I’m starting to think a lot more categorically about how I use my credit cards in order to max out on cash back rewards for every type of purchase I make. After looking at my year-to-date breakdown recently, it really hit me that a full one-third of my annual expenses are from groceries. And up until then, I had only been earning 1% cash back on those purchases.
I thought I might just be able to do better than that. So I went searching for the best cash back rewards card for grocery purchases. And all of my research brought me back to the Blue Cash Preferred® Card from American Express.
Cash Back Rewards on Blue Cash Preferred
As a cash back card, the Blue Cash Preferred Card is pretty outstanding. My favorite perk is that it offers 6% cash back at U.S. supermarkets, up to $6,000 per year in purchases. If that isn’t enough, it also offers 6% cash bak on U.S. streaming subscriptions, and 3% cash back at U.S. gas stations stations. And it also offers 1% cash back on other purchases.
Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. And cash back is simple and straightforward: No rotating reward categories. No enrollment required.
The cash back rewards, on their own, make the card worth it, but there is also a promotion for new card members to get a $250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.
There is an annual fee of $95 for the card (which is $0 the first year).
Is the Blue Cash Preferred Card Worth its Annual Fee? Let’s Crunch the Numbers
I used to be very against annual fees, but 6% on a category I spend so much of my budget on is very convincing. With the card’s annual fee of $95, does it pay off? Let’s crunch the numbers to find out. According to the U.S. Bureau of Labor Statistics, American households spent an average of $6,189 on groceries over the course of a year.
- At 6% cash back on those purchases (up to $6k), the average household would typically get $360 back.
- Had those purchases been made with a 1% cash back card, the result would be $60 per person with that card.
- When you subtract the $95 annual fee, you still end up with a net cash back of $205 more with the Blue Cash Preferred vs a typical 1% cash back card.
I’m willing to pay $95 to get $300 back.
If you want to compare the cards rewards to others, find out what your previous year’s grocery expenses were, multiply that by 0.06 and subtract $95 to get the net cash back on the card, to see if the Blue Preferred card outdoes your or any other card rewards for grocery purchases.
What Supermarkets Get 6% Cash Back with the Blue Cash Preferred American Express?
Your mileage may vary, but the card has given me 6% cash back at each of the grocery stores I shop at: Trader Joe’s, Whole Foods, Meijer, and Kroger. You can call the stores you frequent to ask them if their merchant code is set as grocery.
Bonus: the Blue Cash Preferred card often has lucrative AmEx offers for Kroger and other grocery store chains.
Is it the Best Grocery Rewards card? Comparison vs. the Blue Cash Everyday® Card from American Express
How would the results of the card fare against another grocery rewards card without an annual fee? The best I’ve seen in the category is actually the sister card of this one – the Blue Cash Everyday® Card from American Express (check out my review). That card offers 3% cash back on U.S. supermarket purchases, 3% on U.S. gas stations, and 1% on other purchases – with no annual fee.
- With the Blue Cash Everyday card, the average household would get $180 cash back on groceries (vs. $360 for the Blue Cash Preferred).
- Additionally, the Preferred version offers 6% cash back on streaming services.
If your annual grocery purchases are in line with the averages I’ve highlighted here, the Blue Cash Preferred Card from American Express will result in the most net cash back, despite the $95 annual fee.
UPDATE: My first year of using the Blue Cash Preferred resulted in $465 cash back!
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