Amex Cobalt Card: Adjustments to the 5x Eats & Drinks Incomes Restrict

American Express will soon be restructuring the Cobalt Card‘s much-beloved 5x points earning rate on eats & drinks. Starting August 15, 2023, there will be a monthly cap of $2,500 (CAD), in place of the current $30,000 (CAD) annual limit.

Don’t panic, though: by doing the math, you’ll notice that the annual limit will simply be broken down into monthly limits, and you’ll still be able to earn up to 150,000 Membership Rewards points on eats & drinks every year.

Amex Cobalt Card: Earning 5x MR Points on Eats & Drinks

As a refresher, the American Express Cobalt Card offers an industry-leading benefit: 5x Membership Rewards points on eats & drinks purchases. With MR points valued at 2.2 cents per point (CAD), you’re effectively getting an 11% return, which is the most generous effective earning rate for any credit card in Canada.

American Express defines “eats & drinks” as:

• Restaurant, quick service restaurant, coffee shop and drinking establishments in Canada
• Stand-alone grocery stores in Canada
• Delivery of food and groceries in Canada as a primary business

Until now, the 5x earning rate has been limited to $30,000 (CAD) in spending on eligible eats & drinks categories per year, based on the cardholder anniversary date. Once this limit has been reached, further purchases in the eats & drinks category will only earn 1x earning rate.

As reported by Milesopedia, as of August 15, 2023, this annual limit will change to a monthly limit of $2,500 (CAD) per month. If the new monthly limit works in the same way as before, then purchases beyond $2,500 in the eats & drinks category will drop to the 1x earning rate.

How Will This Change Affect Cardholders?

A $2,500 monthly limit comes out to the same effective total as a $30,000 annual limit, except cardholders will need to manage smaller limits on a monthly basis.

Most Amex Cobalt Card holders will likely be unaffected by this change. Despite the card’s strength on eats & drinks earnings, spending $2,500 on groceries and restaurants is still a lot when, as per Canada’s Food Price Report, a family of four will spend an average of $1,357 (CAD) monthly on food in a year.

Instead, this restructuring of the earning cap is very much designed to curb inorganic spending strategies, such as buying gift cards for other retailers at grocery stores to effectively get 5x the points on other expenses. By implementing smaller monthly limits, American Express is making it a little bit more cumbersome to incorporate large gift card purchases into your Cobalt Card strategy alongside with organic spending on groceries and restaurants.

Cardholders who had previously hit the $30,000 annual threshold will need to plan their spending out more carefully so that they continue to optimize the 5x earning rate throughout the year without falling afoul of the $2,500 monthly limit. 

Again, in a nutshell, if you’re a typical cardholder, this fairly minor change shouldn’t worry you. But if you do splurge on food, drinks, and purchases at the grocery store and could see yourself exceeding the monthly limit, it may be worth considering getting a second Cobalt Card under your partner’s name to switch over once you’ve hit $2,500 for the month. 

Conclusion

American Express is restructuring its generous 5x eats & drinks earning benefit on the Cobalt Card as of August 15, 2023. The $30,000 (CAD) annual cap will be broken down into a $2,500 (CAD) monthly limit instead. 

You can still earn up to 150,o00 Membership Rewards points per year on eats & drinks spending, though you may need to plan out your spending more carefully across 12 months if you’ve previously had a habit of hitting the $30,000 annual limit early on in the year.