American Express Blue Card: Our Everyday Credit Card

Since becoming debt free my wife and I have started using a credit card to consolidate our monthly bills. I’ve shared a bit about this stragegy in the past, and several of you have asked me to share which card we decided to use. Out of the small stack of cards we had accumulated over the years, only our American Express Blue Card and a Visa card from our credit union survived our sharpest pair of scissors.

To simplify things, we decided to use our Amex Blue card to hold all recurring, monthly charges, such as utility payments, subscriptions, etc. The benefit of this plan is two-fold.

First, it makes managing our primary checking account much easier. No longer do we have to reconcile five or six utility payments plus a number of subscriptions (Netflix, Onstar, etc.) to our checking account ledger. We simply write one payment to pay off the American Express Blue card and record it in our checking account.

Another benefit of charging all of our recurring expenses onto a single credit card is that I am able to get a consolidated view of our monthly outgo, grouped by category (more on that in a moment). I can even analyze total expenditures in each category over time online.

Sure, I could do the same thing using personal finance software, but this way I don’t have to download any transactions from multiple sources, or share any login information, making this a one-stop, secure shop to viewing our expenses.

American Express Blue Card Review

Customer Service/Website Interface I’ve never had a problem with Amex customer service, and their interface recently added some features that I’ve come to enjoy. Members may “tag” transactions using user-defined categories and view a number of reports/views based on those groupings. So far, I’ve grouped transactions by Monthly Bills and Vacation (we use this card for reservations and travel expenses). I can graph those categories over a specified time to track spending, and even pay a particularl “bucket” of my balance from a separate account (paying for vacation out of our vacation fund, for instance).

AmexCharge011310
An example of the “transaction tag” I referred to above attached to my Netflix subscription fee. Notice the “Monthly Bills” designation under my Netflix charge. At the end of the month, I sum up this category to determine my monthly, recurring charges.

Competitive Rate While I plan to pay off our American Express Blue card every month, it’s nice to have a competitve interest rate on your card just in case you need to stretch your payments across a couple billing cycles. Blue comes with that flexibility to pay over time, and a 0% introductory APR for 6 months.

Rewards Program A rewards program is not what really sells me on a credit card product. After all, most programs would require thousands of dollars in spending to earn a modest reward. However, if a credit card issuer is offering to give me points just for using their product, I’ll take them!

With the Amex Blue card you earn 1 point for every eligible dollar, 2X points at the American Express Travel website, and 2X – 10X when you make purchases with select partners. Rewards are available in a variety of categories such as travel, gift cards, cash, merchandise and entertainment.

No Annual Fee – A number of Amex products (and others) have outrageous annual fees. I simply refuse to pay a fee for the privilege of charging items to the card. My Amex Blue card has a $0 annual fee.

Additional Benefits I’m Not Likely to Use, but are Nice to Have

Extended Warranty American Express extends the manufacturer warranty for purchases made using your Amex Blue Card.

Purchase Protection Eligible purchases made with the Amex card are protected against accidental damage and theft for up to 90 days from the date of purchase.

Comments

  1. I’m with Affluent Pauper. I’m disappointed to see your mention of a low interest rate just in case you have to let part of your balance ride for longer than one month.
    My wife and I followed the Dave Ramsey Baby Steps Plan all the way out of debt. The very idea of having a credit card to turn to really goes against all the ideas that he promotes.
    I think living frugally means living below your means. Credit cards open up the opportunity for splurging, and this is what gets so many people in to trouble.
    As the old saying goes…when you play with fire, you’re gonna get burned.

  2. I appreciate the feedback, and constructive criticism. If this system does not work for you, or you find the temptation of using a credit card too much, I certainly recommend you avoid it.

    Affluent Pauper correctly points out that I was once in a similar situation – and at the time I destroyed all of our credit cards. I kept this one card locked away, and now I’m slowly reintroducing myself to using it as a tool to improve, and simplify, our day to day management of expenses.

    Thanks again for your comments.

  3. I’m also disappointed in this article. Though it may not be, it appears to me to be an advertisement for Amex.

    There are many other ways to simplify/mamage your finances as mentioned above. Recommending use of a credit card that opens the opportunity for someone to get back into debt if they’re not careful (most of the population) goes against what I thought this blog was about. It’s a shame as I thought your advice was quite good…

    I still get the feeling this is some sort of advertisement you were compensated for.

  4. This can be a dangerous strategy if you are not responsible and pay off that credit card balance monthly. It can give someone a false sense of having money if they are not careful.

