American Express launches cashback card: How does it compare?
With a standard rate of 1% cashback per $1 spent on purchases, how much value can you get from this new Amex card?
Launched on 21 April 2021, the American Express Cashback Credit Card earns a standard rate of 1% cashback per $1 on purchases.
So if you spend $1,000, you'll get $10 cashback on your account.
Right now, it also offers new card members an introductory 5% bonus cashback on spending in the first 3 months, up to a maximum of $200 cashback (which is $4,000 worth of purchases).
It also charges a $10 monthly fee instead of an annual fee. That means you'll end up paying $120 over a year.
Based on the standard 1% cashback rate on this card, you'd need to spend $12,000 over a year to break even on this cost.
Although it's worth noting the bonus cashback does give you a way to get more value in the first year (and you can get more if you register the card for Shop Small).
There are also other features that offer you value, including a BINGE Basic subscription valued at $10 a month, complimentary smartphone screen insurance and a 12-month subscription to Centr by Chris Hemsworth valued at $119.99.
The American Express Cashback Credit Card is unique in Australia right now, and this article doesn't cover all its features in depth. We do that in Finder's full review of the American Express Cashback Credit Card.
While the monthly fee is unusual for a credit card in Australia, there has been a trend towards them over the past year. Both NAB and CommBank have also launched credit cards with monthly fees – although they focus on no interest, not rewards.
But all three of these new cards have addressed changing spending habits – and seem to be targeted at younger Australians.
American Express has actually said as much, with vice president of consumer lending Austin Huntsdale saying the cashback card was developed after it found 64% of younger Aussies preferred cashback over traditional reward points.
They also found young people preferred a low monthly fee to an annual one.
"We're always looking for ways to ensure our products address the evolving needs of consumers," Huntsdale said.
With Gen Z and millennials seeking instant gratification through cashback incentives and new ways to be savvier with their money, there was no better time for us to introduce Australia's highest uncapped cashback earning credit card.”
While cashback is a common feature on credit cards in the US and Canada, it's much rarer here.
No other major credit card brand in Australia currently offers a dedicated cashback credit card. So, how does this compare to cards that earn points?
As an example, let's say we spend $12,000 on a credit card that earns 1 Qantas Point per $1 spent. We could use those points for a one-way flight between Melbourne and the Gold Coast. If we booked this for next Friday, the cheapest direct flight with Qantas would cost $193.
Based on this scenario, we'd get more value from the Qantas Points than the 1% cashback rate ($193 compared to $120).
But the value would drop if we decided to use these Qantas Points for a gift card instead of a flight: it currently costs 10,390 Qantas Points for a $50 Woolworths WISH gift card.
This amount of points for a $50 gift card is pretty similar across other reward programs as well – both with credit card rewards and retail loyalty programs like Flybuys (10,000 points for $50 off your shop).
So if cash was your ultimate goal, the American Express Cashback Credit Card is simpler. It's also faster than earning points and logging in to redeem them for a gift card or other forms of cash.
But, with American Express research also showing that 87% of generation Z and millennials hunt for bargains, it still pays to shop around so you can decide what you value most when it comes to rewards.
This article was updated on 22 April 2021 to include more details about the American Express Cashback Credit Card and rewards programs in Australia.
Images: Finder (Luke Dubbelde)