Cashing in at the Supermarket: Blue Cash Preferred® Card from American Express Review
Earning rewards from your credit cards is a lot like earning interest on your investments. Cardholders should look for the highest returns possible considering the amount they spend and the type of merchants they frequent. They then need to balance these rewards against any fees assessed on their cards. The Blue Cash Preferred® Card from American Express offers as much as 6% cash back rewards for your spending at a time when many reward cards only offer 1%-2% cash back.
Preferred’s Cash Back Percentages
Like many credit cards, customers earn 1% cash back on purchases from most retailers, but it is the bonus categories that make this card stand out. 3% cash back is earned at select major department stores in the United States, including:
- Bon Ton Stores Inc.
- Boscov's Department Store
- Century 21 Department Stores
- Dillard’s Department Stores
- J.C. Penney Company, Inc.
- Lord & Taylor
- Neiman Marcus
- Saks Fifth Avenue
- Stein Mart
3% cash back is also earned at stand-alone gas stations. This excludes the pumps at places like Costco and Sam’s Club, and at some supermarkets.
A whopping 6% cash back is earned from purchases from supermarkets, not including warehouse or discount stores. How good is that? Let’s just say that some people were taking this discount so far that American Express recently imposed a $6,000 annual cap on eligible purchases. After earning $360 (6% of 6,000) in cash back from supermarkets, cardholders will now earn just 1% on subsequent purchases.
Finally, new cardholders earn $150 in Reward Dollars after spending $1,000 within the first three months of opening their account.
Because Blue is an American Express card, you can expect a wide range of other benefits beyond simple cash back.
- First, you have the standard rental card loss and damage insurance that most cards offer. But in addition, you also receive a roadside assistance policy that covers things like having your car jump started, a flat tire changed, or even a towing.
- Cardholders also receive travel accident insurance that covers any kind of common carrier transportation when paid for with their card.
- Finally, there is a 24/7 global assist hotline that can provide help when you are traveling.
There is a $75 annual fee for this card and a 2.7% foreign transaction fee on all charges processed outside of the United States.
- Sign up bonus. $150 cash back is not the greatest sign up bonus ever, but it is still pretty nice easy money. The fact that the minimum spending requirement to earn the bonus is only $1,000 of spending in three months makes this offer even better.
- Bonus cash back. This card is the leader in providing extra cash back rewards on most common purchases such as those at supermarkets, gas stations, and department stores.
- Reasonable annual fee. $75 is a significant annual fee, but considering that the cash back rewards are so high, it is not out of line with many leading reward cards.
- Generous benefits. Many cards come with a roadside assistance policy that merely calls for help, but this card will pay for many types of problems. Likewise, the travel accident insurance will cover you when you use the card to pay for trips in buses, boats, trains, airplanes, and even helicopters.
- Foreign transaction fees. Simply put, this fee is a complete rip-off. Many other banks are getting rid of these charges, but American Express continues to retain this fee on all but their Platinum and Centurion cards. Until they join the crowd and eliminate this fee, I will keep calling them out on it.
- Mediocre interest rates. Cardholders receive an APR of between 12.99% and 21.99%, depending on their credit worthiness. There are other cards with lower interest rates best suited to those who carry a balance.
- No promotional financing. Likewise, those who have a credit card balance should look for a card with a 0% APR promotional financing offer on balance transfers or new purchases. This card has no such offers.
- Restrictions on bonus cash back. If you normally shop at warehouse or discount stores, you will not see much of the bonus cash back from this card. Likewise, if you pay more to shop elsewhere in order to receive the bonuses, you aren’t really saving any money. Finally, the annual limit makes it impossible to treat this card like a cash cow by purchasing gift cards at supermarkets for use elsewhere.
Who This Card Is Best For
This card, like all reward cards, is not for those who carry a balance on their credit cards. If you do, you should focus on finding a low interest card and paying off your debt.
For everyone else, the key to this card is figuring out if you normally spend enough on the bonus categories to easily justify the annual fee. For example, if you spend $50 per week at grocery stores, or $2,600 per year, you will earn $156 of cash back each year. Those who spend $50 per week at stand-alone gas stations will earn $78 per year in cash back.
So if you do the math and come out way ahead, this might be the cash back card for you. But even if the numbers don’t work, you still might want to consider the similar Blue Cash Everyday card. Sure, the bonuses are less, but there is no annual fee.
Once you have considered how these cards will work for your budget, you can choose the card that will give you the most cash back in the end.