New 5% cash back card! But does it beat Amex?

16 August 2011, 11:12   By Julia Kukiewicz

CAPITAL ONE kicked their World credit card into touch last month with a new deal that offers up to 5% cash back on spending.

american express card
Credit: Colin Hui/

Today, though, the American Express Platinum credit card bit back, replacing its own 'tiered' system for earning cash back with a recurring 2.5% special offer rate.

Which begs the question: which is best?

What are they offering?

Previously, the Capital One World Mastercard offered a simple, unlimited 1% cash back rate.

Now it's offering a considerably less simple tiered rewards scheme that runs from 0.5% up to 5%.

The 5% rate is available for the first 99 days (just over three months) and earnings are capped at £100 or, to put it another way, on £2,000 of spending.

Thereafter, the higher cardholders' annual spending, the higher the cash back rate they'll earn.

That's a model nicked straight from the American Express Platinum which was long the market-leading cash back deal.

That may explain why, just a month later, the Platinum decided to ditch its copied cash back model and launch a longer term cash back deal instead.

Now, new American Express Platinum cardholders earn an unlimited 1.25% rate on their annual spending.

Despite those slightly lower rates, though, there's no doubt that the AmEx Platinum has been redesigned with higher spenders in mind.

Not only is there a new £25 annual fee to pay, that bonus rate on cardholders' anniversaries is only available when they've spent over £10,000 during the year (so at least £833.50 a month).

"There's a huge amount of dissatisfaction towards companies that offer better rewards and discounts to new customers compared to existing customers," said Julie Hay, head of credit cards at American Express UK.

In addition, the American Express Platinum credit card's representative 18.5% APR variable, is just a little lower than the card's previous interest rate.

But that rate takes into account the new fee: look a little closer and you realise the AmEx have significantly cut their standard interest rate on purchases to just 14% p.a. variable.

As with all reward credit cards though, paying off in full every month is still the ideal - any interest you pay just eats into your earnings.

AmEx Platinum vs Capital One World

But enough small print, let's get down to which is the most successful cash back credit card: that is, which will actually earn cardholders the most money for their purchases.

Year one:

In the first year, let's assume you've timed your application to coincide with a period of high spending and, no matter your usual monthly spend, you'll nab that £100 bonus.

Monthly spend CapOne Amex
(^minus £25 annual fee)
£1,000 £160 £187.50^
£850 £146.50 £170.63^
£500 £122.50 £131.25^

(Note that you can see how much bonus you can earn without increasing spending in the first three months by using our cash back credit card calculator)

Year two:

In year two we start to see the effect of that bonus month for bigger spenders.

Monthly spend CapOne Amex
(^minus £25 annual fee)
£1,000 £95 £137.50^
£850 £72.50 £113.12^
£500 £30 £56.25^

Look long-term

As you can see, although the bonus for the 5% offer is great, long term is worth looking at, particularly for the highest spenders.

Finally, we noticed an intriguing note in the American Express Platinum's terms and conditions that "You may choose and we may agree" to receive the cash back in the form of shopping vouchers.

We're waiting for confirmation from AmEx on what the advantage of this would be.

Also note that all the information above is subject to change. We update our guide to the best cash back credit cards (available here) regularly so check back to see how both the Amex Platinum and Capital One World stack up against the competition.

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