is a lot for a household to spend.

[Anonymous]

---

@Citylights18 wrote:

I start with any AF and convert it into points. That mean $250 AF is the same as 25,000 points and $550 AF is the same as 55,000 points.

If the AMEX Gold is offering you 4x dining/grocery you would have to spend irrespective of the perks 6,250 to break even. For the AMEX Green with 3x dine/3x travel you would need to spend 5,000 across categories to break even. That doesn't count of course every day spend or bonus point opportunties.

But if you already have the AMEX Green then to add a $250 gold card then you would need to spend 6,250 on food and 5,000 travel (total 11,250) so it becomes harder. But if you put all of your spend on an $550 AMEX Platinum figuring a 1.5 point average that would need about 36,700 of total annual spend to cover which is doable. If you had also the Gold/Green combo at the spend above, that average on the Platinum would go down to about 1.2 so to spend enough to break even just on spend then requires 55,000/1.2 + 6,250 + 5,000 = 57,083 which is a lot for a household to spend.

---

Thanks so much for that answer.   Could you clarify where your points average is coming from and what method for concerting MR to CPP you are using? 

[simplynoir]

---

@Citylights18 wrote:

I start with any AF and convert it into points. That mean $250 AF is the same as 25,000 points and $550 AF is the same as 55,000 points.

---

That's a flawed way to look at it when the cash redemption value of MRs is a little better than half

[Aim_High]

---

@Anonymous wrote:

Hi everyone.  Understanding that everyone gets different value out of cards and sees returns differently based on usage... is there a basic formula somewhere or math someone has done to show min spend to offset AFs for the Amex Gold and Amex Platinum

@simplynoir wrote:

From what I'm understanding here if you're thinking too much about how you're going to at least break even on what is essentially a travel rewards card (even though the spend is geared towards everyday expenses) then you're better off getting a cashback card like @notmyrealname23 suggested. It's okay for a credit card to not fit your spend/redemptions

---

Steph, flashback to a recent previous thread where we talked about the Gold card.   Remember this exchange?

@Aim_High wrote:

---

@Anonymous wrote:

---

@Aim_High wrote:

---

@Anonymous wrote:

I'll be applying for an Amex Gold in a few weeks and want to supplement that with a non Amex ...

---

And I would ask why you want the AMEX Gold with a $250 AF

---

Why do I want the Amex Gold? Because it looks like it does (sorry, I know, but, the heart wants what it wants).  But it's prob not all bad given how much I spent on dining out and groceries. 

---

(And I replied) "... nothing wrong with wanting what the heart wants!   As long as it's a conscious decision and you know you might be sacrificing some rewards for that desire.  We all pay for privileges based on the perceived value we get back from it." 

https://ficoforums.myfico.com/t5/Credit-Cards/If-you-could-only-carry-2-cards/m-p/5990849#M1714224

So if you're getting a card more because you enjoy carrying it, even while knowing the math may not make sense, that's okay!   But I would say be careful ignoring that intrinsic emotional value and then trying to justify a card with math when it doesn't really work for your spending.  You can't easily quantify into numbers that intrinsic value and if that is more important to you, you might be better off just ignoring the gain or loss.  I think you may be trying to mix rational analysis with emotional appeal to convince yourself it makes sense.  It doesn't have to if it's important to you regardless. 

So give yourself permission to carry the card regardless of whether it makes sense, if the AF is a cost you're willing to pay. (Personal judgment.) Or give yourself the permission to not carry a card because it doesn't make financial sense.

[Citylights18]

---

@Anonymous wrote:

---

@Citylights18 wrote:

I start with any AF and convert it into points. That mean $250 AF is the same as 25,000 points and $550 AF is the same as 55,000 points.

If the AMEX Gold is offering you 4x dining/grocery you would have to spend irrespective of the perks 6,250 to break even. For the AMEX Green with 3x dine/3x travel you would need to spend 5,000 across categories to break even. That doesn't count of course every day spend or bonus point opportunties.

But if you already have the AMEX Green then to add a $250 gold card then you would need to spend 6,250 on food and 5,000 travel (total 11,250) so it becomes harder. But if you put all of your spend on an $550 AMEX Platinum figuring a 1.5 point average that would need about 36,700 of total annual spend to cover which is doable. If you had also the Gold/Green combo at the spend above, that average on the Platinum would go down to about 1.2 so to spend enough to break even just on spend then requires 55,000/1.2 + 6,250 + 5,000 = 57,083 which is a lot for a household to spend.

---

Thanks so much for that answer.   Could you clarify where your points average is coming from and what method for concerting MR to CPP you are using? 

---

All the points are face value credit card points. With the AMEX I'm thinking a percentage of your spend if you reeedem in the bonus travel categories would balance out the general MR 1.0 ccp of the card. One point member rewards = one credit card point assumption.

I haven't factored 30-40% airline bonuses, business class flights or elevated transfers to Hilton with the points. All of this is really important in terms of calculating a cards value.

Little old me has low earn 2x dine/travel with my CSP but I can take those points 2.0 ccp or better to the partners. That trumps to me 3x cash back with the NFCU cards. The perks and partners really do count in the whole analysis. How you direct your spend is important. With all the hype on redeeming miles to pay for flights I find that 85% of my travel spend is on hotels. I have to pay up to stay close to the tourist attractions.

