"I was aggressively using Amex blue cash from 2003 until 2004," Ron explains (not his real name). "But when I realized I wasn't receiving the percentage of cash back offered, I switched to another credit card which delivered a no-tiered 5 percent rebate on all purchases. Back in those days 5 percent credit cards were given out left and right, so the Amex Blue Cash wasn't that good a deal.
For example, one card I had gave 5 percent on all purchases but it limited rewards to $600 per year. On purchases with Amex you had to fit into certain categories. I realize this was my fault and buyer beware—you have to read the fine print. I found out later that you earn 5 percent with AMEX over $6,000, and the Blue Cash card comes with a lot of stipulations.
Now I am back using my Blue Cash Card but it only works for me because I am a high spender; I put everything on it, from utilities to my gym membership. If I could put my mortgage on it, I would. I wish I could use it more because there are some restrictions—of course the vendor has to accept credit cards.
And here is another thing: I was a bit pissed off with Amex because they suspended my account without notice. Because of all their defaults with other customers—those they gave credit to—they lumped me into this group. I switched to Blue Cash in November 2008, when I used it again aggressively. I was determined to get over that $6000 mark, fast. So I started charging about $3000 per month, but that was outside my spending pattern because before that I was only spending about $500. Amex got scared and suspended my account then they sent me an IRS form, which gives them access to your income tax return. I had to prove that I could continue my relationship with them.
Amex gave these credit cards to people who just stated their income, with no documentation. I stated my income truthfully. So when I jumped from spending $500 to $3,000 per month, given the economy and the rapid defaults of other customers, they just assumed that I would default; my spending pattern likely red-flagged them.
Anyway, I sent the form back. Fortunately my income matched my initial statement so Amex allowed me to continue using my Blue Cash card. But I was still mad, what if I was in a foreign country? I'm sure a lot of people have been put into a nasty predicament…
I calculated that I have received $130 from last October to now from Amex. It is given to you in a statement credit, you don't get cash in the mail. I calculated it was 1.3 percent cash reward. So they are tricky, but if you make a big purchase, you can get to the $6500 level really fast.
But who is making big purchases these days? They are playing this game and you have to play back—they are making money from you, and you have to do likewise if you want to benefit."