    I follow a similar strategy…

    I use one credit card for all my monthly bills (utilities, car payment, etc.) I have set up these accounts onto budget payment plans (offered free by many of these utility companies). I pay the same amount each month. Once a year they reconcile my account (match what I paid to what I should have been charged). I then get a credit or have to increase my payments for the next year. I have almost all of these payments set up to automatically charge onto my credit card each month. I am careful to only do this major reputable companies. These bills charge to my card each month. I then have automated my bank account to automatically pay my credit card the same amount that was charged on the very next day.

    All it takes is for me to monitor it once a month, and make changes to the bank payments once per year as my budget amount changes.

    I know some people are not in favour of these budget amounts as you can sometimes end up with having a large surplus (which means the company had your money for up to a year) or a large deficit (which increases your payment for the next year), but I have found that I am pretty close on my budgeted amounts and this way I have consistent payments for things like my heating bill (natural gas)all year rather than it spiking during our winter. The largest surplus I have accumulated was $104 in a year and the largest deficit was $93 in a year. Neither amount really make an impact on my budget over a monthly basis.

    The Frugal Canuck
    http://thefrugalcanuck.blogspot.com

  5. This is how we handle bills also. Everything goes on our AmEx, and then we pay it off. We do it mostly for the cash rewards. I have to say the only downside is that it’s a little scary to see a big balance on a card, but knowing it’s just a couple clicks from being paid off makes it better.

    I don’t think advice is bad, but I do think that having funds available to pay it off is the way to go.

    For the comment about splurges, the card doesn’t make us splurge, nor give us an excuse to make splurges. It’s just a way to keep everything together on one bill and get some rewards for doing so.

  6. I want to help clarify my input with an extreme example. I believe that many people reading this blog are those who have gotten into debt, partly due to the misuse of credit cards. Frugal dad I believe that was part of your families debt.
    What if someone was an alcoholic? Unable to consume alcohol in a controlled manner. And then they went through rehab, got clean, and we doing well. Would we then propose that they break out that bottle of scotch they had hidden away and slowly reintroduce alcohol into their life? So they could learn to do it in a controlled manner?
    To me, this is a decent representation of credit cards in the lives of people in debt. It is the very thing that got them into trouble, so now that they are out, I should think they would want to avoid it at all costs! Even if it meant a couple extra minutes to reconcile their bank transactions.

  7. @Mike: Your analogy between misuse of credit and alcoholism is interesting, however I would argue that it compares apples and oranges in that alcoholism can be traced to certain genetic tendencies, and is a very real chemical dependency.

    Misuse of credit cards is more a behavioral problem, in my opinion, and going cold turkey is a great way to improve habits, initially. However, I think it a bit extreme to expect 100% of the population that had trouble with credit to then avoid it the rest of their lives. Those who have matured/grown wiser, financially, and cleaned up the mess from years of irresponsibility, are able to reintroduce credit in a responsible manner.

    One technique I failed to mention in the article that might help alleviate concerns of sliding down the slippery slope of debt again is to contact the card issuer and request your limit be lowered to only a couple thousand dollars. This way, you can easily cover the monthly expenses without the risk of running up thousands of dollars in a moment of weakness.

  8. I am just starting the Debt Snowball per Dave Ramsey’s suggestion and am looking forward to having all my five credit card balances reduced to zero by the end of this year. To keep my FICO score high, I will continue to use my Bank of America card and pay it in full each month.

  9. We use this method as well for the cash points. I understand the reluctance of some readers regarding the use of credit cards but if you find yourself in the financial position to so this it really simplifies bill paying.

  10. We use a very similar method. We put everything (and I mean everything) on our credit cards. For us, it makes it easy to then see where we are spending. Also, because we pay it off every month, we like the cash reward that our card offers.

    If you have a credit card that offers a reward for paying on time, then isn’t that a strong incentive to pay the bill in full every month? It’s a great incentive to me. I like the cash back program.

  11. I haven’t looked into blue- but will soon be giving up my gold for blue after this article. I didn’t know if blue had rewards…
    We have used this method successfully for the last ten years. We do envelopes for cash and cards for groceries (the major shops), travel and bills. If it should begin spinning out of control- we simply put the cards away for the month.
    Cards help us track our spending.
    BTW- no swipes are little ones- only real bills….
    Thanks for the article.

  12. This is our only credit card as well, and while I don’t use it to consolidate monthly bills I do use the cashback function (instead of points). I know that not everyone is in a position to use a credit card this way, but we pay the bill in full every month, charge everything on it (you get a higher % back for groceries and gas), and enjoy a nice cash bonus every July. It’s the only reason I haven’t gone to a cash envelope system, but it’s how my husband and I have used credit for over 15 years, so it’s working for us.

