Amex Gold Charge Card Return% Calculations Worst Case (w/o Bonus MR inc Renewal Fees)

[cardzo]

I have a query regarding Amex Gold Charge Card Return% is the following calculations correct?

1000 * 6 transactions Amazon GV(AGV) purchase = 6000 INR monthly which gives 1000 bonus MR per month
5x multiplier AGV purchase on Amex Rewards Multiplier portal for above 6000 INR transaction - 6000/50 * 5 = 600 MR
Total per month 1600 MR for 6000 INR so 1 year will be 19200 MR for 72000 INR(yearly spend)
Redeeming for 18k Gold Karat Collection you will get at least 6000 INR Amazon Gift Card
So now Return % will be as follows without considering referral bonus and including 4500 INR renewal fee to replicate worst case scenario
Return % = 6000 INR(Amazon Gift Card) / 72000(yearly spend) + 4500(Renewal Fee) = 6000/76500 = 0.0784 * 100 = 7.84%
Are the above calculations correct or am I missing anything here??
Appreciate it if someone could help me on this.

 

[Karma]

Yes, this is correct. Would just add GST to the fee.

 

[Karma]

Yes, this is correct. Would just add GST to the fee.

The referral link will default to platinum card but once you open the link you will have to go to “View all cards” and then select GC card and the referral benefits will apply.

 

[jk51]

I have a query regarding Amex Gold Charge Card Return% is the following calculations correct?

1000 * 6 transactions Amazon GV(AGV) purchase = 6000 INR monthly which gives 1000 bonus MR per month
5x multiplier AGV purchase on Amex Rewards Multiplier portal for above 6000 INR transaction - 6000/50 * 5 = 600 MR
Total per month 1600 MR for 6000 INR so 1 year will be 19200 MR for 72000 INR(yearly spend)
Redeeming for 18k Gold Karat Collection you will get at least 6000 INR Amazon Gift Card
So now Return % will be as follows without considering referral bonus and including 4500 INR renewal fee to replicate worst case scenario
Return % = 6000 INR(Amazon Gift Card) / 72000(yearly spend) + 4500(Renewal Fee) = 6000/76500 = 0.0784 * 100 = 7.84%
Are the above calculations correct or am I missing anything here??
Appreciate it if someone could help me on this as well as need GC referral link, tks in advance!

Calculation should be like this without any other referral benefit apart from the mentioned use case of purchases on reward multiplier for the milestone amount.

19200 MR Points on spends of 72,000/- annually yields (0.33p as per 18k gold collection, here considering this rate for the entire points since balance points carried forward and be redeemed in next cycle as well)

4500+tax = 5310
19200 MR points = 6336 (@0.33p)

Hence net yield 1.425% upon spends of 72,000 as per above case without referral benefit. It totally depends upon the way one looks at it.

 

[Karma]

Calculation should be like this without any other referral benefit apart from the mentioned use case of purchases on reward multiplier for the milestone amount.

19200 MR Points on spends of 72,000/- annually yields (0.33p as per 18k gold collection, here considering this rate for the entire points since balance points carried forward and be redeemed in next cycle as well)

4500+tax = 5310
19200 MR points = 6336 (@0.33p)

Hence net yield 1.425% upon spends of 72,000 as per above case without referral benefit. It totally depends upon the way one looks at it.

Interesting way to calc and agreed it eventually depends how you look at it.

However, I think I would consider the fee as an expense that I am going to incur and group with the rest of the expenses (72k in this case) and consider 6336 as a return on those spends.

 

[cardzo]

Thanks a lot @Karma & @jk51 so which is the best way to look at it would it be @jk51 way 1.425% or adding fees as an expense?

 

[SSV]

I have a query regarding Amex Gold Charge Card Return% is the following calculations correct?

1000 * 6 transactions Amazon GV(AGV) purchase = 6000 INR monthly which gives 1000 bonus MR per month
5x multiplier AGV purchase on Amex Rewards Multiplier portal for above 6000 INR transaction - 6000/50 * 5 = 600 MR
Total per month 1600 MR for 6000 INR so 1 year will be 19200 MR for 72000 INR(yearly spend)
Redeeming for 18k Gold Karat Collection you will get at least 6000 INR Amazon Gift Card
So now Return % will be as follows without considering referral bonus and including 4500 INR renewal fee to replicate worst case scenario
Return % = 6000 INR(Amazon Gift Card) / 72000(yearly spend) + 4500(Renewal Fee) = 6000/76500 = 0.0784 * 100 = 7.84%
Are the above calculations correct or am I missing anything here??
Appreciate it if someone could help me on this as well as need GC referral link, tks in advance!

