The Two Credit Cards That I Consider To Be Too Generous

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The credit card landscape is more competitive than ever before, and that’s great for consumers. Credit card companies make money through a combination of three revenue streams:

  • Merchant fees for each transaction
  • Card annual fees
  • Interest payments for those who choose to finance charges over time

The good news is that as consumers we’re getting more from our credit cards than before. Much of the annual fees and merchant fees are being given back to us in the form of rewards, so for credit card companies our transactions are (mostly) lower margin than before, though they hope to make up for it with volume, as credit card usage keeps increasing.

Credit cards that are extremely generous

Many credit card benefits seem too good to be true, and even some credit cards offer a return that seems almost too generous. For example, here are a few cards that have specially lucrative bonus categories:

  • The Chase Sapphire Reserve℠ Card offers 3x points on dining and travel, and those points can be redeemed for 1.5 cents each towards the cost of travel, meaning you’re getting a return of 4.5%
  • The Platinum Card® from American Express offers 5x points on airfare, which I value at a return of 8.5%
  • The Amex EveryDay® Preferred Credit Card offers 3x Membership Rewards points at U.S. supermarkets (on up to $6,000 of spend per year), 2x points at U.S. gas stations, plus a 50% points bonus when you use your card at least 30 times during a billing cycle

Nonetheless I see these offerings as being sustainable and logical enough. These cards have annual fees, and they count on the spend in the above categories to only compromise a small portion of the overall spend. The idea is that they want to gain wallet share, and they know that bonus categories are the way to accomplish that.

Similarly, there are some cards with specific perks that seem especially generous. For example, the Citi® / AAdvantage® Executive World Elite™ Mastercard® has a $450 annual fee and comes with Admirals Club membership, but the killer perk is that you can add up to 10 authorized users at no extra cost, and they get Admirals Club access as well.

Credit cards that are… too generous?

In this post I wanted to share the two credit cards that I consider to be (almost?) too generous. These are cards that are so rewarding for just about anyone that I’m surprised they’re around in their current form. While there are other cards that can be super generous if you maximize them in a certain way, the above don’t require any effort to maximize.

So, which cards are they?

The Blue Business℠ Plus Credit Card from American Express

This card has no annual fee and offers 2x Membership Rewards points on the first $50,000 spent card annually. This is the single card that offers the best return on everyday spend, and best of all, it doesn’t even have an annual fee. I value Membership Rewards points at ~1.7 cents each, so that’s like a return of ~3.4%.

It’s amazing to see that kind of a return, especially given that The Business Platinum® Card from American Express OPEN, which has a $450 annual fee, offers one point per dollar on base spend.


Redeem your Amex points for travel in ANA first class

The IHG® Rewards Club Select Credit Card

This is the only hotel credit card that offers an uncapped annual free night certificate every year. The card has just a $49 annual fee, which is even waived the first year. For that you receive an annual free night certificate, Platinum status with IHG for as long as you have the card, and a 10% refund on redeemed points, for up to 100,000 refunded points per year.

This isn’t the only credit card that offers an annual free night certificate:

  • Marriott’s co-branded credit card has an $85 annual fee, and offers a certificate that can be redeemed at Category 1-5 properties
  • Hyatt’s co-branded credit card has a $75 annual fee, and offers a certificate that can be redeemed at Category 1-4 properties

So what makes IHG’s card better?As you can see, IHG’s card has the lowest annual fee and also has the fewest restrictions on what properties you can redeem at. You’re essentially paying $49 per year for an annual free night certificate, which is an absolute no brainer.


Redeem your annual free night certificate at the InterContinental Sydney

Bottom line

I’m sure some will say “don’t give the credit card companies any ideas.” We know surveys have been sent out about the benefits of the IHG Card for a while, so I wouldn’t be surprised to eventually see changes there. Meanwhile I haven’t heard such rumblings about the Blue Business Plus Card, which is still new.

While there are other cards that are useful, especially under specific circumstances, the two cards are the ones that I consider to be the all around most generous.

Are there any credit cards that you guys consider to be “too” generous all around?

