Graduating from Dave Ramsey - AMEX Blue Gotchas

[Allen]

So in the first phase of my financial turnaround, I was very much on the Dave Ramsey approach of Credit is Evil. This was very good for me at first, and helped me get things squared away and on the right track.  Now, I've moved in the past year more towards MMM style finance optimization and have been using an old Citibank card that gets me 'points' (1 point per cent) that I can redeem for overpriced stuff.

With the MMM article on Credit and his recommendation of the Amex BLUE Cash card, I went ahead and applied and was approved.  This is the one with the $75/yearly fee.  It's on the way.

Our family will just about perfectly hit the $6k/year in grocery spending at 6%, and our limited gas spending (I bus commute, my wife doesn't commute) will get a nice 3% rebate. 

We will run all spending through this card and will setup the website to pay it off automatically, just like our old Citibank is now.  I'll leave the Citibank card open but at a zero balance since it has my longest credit history.  I may make sure to run a charge or two through every once in awhile to keep it hot.

Are there any other gotchas or pitfalls or whatever I need to pay attention to to not get burned?  I know Dave Ramsey gets a lot of hate around here, but I truly believe the 'if you play with snakes, you are going to get bitten' line he repeats frequently.  I would like to not get bitten. 

I proved the rewards concept worked for me with citicards, but instead of buying iTunes gift certificates, actual cash rebates at an increased percentage back seems like a much better plan.

[Supertaster]

Make sure you do your grocery shopping at stores that AMEX classifies as 'stand-alone' grocery stores (no Wal-Mart or Costco). Otherwise you'll only be getting the base level of rewards. I'm considering getting rid of my AMEX (non-preferred) since none of the places I shop at are covered.

[iwannaretire]

This isn't a gotcha, but just the opposite.  Make sure you set up an online account and check the special offers on the card periodically.  American Express has some really great offers, especially around the holidays, but you have to sign up for them.  For instance, this year, you received a $25 statement credit if you spent $75 at Amazon in one transaction.  All you have to do is buy a $75 Amazon gift card on Amazon using your card and you get the credit.  I have 2 American Express cards and the offer was available on both.  So, American Express paid for $50 of my Christmas presents this year.

There are all sorts of other offers, such as statement credits on gas, travel, various retailers, etc.  I have more than made up for my $75 annual fee just in statement credits alone.

[Will]

For instance, this year, you received a $25 statement credit if you spent $75 at Amazon in one transaction.  All you have to do is buy a $75 Amazon gift card on Amazon using your card and you get the credit.  I have 2 American Express cards and the offer was available on both.  So, American Express paid for $50 of my Christmas presents this year.

I signed up for this on my 2 AmEx cards but didn't give it much thought as I don't really buy things on Amazon.  But if I were to get $50 credit on $150...

So you did this and you got your 2 $25 credits already?

[Khan]

If you're a Costco member, then you get some sort of AMEX credit card free. Sure it's not cash, but Credit's not stupid if you never carry a balance such that you take the interest hit.

Last time I had an interest charge was ~5 years ago, and that was on accident.

[carloco]

I read somewhere that you can buy a Amex gift cards at a grocery store to get the 6% reward and used them to pay for gas and groceries at Costco. 
I am planning of trying that one.  I just received the cards myself.

[The knitter]

I read somewhere that you can buy a Amex gift cards at a grocery store to get the 6% reward and used them to pay for gas and groceries at Costco. 
I am planning of trying that one.  I just received the cards myself.

We do this for our car insurance too. Buy gift cards at the grocery store, get 6% cash back on the purchase. There's a purchase fee for the card, so we decided it only makes sense for really big purchases like the full year's insurance bill.

This is why AMEX started the $6,000 cap on groceries cash back.

[gripped]

I sure wish I'd gotten in on the prepaid card method before the limit was imposed. AMEX must've basically been an ATM for those who knew how to use it.

I'm sure there must be a gas station that sells prepaids.
3% on $500 = $15 - $5 service charge = $10 per $500 spent

[iwannaretire]

For instance, this year, you received a $25 statement credit if you spent $75 at Amazon in one transaction.  All you have to do is buy a $75 Amazon gift card on Amazon using your card and you get the credit.  I have 2 American Express cards and the offer was available on both.  So, American Express paid for $50 of my Christmas presents this year.

I signed up for this on my 2 AmEx cards but didn't give it much thought as I don't really buy things on Amazon.  But if I were to get $50 credit on $150...

So you did this and you got your 2 $25 credits already?

Yes, I already received both $25 credits.  I've done this a lot on different things.  I received a nice Travelocity credit this summer when I booked my hotels using my Amex.  I've received credits from Lowes (which sells gift cards) and movie theater tickets. 

[robtown]

I read somewhere that you can buy a Amex gift cards at a grocery store to get the 6% reward and used them to pay for gas and groceries at Costco. 
I am planning of trying that one.  I just received the cards myself.

We do this for our car insurance too. Buy gift cards at the grocery store, get 6% cash back on the purchase. There's a purchase fee for the card, so we decided it only makes sense for really big purchases like the full year's insurance bill.

This is why AMEX started the $6,000 cap on groceries cash back.

Would you provide more details on what gift cards work for you?   The car insurance accepts them for payment?  I recall seeing added charges for using "credit" for insurance payments.
AMEX has not fussed about buying gift cards?   I wonder if that would be a quick way to meet the $1000 in first three month signup bonus requirement.

[The knitter]

Would you provide more details on what gift cards work for you?   The car insurance accepts them for payment?  I recall seeing added charges for using "credit" for insurance payments.
AMEX has not fussed about buying gift cards?   I wonder if that would be a quick way to meet the $1000 in first three month signup bonus requirement.

We buy MasterCard gift cards for the amount our car insurance costs.

They cost $5.95 each to purchase. But we get 6 percent cash back on them.

So if we use $1,000 to pay for our insurance with those MC cards, we spend about $12, and get $60 cash back for a total of  $48 earned.

The car insurance company we use accepts credit cards for payment, including pre-purchased cards like the MC gift cards they sell at grocery stores.