American Express Cobalt credit card review: a top points earner for certain people

The American Express Cobalt credit card earns 5 points per dollar spent at grocery stores and restaurants, and even with a $10 per month fee (essentially $120 per year), I find the points reason enough to continue to hold the card.

5 points per dollar on food-related purchases, but not 5% cash back

If you are somebody who pays off your credit card balance every month, then the card benefits are important while the interest rate is not. Top of the benefits list for the Amex Cobalt is that the points are redeemable for travel purchases at a rate of 1000 points for $10 back, or essentially each point is worth 1 cent. These travel purchases can be made anywhere and then you redeem points after the fact; or you can book through American Express’s travel agency and apply the points directly at the time of purchase.

This works out to 5% back on food-related purchases when your points are redeemed against travel purchases… until you deduct the $10 monthly fee (and technically you should factor in the travel purchases made on the card too). So for this to work for you, you have to 1) shop at grocery stores that accept American Express and/or eat out a lot at restaurants / coffee shops / bars that accept American Express; 2) make enough food-related purchases each month to offset the $10 monthly fee; and 3) make enough travel purchases each year against which to use those points. At $1000 per month spent at grocery stores and restaurants you get $40 of travel points after subtracting the monthly fee. That’s a 4% value. At $500 per month spent at grocery stores and restaurants you get $15 of travel points after subtracting the monthly fee. That’s a 3% value.

If you redeem the points for non-travel purchases, then 1000 points only get you $7 back. Using the $1000 grocery store and restaurant monthly spending example, that’s a 2.8% value. At $500 of food-related purchases, that’s a 2.1% value.

There are many other things you can do with the points, called Membership Rewards (MR) points. Because the Cobalt earns points to the “MR Select” tier, you cannot transfer the points directly to Aeroplan or other airline programs directly. You can, however, transfer to Marriott Bonvoy or Hilton Honors. In the case of Marriott Bonvoy, you can transfer at a rate of 1 MR point to 1.2 Marriott Bonvoy points. You can then transfer Marriott Bonvoy points to Aeroplan miles at a rate of 3 Marriott Bonvoy points to 1 Aeroplan mile. That means an MR point is worth 0.4 Aeroplan miles or more, depending on whether you transfer enough to get a bonus (if you transfer 60,000 Marriott Bonvoy points to Aeroplan miles, you get 20,000 + 5,000 bonus Aeroplan miles) or transfer during a promotional period. I won’t get into all the ways one can value or redeem these other points and miles.

You can also use the American Express Fixed Points Travel Program. This could get you a higher value per point.

Lastly, you can redeem points on the Membership Rewards store for items such as kitchen appliances and electronics. This is likely to get you a lower value per point!

Earning rates for other purchases

You get 2 points per dollar spent on travel, gas, and transit purchases, and 1 point for all other purchases. I try not to use the Cobalt for anything other than grocery store and restaurant purchases, as well as the travel purchases I’m going to redeem against. For some people, the Cobalt might be worth it for non-food purchases, but for me I prefer the rewards I can get on such purchases with other credit cards.

Monthly fees, not annual fees

The Amex Cobalt is unique in that it charges a monthly fee (of $10) rather than an annual fee or of course no fee at all. The monthly versus annual fee element does not make a material difference for me; in the past when I cancelled cards with annual fees, I always did so right before the yearly fee date. I’ve also heard of other annual fee cards giving you partial rebates if you cancel mid-way through the year.

Supplementary / additional cards are free, which can useful if you’re not the only one in the family who does the grocery shopping.

Sign-up bonus

The sign-up bonus for the Cobalt is spread across 12 months, presumably to match how the fee is monthly, and so that people are not tempted to cancel the card earlier than a year in. You get 2,500 bonus points for every month in which you spend at least $500 on any purchases on the card. This adds up to 30,000 points in the first year if you meet the minimum every month. That puts the minimum spend in a year at $6,000 to get the full bonus.

Points accrue immediately

It’s worth mentioning that you get the Membership Rewards points as soon as a purchase posts to your account. You can also use those points immediately. This is unlike some cards where the points might accrue monthly and in some cases you can only redeem them yearly.

Insurance benefits

If you’re under 65 years of age, the Cobalt provides out of province and country emergency medical insurance for trips of up to 15 days long. There is also flight delay insurance, baggage delay insurance, hotel/motel burglary insurance, car rental theft and damage insurance, and more. A missing travel insurance on the Cobalt is trip cancellation insurance.

Other benefits

Occasionally, American Express runs promotions, usually for extra points, on the Cobalt. There is no regular schedule or promise that such promotions will happen in the future, and sometimes they are targeted only at certain cardholders. As such, I try to consider them as “nice to have” rather than a main reason to keep the card. The promotions that I have benefited from were:

• In December 2017, you got 10 points per dollar spent on food-related purchases (up to $2,000 in total spend), rather than 5 points per dollar
• On November 26, 2018, you got 5 points per dollar spent on Amazon.ca (up to $500 in total spend)
• From December 17-19, 2018 you got 10 points per dollar spent on Amazon.ca (up to $1,000 in total spend)

I’ve also seen offers for Etsy, Holt Renfrew, Levi’s, and special dining events.

Other similar and complementary cards

American Express is accepted at fewer places than Visa or Mastercard, and the Cobalt card becomes much less interesting if your main grocery store(s) don’t take Amex. There are competitor cards such as the Scotiabank Momentum Visa Infinite and the CIBC Dividend Visa Infinite, both also with annual fees, that give you 4% cash back (not points) on gas and groceries, although not restaurants.

If you make a lot of purchases in US dollars or other foreign currencies, there are quite a few cards that do not charge a 2.5% foreign exchange fee, such as the Rogers World Elite Mastercard (no annual fee), the Scotiabank Passport Visa Infinite ($139 annual fee), and the Hometrust Preferred Visa (no annual fee).

You could also optimize your earning rate in the other spending categories with cards tied to other programs like frequent flyer miles on WestJet or Aeroplan.