Review: SimplyCash Preferred From American Express

simplycashpreferredcardfromamericanexpress.jpgI recently reviewed the regular Simply Cash Card from American Express, which is one of the most underrated no-fee cash back credit cards in Canada. This card, the Preferred edition, is like the big brother to no-fee card in that it has higher cash back and more perks, but comes with an annual fee of $79 to account for them.

You’ll get 1.5% cash back on ALL purchases, which is a really good rate, and the annual fee is less than all of its main competitors. Everything else with $79 or less earns less cash back or has a tiered cash back system, which typically also means less overall cash back. Unfortunately, there are a few competitors with slightly higher annual fees in the $90-$120 range that offer more cash back.

However, this card definitely fills a nice niche that you will begin to appreciate as you peruse the pros and cons below. The sign up bonus that is effectively worth $400 is also nothing to sneeze at because none of the other cash back cards come close to this - they typically come in at around $100, if a bonus is offered at all.

Quick Facts

Annual fee $79
Interest rate 19.75%
Min. income $15,000
Reward type Cash Back
Reward 1.5% cash back on ALL purchases under $100,000 spent annually
1.25% cash back on ALL purchases over $100,000 spent annually
HTS reward return 1.18% of spending for a typical person after annual fee deducted
Sign-up bonus 5% cash back on ALL purchases for 6 months - $400 maximum
Apply Click here

Positives:

  • 1.5% cash back on ALL purchases without having to worry about spending category bonuses. This is the highest of all cards in the $0-$79 annual fee range.
  • Huge 5% bonus on ALL purchases for 6 months ($400 limit on this bonus). This is much higher than all its competitors that top out at around a $100 bonus.
  • Very low minimum income for a premium card of $15,000. Most cards with these perks require a $60,000 or more.
  • No limit to the amount of cash back you can earn.
  • 1.99% introductory interest rate on balance transfers for the first 6 months (limited time).

Negatives:

  • Cash back drops to 1.25% after spending more than $100,000 (honestly, most people won’t spend that much).
  • Better travel insurance package than its little brother, but still not as good as some of the competition.

Insurance Package:

  • Extended warranty - up to one year.
  • Purchase protection - 90 days.
  • Travel accident insurance - up to $100,000.
  • Emergency medical - 15 days.
  • Flight delay - $500.
  • Baggage delay - $500.
  • Lost or stolen baggage - $500.
  • Hotel burglary - $500.
  • Car rental coverage - collision / loss damage waiver (LDW).

Cash Back Analysis

Like its little brother, the rewards system for this card is dead simple. You basically always get 1.5% cash back, unless you have baller status and are spending more than $100,000 a year on the card. If that is the case, then your cash back will drop to 1.25% for everything above and beyond a hundred grand per year.

Below, I’ve done the calculations for how much you could accumulate over the first 5 years depending on your spending habits while taking the annual fee and the 5% bonus into account:

Light spend’ – $200 per month on groceries, $100 per month on fuel, $500 per month on everything else.

Medium spend’ – $400 per month on groceries, $200 per month on fuel, $1,000 per month on everything else.

Heavy spend’ – $600 per month on groceries, $400 per month on fuel, $2,000 per month on everything else.

Category

Year 1

Year 3

Year 5

Light spend

$233

$363

$493

Medium spend

$489

$907

$1,325

Heavy spend

$741

$1,663

$2,585

You can see by comparing this table to the one in the no-fee version of the card, you get a lot more cash back early on because the 5% bonus applies to ALL purchases AND has a higher earnings cap ($400 vs $250). But, looking at Year 3 and Year 5 numbers you see that the gap stops widening at such a fast pace. In fact, It is really only heavy spenders that are going to see enough extra cash back from the extra .25% to make it worth continuing to pay the annual fee over the long haul.

Another important point to note is that these spending categories don’t account for maximizing the sign up bonus and getting the full $400 cash back from that. Doing that, especially for light spenders, can really make this card worth it.

How To Maximize Cash Back

This biggest trick for maximizing cash back with this card is to make sure you get the full $400 bonus during the first 6 months you have the card. That’s $150 more than its no-fee counterpart offers and you aren't restricted to just gas and grocery purchases to qualify for the bonus. If you're going to have trouble spending the $8,000 in the 6 month period to get the full bonus, you can purchase a gift card near the end of your 6 months to make up for whatever money you weren’t able to spend.

Simply purchase a gift card in the amount you need to maximize your bonus from any store where you know you can easily spend the money in the future. Doing so will reward you with the 5% bonus just like you had made the purchases today. The gift card can then be used to purchase necessities over the coming months (like gas and groceries).

Other than that, just shop as you please - your 1.5% will always be there.

Conclusion

So as I said, this card does a good job of filling a niche. It’s a great card for people who have higher spending to benefit from the 1.5% cash back and either don’t meet the astronomical income requirements of its competitors or don’t want to pay an annual fee in the $100+ range.

Essentially, this card allows you to get a premium level card with great rewards and good insurance coverage and perks without being a high roller. Being able to maximize the $400 sign up bonus cash back easily also makes it worth getting for most people to try for a year. Once you’ve maximized your bonus, you can always downgrade to the no-fee edition if you don’t find the extra .25% cash back is worth it.

Apply Now!

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Comments

Amin
Amin's picture

What exactly does this mean? "purchase a gift card in the amount you need to maximize your bonus from the gift card mall ?

Dies it mean that I purchase a gift card from whatever store I like and pay for the purchase with the Credit Card?

October 29, 2015 @ 12:24 pm
Stephen Weyman
Stephen Weyman's picture

Yes, exactly. You go to any store you regularly shop at and buy a gift card with your credit card, thus getting your 5% cash back right away. Then, you use the gift card you bought later on when it is convenient.

The simplest thing to do would be to buy grocery gift cards (we all need to eat) and just use it over the next several months to buy your groceries as needed. That way you get the maximum cash back without changing your spending patterns at all.

October 30, 2015 @ 11:25 pm
Stephen Weyman
Stephen Weyman's picture

Wow, how did I miss that? Now that you mention it, I did know that back when the card was first announced but then my brain equated the sign up bonus for the regular SimplyCash Preferred to being the same as the SimplyCash (except for the bonus limit). Thanks for pointing this out Philippe and I will update the article today.

November 09, 2015 @ 1:51 pm

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