Calculation should be like this without any other referral benefit apart from the mentioned use case of purchases on reward multiplier for the milestone amount.

19200 MR Points on spends of 72,000/- annually yields (0.33p as per 18k gold collection, here considering this rate for the entire points since balance points carried forward and be redeemed in next cycle as well)

4500+tax = 5310
19200 MR points = 6336 (@0.33p)

Hence net yield 1.425% upon spends of 72,000 as per above case without referral benefit. It totally depends upon the way one looks at it.

Interesting way to calc and agreed it eventually depends how you look at it.

However, I think I would consider the fee as an expense that I am going to incur and group with the rest of the expenses (72k in this case) and consider 6336 as a return on those spends.

 

[cardzo]

Thank you @SSV, @Karma, @jk51 your inputs cleared all my confusion.

 

[Karma]

View attachment 52961

Thanks @SSV

So that means the reward rate mentioned in the link below is not correct?

AMEX Gold Charge Card Review

Editor’s note: This is a recurring post, regularly updated with new information and offers. Last Updated 10th July 2023. American Express has finally started issuing cards since they were put under an embargo by the RBI. Their most sought entry-level card other than the AMEX Membership Rewards...

www.technofino.in

 

[SSV]

Thanks @SSV

So that means the reward rate mentioned in the link below is not correct?

AMEX Gold Charge Card Review

Editor’s note: This is a recurring post, regularly updated with new information and offers. Last Updated 10th July 2023. American Express has finally started issuing cards since they were put under an embargo by the RBI. Their most sought entry-level card other than the AMEX Membership Rewards...

www.technofino.in

Before we go further did you understand the difference between capital expenditure and regular expenditure in my example?
Do you agree with my statements?

 

[Karma]

Before we go further did you understand the difference between capital expenditure and regular expenditure in my example?
Do youagree with my statements?

View attachment 52964

I did understand what you mean by capex (believe you mean it is the additional expense you did just to acquire the card which you wouldn’t have incurred otherwise and you aren’t getting any return on it)

I feel at the end of the day when i do my calc at individual level i would just group my expenses instead of categorising them in capex and regular ex. and then subtracting capex from my rewards.

 

[SSV]

I did understand what you mean by capex (believe you mean it is the additional expense you did just to acquire the card which you wouldn’t have incurred otherwise and you aren’t getting any return on it)

I feel at the end of the day when i do my calc at individual level i would just group my expenses instead of categorising them in capex and regular ex. and then subtracting capex from my rewards.

okay, that is by definition..

see, when we are spending ie. regular spends , we are getting equivalent value in goods / GV value in this case..
By paying fee of 5,130 - we are not getting anything in return.. we are only getting a chance to hold the card ...

I will put it in other words..

By spending 72K on CC = we are getting 72K AGV + 6.4K rewards.
BY spending 5.3k fee = ???? what are we getting... ZERO...

so the cost of acquistion of CC here is: 5,310..

so to get 6.4k return on 72K spends , we need to spend 5.3 K seperately

Say if it is one off cost of acquistion , then we spread depreciation cost of 5.3K over the period of life of asset...
but it is not.. it is a yearly cost of acquisition ... so need to write off 100% of acquisition cost in that year only..

so your gross profit is : 6.4 K
your net profit after depreciation is: 6.4K - 5.3k

DO you want to consider Gross profit return rate / net proift return rate??

Just answer to the point...pls

 

[Karma]

okay, that is by definition..

see, when we are spending ie. regular spends , we are getting equivalent value in goods / GV value in this case..
By paying fee of 5,130 - we are ot getting anything in return.. we are only getting a chance to hold the card ...

I will put it in other words..

By spending 72K on CC = we are getting 72K AGV + 6.4K rewards.
BY spending 5.3k fee = ???? whare are we getting... ZERO...

so the cost of acquistion of CC here is: 5,310..

so to get 6.4k return on 72K spends , we need to spend 5.3 K seperately

Say if it is one off cost of acquistion , then we provide depreciation of 5.3K over the period of life of asset...
but it is not.. it is a yearly cost of acquisition ... so need to write off 100% of acquisition cost in that year only..

so your gross profit is : 6.4 K
your net profit after depreciation is: 6.4K - 5.3

DO you want to consider Gross profit return rate / net proift return rate??

