Update 10/10/12- It appears some cardholders are getting a similar notice in their October statements. You will earn a reward of 6% on the first $6,000 of eligible purchases at supermarkets in a calendar year (supermarkets do not include superstores or warehouse clubs); 1% on all other eligible purchases. While this may not have a tremendous effect on those purchasing only groceries, this is clearly an attempt at shutting down the giftcard loophole.
The American Express Preferred ® credit card updated one major aspect of cashback program, so I thought it would be of some benefit to compare the Blue Cash Everyday® Card from American Express to the Blue Cash Preferred® Card from American Express. Both programs earn card holders cash back, for those not interested in earning miles or points, oh my.
| Card | New Member Bonus | Cashback | Annual Fee |
| Blue Cash Everyday® Card from American Express | $100* | • 3% at US supermarkets, up to $6,000 per year in purchases • Earn 2% at US gas stations & select US dept stores • Earn 1% cash back on all other eligible purchases. |
$0 |
| Blue Cash Preferred® Card from American Express | $150** | • Earn 6% US supermarkets up to $6,000 per year in purchases • Earn 3% US gas stations & select US dept stores • Earn 1% cash back on all other eligible purchases. |
$75 |
* Earn 100 Reward Dollars after you make $1,000 in purchases in the first three months of Card membership.
** Earn 150 Reward Dollars after you make $1,000 in purchases in the first three months of Card membership.
As you can see from the above, the major difference between the two cards is the amount of cashback earned at supermarkets relative to the annual fee. However, the $75 annual fee on the Blue Cash Preferred® Card from American Express almost instantly gets lost when considering the real benefits of the card.
Spending only $25 per week will rack up $78 in cashback over the course of a year, more than enough to cover the fee. Even when I was single, I spent more than $25 per week on groceries. Our family of four (4), with two young boys, spends around $600/month on groceries, effectively resulting in $36/month in cashback by using the Blue Cash Preferred® Card from American Express. That is quite a substantial rebate, and thus why you can see how easily the annual fee gets lost in the benefits of the card; however, it is time to start thinking outside the box.
What does almost every major grocery store sell on end caps and near the checkout? Gift cards, which could potentially be the real money maker here. Want to dine at chain restaurants like Red Lobster, Subway, Red Robin, or the Olive Garden? What about purchasing home improvements from Home Depot or Lowes? Going to Disney, Universal Orlando Resorts, or staying at a Marriott? Purchase a gift card from the grocery, earning a whopping instant 6% rebate.
The warning to avoid any potential problems is to make sure you are also picking up some type of grocery item when purchasing the gift cards. All purchases at supermarkets should code properly to earn the 6% cashback bonus, but making a grocery purchase makes sure not to send up any potential red flags.
The point is, the Blue Cash Preferred® Card from American Express just opened up some great possibilities to be able to rake in cashback. With a little bit of planning, and buying the right gift cards, one can effectively take 6% off of almost all purchases. I like that!
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5/9/13- Updated matrix; removed banner
7/12/12- Originally published.
So to really compare though. What amount would the two cards equal each other?
(x*.06) -75 = x*.03
x = $2500 or $48 per week ($192 a month) you would have to spend over that to really make it worth it. I think I spend more than that, but sometimes I buy groceries at Target or Aldi’s or Marc’s. Target would not code right, and I bet Walmart wouldn’t either. Aldi and Marc’s don’t take that card, and neither would the farmer’s markets. “Groceries” is a loose term. And if i think about how often I actually shop at the name brand grocery-only stores, I think the no annual fee card is a better bet.
@Alley Arch: Correct, when it comes to grocery shopping; however, when you factor in earning 6% buy purchasing gift cards at the grocery, one can easily earn tons of cashback depending on how much you purchase at a time.
How would you compare the Blue Cash Preferred to the Blue Sky Preferred & Chase Sapphire Preferred? I have the Chase Freedom card, but I can’t decide if I should upgrade (or add) to a Preferred card…
@MCB: I’ll put together an article discussing the different ones. If I were you though, I suggest opening a new card instead of switching/upgrading to a new card. That way you will get the new customer bonus.
I was interested in the Amex Blue Cash Preferred card but was concerned with the limitations on stand alone supermarkets and eligible purchases. However, Amex convinced me it was a bad deal. First, even though they could tell me what qualified, they did not have a list online so I wouldn’t have to call them every time I wanted to use the card. Second, I asked if Giant, my local supermarket (which by all standards is stand alone), is a stand alone supermarket and they did not know. That got me thinking about what is acceptable to Amex and the few I inquired about are either more expensive than my Giant, e.g., Trader Joe’s, or you end up spending significantly more at each visit, e.g., Costco where people go crazy and end up buying much more than they need and pay an annual fee to shop there. So if you spend 5-10% more on the food and only get 6% in rewards, who is the fool for getting the card? This is not rocket science. Amex knows exactly what it is doing and most consumers do not. Be careful on what you apply for.
@Handles: It may take some experimenting with using the card at retailers to see exactly how they categorize the purchase. Remember, the key with earning the 6% cashback is not necessarily on the grocery side of the purchases, but to be able to use the card at a grocer to purchase gift cards at a 6% discount.
I know that this is an old post but can anyone tell me is Giant Food (Not Giant Eagle) is a 6% American express grocery store
I just recieved my card and it has some major limitations on the 6% cash back.
1) No cash back on prepaid cards (I expected his but its not spelled out anywhere)
2) 6% ONLY ON THE FIRST $6000 OF PURCHASES PER CALENDAR YEAR. This is contrary to their site which states “Enjoy unlimited cash back potential”
@Bill: Thanks for the update. It appears this is something new hitting accounts on the October statements. I will update the post accordingly.
Indeed I have been a member of the blue cash preferred since April, never carrying a balance, and just got the $6000 limit new ruling on groceries coming up at renewal. I spent $18000/yr on groceries store items, that was going to be $1080 cash back in one year but with the new rule only $480… Don’t forget the $75 yearly fee that’s $405 cash back. Compare this with the everyday no fee card with no limit on the 3% which would yield $560… The choice is clear….
@Yves: Thanks for the data point. This rule ruling definitely makes the no fee version more appealing. Thanks for your comment.
Actually both cards have the $6000 limit on them if you read the Amex website. So the preferred is still the better option in the end.
@Yves, 6000 of 6% is 360 not 480. Now your decision becomes more stronger 😉