[Aim_High]

---

@Citylights18 wrote:

I start with any AF and convert it into points. That mean $250 AF is the same as 25,000 points and $550 AF is the same as 55,000 points.  If the AMEX Gold is offering you 4x dining/grocery you would have to spend irrespective of the perks 6,250 to break even. For the AMEX Green with 3x dine/3x travel you would need to spend 5,000 across categories to break even.

---

But as previously pointed out upthread, the goal when calculating annual fee is not to break even; it's to come out farther ahead than someone would with another point system or cashback.  So when making the comparison, don't forget to add in the "lost bonus" from the alternative rewards system.  For example, that $6250 or $5000 spend would net you $125 or $100 respectively on a flat 2% cash back no-AF card.  And if all that spending was at 3% cash back such as dining and travel on a Wells Fargo Propel or Citi Costco card, that would require another $187.50 to break even.   So the break-even point doesn't just pay for the fee; it also has to replace the rewards lost.

[Anonymous]

---

@Aim_High wrote:

---

@Anonymous wrote:

Hi everyone.  Understanding that everyone gets different value out of cards and sees returns differently based on usage... is there a basic formula somewhere or math someone has done to show min spend to offset AFs for the Amex Gold and Amex Platinum

@simplynoir wrote:

From what I'm understanding here if you're thinking too much about how you're going to at least break even on what is essentially a travel rewards card (even though the spend is geared towards everyday expenses) then you're better off getting a cashback card like @notmyrealname23 suggested. It's okay for a credit card to not fit your spend/redemptions

---

Steph, flashback to a recent previous thread where we talked about the Gold card.   Remember this exchange?

@Aim_High wrote:

---

@Anonymous wrote:

---

@Aim_High wrote:

---

@Anonymous wrote:

I'll be applying for an Amex Gold in a few weeks and want to supplement that with a non Amex ...

---

And I would ask why you want the AMEX Gold with a $250 AF

---

Why do I want the Amex Gold? Because it looks like it does (sorry, I know, but, the heart wants what it wants).  But it's prob not all bad given how much I spent on dining out and groceries. 

---

(And I replied) "... nothing wrong with wanting what the heart wants!   As long as it's a conscious decision and you know you might be sacrificing some rewards for that desire.  We all pay for privileges based on the perceived value we get back from it." 

https://ficoforums.myfico.com/t5/Credit-Cards/If-you-could-only-carry-2-cards/m-p/5990849#M1714224

So if you're getting a card more because you enjoy carrying it, even while knowing the math may not make sense, that's okay!   But I would say be careful ignoring that intrinsic emotional value and then trying to justify a card with math when it doesn't really work for your spending.  You can't easily quantify into numbers that intrinsic value and if that is more important to you, you might be better off just ignoring the gain or loss.  I think you may be trying to mix rational analysis with emotional appeal to convince yourself it makes sense.  It doesn't have to if it's important to you regardless. 

So give yourself permission to carry the card regardless of whether it makes sense, if the AF is a cost you're willing to pay. (Personal judgment.) Or give yourself the permission to not carry a card because it doesn't make financial sense.

---

Yes! Haha. Totally remember this.  And I'm not having future buyers remorse or anything (haven't even been approved for it yet or made the decision to actually apply based on all the travel stuff). But I wanted to see how people justified Gold and Platinum AFs and how varied those justifications were (or if there was any simple math).  

I'll be going through CAP so the AF will be reduced and easily justifiable. 

That being said, some people on these "finance channels" have like 7 to 10 cards with AFs and I was wondering what math they use.  I just don't get it.  Well, I guess it's that YouTube money but what a way to waste on the same perks from the same lenders.  

[Aim_High]

---

@simplynoir wrote:

---

@Citylights18 wrote:

I start with any AF and convert it into points. That mean $250 AF is the same as 25,000 points and $550 AF is the same as 55,000 points.

---

That's a flawed way to look at it when the cash redemption value of MRs is a little better than half

---

Very true.  Cash value for MRs (except for Schwab Platinum) is 0.6 ccp so much less than 1 ccp.  However, MR points CAN be redeemed for well over 1 ccp.  So an honest valuation can be very personal since it depends on how you will actually redeem.  And the value is often most accurately calculated in hindsight, since you can see the actual value.

[Aim_High]

---

@Anonymous wrote:

---

---

That being said, some people on these "finance channels" have like 7 to 10 cards with AFs and I was wondering what math they use.  I just don't get it.  Well, I guess it's that YouTube money but what a way to waste on the same perks from the same lenders.  

---

There are people with multiple (10??)  travel cards that know what they are doing, optimize points carefully, and play the game well with discipline.  Some are on this forum.  It works for them, but not for everyone.  The most frequent flyers quickly accrue enough points and get enough experience to quickly learn how to optimize them.  I would say having 7 to 10 AF cards requires some pretty heavy spend, frequent travel, and probably a few years of playing the system to build up to that level of proficiency if they're managing it well.  And then there are people who get multiple travel cards thinking they can replicate what others are doing but are unsuccessful for different reasons.  They may or may not realize how much money they are losing.  Straight cash-back often pays less value but for many people it can be more suitable.  In particular, playing in more than one point system (MR, UR, TY etc) is a game some try but only works well for more frequent flyers.  Otherwise points become too diluted.   I am not a frequent flyer so I choose not to carry many cards; the math doesn't come close to working for me.  I selected a simple CSR with flexible travel rewards which allows me to focus on one system.