By Adam Jusko, ProudMoney.com, adam@proudmoney.com. This is a revised review from the original, incorporating changes to the Cash Magnet card and other cards on the market.

The American Express Cash Magnet Card is a no-annual-fee credit card that gives you 1.5% cash back on all purchases you make with the card — no special purchase categories to consider, and no cap on what you can earn.

Key Features

  • 1.5% cash back on all purchases
  • No annual fee
  • 0% interest rate on purchases and balance transfers for 15 months (3% fee on balance transfers)
  • Bonus opportunity: $150 bonus if you use the card for at least $1000 in purchases in the first 3 months of having the card, plus an additional $100 bonus if you use the card for at least $6500 more in purchases within the first 12 months (so, at least $7500 in purchases can get you a $250 bonus in total) NOTE: When this card was originally launched, you could earn a total of $300 in bonuses; that has been reduced.


Trend Toward Long-Term Bonuses Vs. Short-Term Bonuses

This card is another example in a trend we’ve been noticing. More and more, credit card companies are offering bonuses based on your long-term card spending versus just your short-term spending. The idea used to be that an upfront bonus would get you to use the card and then it would become a habit and you’d make it your everyday card. After watching too many cardholders take the bonus and run back to their prior favorite card, the trend now is to reward cardholders for using the card over a longer period. The American Express Cash Magnet Card actually plays both ends of the strategy, with both a short-term and long-term bonus opportunity.

How It Stacks Up

Our first inclination upon this card’s launch was to shrug our shoulders and say “Meh, another 1.5% flat cash back credit card.” But… wait.

When you consider this card against its two most popular competitors — the Capital One Quicksilver and the Chase Freedom Unlimited — it offers the same 1.5% flat cash back rate, but those cards only offer a $150 bonus opportunity.  (Both offer $150 after spending $500 in the first three months, so a lower initial spend requirement than this Amex card’s $1000). The American Express Cash Magnet tops them, though, by offering that additional $100 bonus if you then spend over $7500 for the first full year of having the card (although the lowering of that second bonus to $100 from its original $150 hurts the Cash Magnet’s attractiveness).

Regardless, we can make a case that this may be the best 1.5% flat cash back card on the market. But what about when we stack it up against the Citi Double Cash Card, which we usually consider the flat-rate champion? After all, the Citi Double Cash offers a higher 2% flat rebate on all purchases, with no bonus opportunity as of this writing (the Double Cash has offered signup bonuses in the past).

Despite the obvious difference between a 2% cash back card and a 1.5% cash back card, the American Express Cash Magnet is actually the better card in the short run for many potential cardholders — assuming you spend enough to get the Amex bonuses in the first year.

Let’s do the math. Let’s say you put $10,000 on your credit card each year. After two years, you’ll have spent $20,000, right? How much would each card have paid you over that period, assuming you hit their bonuses?

  • Citi Double Cash: $20,000 spend x 2% = $400.
  • American Express Cash Magnet: $20,000 spend x 1.5% = $300. Add the $250 in bonuses = $550

You’ll actually earn more with the Amex Cash Magnet in this scenario. In fact, until you hit $50,000 in total spend, the American Express Cash Magnet would win this comparison. After $50K spend, the Double Cash would finally beat it out.

However, the obvious hole in this comparison is that what would actually make the most sense is to get the Cash Magnet card for a year, snag its bonuses, and then move on to the Double Cash card after that, because the Cash Magnet card offers the inferior earning formula once the first year bonuses are no longer available.

The Verdict

If you are someone who likes a flat cash-back rate that they can understand easily, without different rebates for different purchases, or rotating 5% category rebates, this card could very well be your best choice — assuming you spend enough to get the full $250 bonus that the American Express Cash Magnet offers in the first year. However, if you are truly trying to maximize your cash back, it would make sense to use this card for its first year bonuses and then switch to a different card after that.

Overall, we give this card a thumbs-up in relation to much of the competition, but it won’t win any head-to-head matchups after your first year of using it.