    I have to say, though, I was surprised by this post as well, FD. It did sound a little commercial, and my first thought was if you were using an affiliate link or something. Perhaps prefacing your story with “Though not everyone can use credit this way…” would have appeased your regular readers who are in credit card debt or recovering.

  13. Not everyone who reads PF blogs has hit financial bottom.

    I think articles on financial tools such as credit cards are appropriate.

  14. Wow, this post caught me out of the blue. Did not sound like a regular FD post, and even if this was a post that you were compensated for, as a fan of your blog I still took what you said to heart. Even though I won’t be applying for the card, I do appreciate the different way you shared with us on how you all are handling your finances now.

  15. I too use my card daily for everything — for the rewards, the safety, and the warranties. I have used the warranty on a cell phone that was lost — without having to buy the “extra warranty” from the cell company itself. My card covered it and I got a new phone. Since I use the card for everything, and pay it off in full each month, I get substantial rewards. I like the protection of being covered if my card is stolen — I am not responsible for fraudulent use if it happens. Also, I track spending daily online and know exactly where my balance is — if I am close to going over my budget I adjust my spending accordingly.

    Honestly, we built a whole house using the card and getting rewards — those were some awesome rewards that year! Since we built our home ourselves we just put all the materials on the card as we wend along and paid it off each month. Pretty much the cash-back rewards paid for my landscaping.

    I am horrible with cash. I always stick it in my pocket when I am out and am at risk for losing it and I hate that I can’t track when I use cash. The CC makes everything so much easier for me anyway. I think it all comes down to personal responsibility — I would never charge anything that I didn’t have the money in the bank to cover.

  16. Several items were not addressed here and they all fall under the topic: “There’s no FREE LUNCH”. First, ‘rewards programs.’ The money to pay for rewards comes from the people who irresponsible use credit, carry balances, and get socked with fees. For each ‘reward’ dollar a person puts into their pocket, you can bet the credit card company has taken 10 out of some other poor fool’s pocket. It’s analogous to gambling. You can only ‘win’ when many, many others lose. Think about that the next time you get something ‘for free’.
    Also, how many times have you actually used an extended warranty? I can’t think of a single instance where I’ve ever used one of those. So it’s basically a once-in-a-blue-moon benefit. It’s just another trick of card issuers so you’ll stay with their game. And again on the no free lunch: you get this ‘free’ benefit because many, many other card users are paying too much in interest and late fees.
    I can go on, but really if you’ve made your mind up to use credit cards then neither I nor anyone else on this board will change your mind or heart. Using credit is a behavior issue, and the borrower is always going to be in debt to the lender, even if only for a 30 grace period. Borrowing money, even for short periods, can and does bite too many people to make it worth ever going back into debt again for more than the cost of a soda. And if that’s all I need, I’ll just borrow a few quarters from my wife.

  17. I’m not in a position to use this method, but I have heard it’s a good way to limit who sees personal data. I don’t quite remember how it all worked but it boiled down to:

    1. One credit card being used, and it has all that theft protection stuff on it ($50 dollar protection limit, or whatever it is).
    2. Only one check per month being written, meaning less intrusion into a persons finances, other than the credit card.
    3. Only one bill a month being sent out.

    This was NPR quite a while ago, who was talking about how to prevent information theft, etc, and this is one of the tips he brought up.

    I’m sure there’s more to it, but this is all I remember.

  18. I read personal finance blogs even though I have never had financial problems. I see it as a way to keep an eye our for frugal ideas and better financial options.

    My husband and I (26 and 27) have a car loan that will be paid off soon and a mortgage that only has 7 years to go even though we only purchased our home 3 years ago. We do that while making about $62,000 a year after taxes.

    I’m giving these details to explain that articles such as this one may not be meant for those who are struggling with debt.

    We use three credit cards to pay for almost everything and get $400-$600 in cash back every year. We have never had a credit card or bank fee. We have never incurred interest charges.

    That said, I hate Amex. :-)

    I do love our Discover More card for everyday purchases (1-5% cash back after the first $3000 depending on the purchase), our Discover Open Road card for gas and other car expenses (5% cash back), and I’m okay with our Worldpoints Mastercard (1% cash back) for everybody who doesn’t take Discover.

    The Amex cards I’ve looked into either charge annual fees or have a less beneficial rewards system. If I’m going to use credit cards to make budgeting easier and for convenience, I am going to maximize my cash back.

