Ask Our Expert

AA vs. AMEX

Dear Chris, I’ve seen the new AA reward credit card on your website, and I was wondering whether you think it is a best buy?

I’m an AA member and am thinking about getting the new card, but I’ve also been looking at the AMEX Platinum card and that looks like a pretty good deal too.

I reckon I could put about £1,000 of spending a month on a credit card, including £300 of fuel. Which card do you think would suit me best?

Kind regards,

Clive, via email on 10 November 2009

Our expert says...

The AA reward card (www.theaa.com) is an attractive new option for AA members and is specifically designed to benefit those who spend a lot on motoring. With this card you collect points which can be exchanged for high-street vouchers or AA products at a very competitive rate, or cashback at a lower rate.

The American Express Platinum card (www.americanexpress.com) is also a very attractive credit card, and the rewards are straightforward – you simply earn cashback every time you spend.

Which will be better for you depends on how much you spend on motoring, and how you want to receive your rewards.

It’s also worth noting that the AMEX card has a particularly attractive introductory deal, allowing you to earn 5% cashback, up to £100, in the first three months. While this is a juicy perk, it doesn’t necessarily mean it will be the best card for the long-term.

The following table illustrates the rewards you could earn with each card in the first year if you spent £1,000 a month, including £300 on fuel:

Card	Reward earned over year	Value in cash	Value in vouchers / AA products
AA reward credit card (if you are a member*)	15,600 points	£78	£156
AMEX Platinum credit card	£176.25	£176.25	n/a

The following table illustrates the rewards you would earn in the second year of having each card (so does not include the AMEX introductory bonus period):

Card	Reward earned over year	Value in cash	Value in vouchers / AA products
AA reward credit card (if you are a member*)	15,600 points	£78	£156
AMEX Platinum credit card	£113.75	£113.75	n/a

* Non-members earn half as many points as members with the AA reward card

As you can see from the first table, based on your monthly spend, the AMEX Platinum credit card wins hands down for the first year. With AMEX you could earn £176.25 cashback, whereas you would only earn £156 in vouchers or £78 in cash with the AA card.

However, for the second year (and every year after that), the AMEX would not necessarily be the best option.

If you want hard cash, then the AMEX Platinum card would still be better, but if you are happy to take your rewards in vouchers (which are available for a number of retailers including Marks & Spencer, Argos and John Lewis) then the AA card offers a better deal.

Over the first two years, you could earn £290 cash with AMEX or £312 of vouchers with the AA card. So you need to decide whether the vouchers are as valuable to you as the cash.

When making your decision, it’s also worth noting that AMEX cards are not accepted everywhere, whereas Visa cards (which the AA card is) generally are.

The AA card also has a lower APR than the AMEX Platinum – 16.9% compared to 19.9% - but this should not matter to you. If you are planning to use a reward credit card you should be confident that you can pay off your bill in full at the end of every month (so won’t pay any interest) – otherwise the interest payments would likely wipe out any rewards.

Good luck Clive.