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Comments

  1. Only someone who gets a significant amount of compensation from the multibillion dollar, too-big-to-fail international banks behind credit cards would refer to them as “generous” let alone “extremely generous.” They exist to make profit, and boy do they make profit. And the products they produce that don’t make profit-they axe. Yeah, the IHG card is great if you put it in the sock drawer, but for the less savvy consumer who uses that card for daily purchases-well, an IHG point is a far cry from 2% cash back.

  2. I don’t understand the point of this post.
    So what are you trying to say at the end?
    Are you saying these cards are too good so they need to get devalued?

  3. Unprofitable products don’t last, so I’m not sure what you think or even mean when you say these cards are too generous. Personally, I don’t think the IHG card is generous at all – what about it’s point structure, what about the value of an IHG point? Why be so selective in your analysis?

    I think you should take a sabbatical and work for a credit card company for a while.

  4. 5X on Platinum on travel expenses. I am laughing hard. We are trying to generate points and miles for traveling. How on earth you can generate many points and miles on 5X on Platinum?

  5. I like the old Chase Ink Business Plus and the current Ink Cash card with 5x on cable, internet, cell phone, and office supply stores.

  6. Who is the IHG card unprofitable for? Unless you know how much Chase has to pay iHG for the free nights redeemed, you don’t know whether Chase or IHG or neither is getting the short end of the stick. the conclusión about this card has zero evidence behind it, other than the fact that someone MiGHT redeem their night at a $500 a night hotel in exchange for a $49 annual fee.

  7. I don’t like the premise of this post… if you like the cards, say so and promote their benefits.

    But with your readership, this is just telling banks where they can make cuts. Saying they’re “too” generous is telling banks to change them.

  8. What a unnecessary post!!! What are you trying to accomplish here? Have these cards devalued? I don’t see any other benefit you would have in mind.

  9. Hmm…not sure what you are trying to accomplish with this post.

    That said, I do wish you’d put the “(almost?)” in the title like you have in the actual article (excerpt below):

    “In this post I wanted to share the two credit cards that I consider to be (almost?) too generous. “

  10. Man a lot of negativity on the blog these days. All Lucky was saying was that having the IHG card for a savy consumer is a steal. You can stay at a 400 dollar a night property all for one low annual fee. Of course the card makes a lot of money off non savy consumers. Especially given the fact that you are basically getting one point which is only worth half a cent per dollar spent. But for someone who is smart you really are coming out ahead on this card and not having to spend anything. Other cards may have more generous rates of return. But the IHG card is crazy for someone who can take advantage of the free night. Plus it does give you platinum status (which I will admit is not much) for free.

  11. @Kevin yes, your personal and business MR points combine. I have the Amex Platinum and the Blue Business Plus. Outstanding combination for me. I own a small business, I travel regularly for business. I put the air and hotels on the Platinum card, everything else on the Blue Business Plus. I’m getting either 5X or 2X on everything.

  12. Agree with Matt. I know Lucky needs clicks but no reason to tell a travel provider or bank they are too generous with benefits. What good can come of that?

  13. I agree with Matt, too. Unnecessary post. The banks are well aware of your blog. No need to tell them they are too generous.

  14. So, Marilyn, Boraxo, Matt, etc: are you under the impression that giant multi-billion dollar banks like Chase make decisions about what is profitable and what is not based on… blog posts? And not based on, oh, I dunno, something like a comparison of revenues vs expenses – information that they no only already have (without needing to read about it on OMAAT), but that they keep a hawk’s eye on at all times, like any business does with respect to each of its products?

    Really, people. You’d think from reading some of these comments that bloggers were all-powerful people who have huge influence over the world. Let me be the first to clue you in: they don’t.

  15. Banks don’t make financial decisions based on information contained in blogs; however, they are very interested in the public relations consequences of their decisions. Hence the surveys of cardholders prior to changing a credit card’s benefits. Besides the surveys, the reader comments on these blogs is another way for banks to assess how devaluations will be viewed by their customers. I’m sure Amex is probably losing money on Blue Business Plus, so they’re eagerly following how readers react to the notion that the benefits might be “too generous.”

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