Amex Platinum Cashback vs Everyday (under £10k annual spend)

Larches

I've had the Amex Platinum Cashback card for a while now and decided it was time to check (before the account anniversary and therefore fee payment) if it's still the right card for me, depending on how much I'm spending on it over the year.

As aficionados will know, these cards are recommended on MSE as they have the best rate of cashback currently available, and the main difference between the cards is that the Everyday has no annual fee but a lower initial rate of cashback (and a minimum threshold), the other card has a fee but a higher rate of cashback from the outset (note that I'm referring to the enduring cashback here, not introductory offers as they aren't relevant to me anymore).

What is puzzling me is why MSE specifically recommend the Everyday card for people who will spend less than £10k. Having looked at my spend for the past year, I am a bit under that, so was wondering if Amex would switch me over to the Everyday card. That is until I did a few sums and wondered if there's any point. Might be me being a bit dim, hence this appeal for a sense-check from fellow Moneysavers!

So, let's say that I spend £7k over the year. As I understand it, the cashback would work as follows for each card:

Amex Platinum Cashback: £25 fee, 1% cashback on spend up to £10,000 (1.25% thereafter).

Therefore, cashback on £7000 is £70 - £25 (fee) = £45.

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Amex Platinum Everyday Cashback: no fee, 0.5% cashback on spend up to £5,000 then 1% cashback on spend above £5,000.

Therefore, cashback on £7000 is £25 (first £5k) + £20 (remaining £2k) = £45.

In other words, exactly the same outcome. The only difference I can see is that if I had the Everyday card and my spending were to drop below £3k (seems unlikely as things stand), I would forfeit my cashback entirely, whereas with the fee-based card I would make a little bit if I spend between £2500-3000 but would actually lose out (due to the fee) if I spend under £2500.

I wonder if MSE are just recommending the Everyday card so that people don't feel tied in for a year from having paid the annual fee, as opposed to the Everyday card actually working out better for some other reason. Is that it, or am I missing something?

kaMelo

It's simple arithmetic, £10,000 is the break even point, you are in exactly the same position if you spend £10,000 no matter which card you use.
if you spend less than £10,000 you're better off with the everyday card.
If you spend more than £10,000 then the increased cashback offsets the annual fee and you're better off with the Platinum card.

wiseonesomeofthetime

You should also bear in mind that, if you spend exactly £7,000, per the example, you would not achieve the figures calculated unless every purchase was in whole pounds.

AmEx only pay cashback on whole pounds so every penny you see on your till receipts after the decimal point earn zero cashback.

They cover it in their T&Cs as qualifying spend.

So you will need to spend more than £10,000 to achieve the break even point.

jbrassy

The OP is right. I've done the sums before and saved them here:
https://docs.google.com/spreadsheets/d/1rZouflfUDeghKt9At9mwezrbCjm_jL4KCsksAP8cHS0/edit#gid=0

Basically, if you spend less than £5,000 per year, you should get the Everyday card which has no fee. 
If you spend between £5,000 and £10,000 per year, it doesn't matter which card you get. 
If you spend above £10,000 per year, you should get the card with the £25 annual fee.

Personally, I have the card with the £25 fee since I easily spend over £5,000 a year and there is the potential for me to spend above £10,000.

Larches

kaMelo said:

...
if you spend less than £10,000 you're better off with the everyday card.
...

I think that's true when spending less than £5000 (or, specifically between £3000 and £5000), but not necessarily when spending between £5k and £10k, as explained above (thanks @jbrassy for doing the sums and summarising it so clearly!).

Larches

wiseonesomeofthetime said:

You should also bear in mind that, if you spend exactly £7,000, per the example, you would not achieve the figures calculated unless every purchase was in whole pounds.

AmEx only pay cashback on whole pounds so every penny you see on your till receipts after the decimal point earn zero cashback.

They cover it in their T&Cs as qualifying spend.

So you will need to spend more than £10,000 to achieve the break even point.

You raise a very important point, and one that I forgot to acknowledge in my post. I had caught onto that little ruse and used the Rounddown function in Excel to do my calculations, but it's certainly a point that is easy to overlook.