Just answer to the point...pls

I have been considering GP return rate

Post this explanation net profit return rate does sound more logical

 

[SSV]

I have been considering GP return rate

Post this explanation net profit return rate does sound more logical

Any business , MUST consider NET profit only.. not GROSS profit...
GROSS profit is to ascertain how the core business is doing..
Net profit is for the return for the investors...

 

[Karma]

It is 1000*6 for GC and 1500*4 for MRCC

 

[Copycat]

[Wrong calculation follows. I'm retaining my insane text so that others don't make the same mistake]
[Wrong calculation starts]
@cardzo
You opened my eyes today. I never ever thought of calculating it that way. I would deduct the card fee from the cashback and be done with it. Your way makes much more sense when comparing cashback returns

Your way:
You spent 77310 to get a cashback of 6336 (I included GST and took a redemption rate as 0.33p for Amazon vouchers)
Return: 8.2%

My old way (and the way @SSV, @jk51 and others are advocating)
You spent 72000 to get a cashback of (6336-5310) = 1026
Return: 1.43%

For me, here is why your way makes more sense
Now let us say you used an APay card to buy the vouchers worth 77310
You get 2% returns and the card is LTF
So you have a cashback of 1546
Now this will lead you to the erroneous conclusion that at 2% returns the APay card is better that the Gold charge card at 1.43% returns
But that is wrong. With the Apay card you have 1546 Amazon GC rupees but with the Gold Charge you have 6336 Amazon GC rupees as cashback. So the Gold Charge is far better.

So, your way of doing things is far, far better.
Thanks!
[Wrong calculation ends]

EDIT: I'm an idiot. I would have 5310 cash in hand + 1440 APay. Which is better than 6336 from the Gold charge

 

[Karma]

Any business , MUST consider NET profit only.. not GROSS profit...
GROSS profit is to ascertain how the core business is doing..
Net profit is for the return for the investors...

I understand this makes sense for a business but didn’t think of applying the concept on a personal basis. Nonetheless, your approach looks good and I will go back to assess few of my CCs.

Thank goodness atleast DCB is LTF 😀

 

[jk51]

Interesting way to calc and agreed it eventually depends how you look at it.

However, I think I would consider the fee as an expense that I am going to incur and group with the rest of the expenses (72k in this case) and consider 6336 as a return on those spends.

I look at it this way. I spent 72,000/- on somethings which I required (read as was supposed to incur these spends of not in this card then some other) against which I received 19200 MR points. So after that am I getting anything else out of it by paying renewal fee for the card? At these spends No. 5310/- is the added cost of maintaining that card at these spends hence it is a hard expense which decreases my return on it.

If I had spend the same amount on some other card which is LTF then even return on it trumps the return one receives on this card for the above spends.

Best use case is to spend 72,000 on this card. And ask for retention benefit in lieu of annual fee payment to be made. People get 10-12.5k MR points upon negotiation. Conservatively even if we take 10k MR points then it’s 3300/- (@0.33p). Hence net return shall be 6% on this.

 

[jk51]

Thanks a lot @Karma & @jk51 so which is the best way to look at it would it be @jk51 way 1.425% or adding fees as an expense?

As already stated by @SSV and self this calculation takes into account the net returns.

 

[Karma]

I look at it this way. I spent 72,000/- on somethings which I required (read as was supposed to incur these spends of not in this card then some other) against which I received 19200 MR points. So after that am I getting anything else out of it by paying renewal fee for the card? At these spends No. 5310/- is the added cost of maintaining that card at these spends hence it is a hard expense which decreases my return on it.

If I had spend the same amount on some other card which is LTF then even return on it trumps the return one receives on this card for the above spends.

Best use case is to spend 72,000 on this card. And ask for retention benefit in lieu of annual fee payment to be made. People get 10-12.5k MR points upon negotiation. Conservatively even if we take 10k MR points then it’s 3300/- (@0.33p). Hence net return shall be 6% on this.

Understood. But, 10k+ points for retention for GC. That is not great but decent atleast.

Anyway i think sticking to DCB for my GVs looks like a better proposition to me but will re asses when GC renewal comes close.