    On a personal note, Amex also made it difficult for my mother to cancel when they started charging my parents an annual fee. I hold a grudge for the two hours we spent waiting in line when I was 13 years old. :-)

    Thanks for the article. I like reading about other options.

  19. I should mention that I have never had credit card debt. Ever. I was brought up and taught that if you don’t have the money to pay for it you: A: don’t buy it, or B: find a way to earn some extra cash first. As a result, I have always used my credit card only to the extent that I have the cash already available to cover my purchases. For me it is convenience only.

  20. I use a similar method with my card as well.
    It is worth noting, as others have, that many folks have success using credit cards to manage their daily finances.
    Just like any other credit product (such as a mortgage)it is a “financial tool” that if used appropriately can be very beneficial.
    Don’t blame the hammer for missing the nail!

  21. Statistically You Spend More With Credit – A Dunn and Bradstreet study stated that if you pay with a credit card, you will statistically spend 12%-18% more on your purchases as opposed to paying with cash. When you pay cash, you feel the money leaving you and it hurts; with credit cards that’s not the case. If you use a credit card, you will spend more money whether you realize it or not. http://www.discoverdebtfreedom.com/2008/04/02/ten-facts-credit-card-companies-don’t-want-you-to-know/

    1%-5% Cashback rewards, what a deal! You cannot beat the CC companies. Even after your reward, you’re still spending 7-17% more than if you just carried cash.
    (The only acception would be frugal dads proposal of just paying the household fixed bills with the card. But many other posters have praised their intelligent use of CC for all expenses.)

  22. Initially mentioning credit cards again to someone who has had problems with them in the past may seem like a bad idea, however it all depends on the method of paying them off. If like me you have in the past spent too much on them, then you will know its no fun paying them back over months or years – equally important though is sound cash management which avoids the payment of any overdraft bank interest. This is where a credit card can save you money, especially if like me you travel a lot for work and cannot get all of it in advance. Provided you set your credit card repayment to “in full” every month then they are a very useful and good cash management tool and usually do away with needing to borrow short term money from the bank.That said I would ONLY recommend credit (or charge cards) to people who use the pay in full model otherwise they are there only to create problems.

  23. We use a budget, and use the CC for what we have planned to spend. At the end of the month, we pay off the credit card from the checking account. This means less balancing of the checkbook, and less chance of us overdrafting since all non-budgeted money gets transferred to a higher-yield savings account. I am a fan of anything that saves me time. The added credit history and cashback rewards are bonuses.

    However, I’ve heard that the best way to automate bill pay is to set it up through your bank. This way your bank pays the biller, and the biller isn’t requesting money from your bank. Of course, you would lose the CC cashback rewards and credit history, but the idea is that it is more secure. Is that true? I have read this on other personal finance blogs.

  24. It’s also worth noting that a credit/charge card also makes fraud prevention a little easier. If you use a normal debit card then the money leaves your account instantly, something which happened to some people I know. On the other hand with a credit/charge card you get a little time to check it over before the payment leaves your account. This is a great benefit if you are having to pay lots of restaurant bills and you have no idea how trustworthy the establishment is. Also for Forex payments abroad credit cards often work out cheaper than debit cards, as many debit cards level a fee just to process the transaction plus a % of the amount. These fees can soon add up if you make a lot of purchases. As I said earlier though, payment in full every month is the only way to go.

  25. Danger aside, I’m curious if you had to deal with any hoops for your utilities to accept credit card payment. I thought most utilities prefer checks and there’s usually costs for credit payments, no?

  26. @Ari Herzog
    I only use my credit card for utilities that take credit with no hassles. My water company was the only hold-out and is automatically debited from my checking account.

  27. I’ve followed the FD blog from afar and this is my first comment. I appreciate FD’s approach, and used wisely, his method can work for a fiscally disciplined household. I personally was tettering on the edge of bankruptcy just five years, but I opted to pursue credit counseling to pay my debts. Five years later, I own a home, I own my household’s vehicles, and I have FICO scores near 800. During my years in CC, I learned how to live on a cash only budget. I learned a ton about credit during those lean years and once I was debt free, I knew that I could make credit work for me. I’ve been using rewards credit cards for the past couple of years and making decent returns on them. The bottom line is you must still view your life as a cash-only deal, stick to a budget, and only charge what you normally would. Between my Amex Blue Cash, Chase Freedom Signature Visa, Discover More, and Penfed Travel Visa, I’m raking in hefty rewards and never pay a cent of interest. I have over $30K in available credit and I’m never tempted to spend it. Those lean, cash-only years was probably the best thing that ever happened to me. Take charge of your financial life and beat the banks at their own game people.

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