I’ve had a number of years of using the Blue Cash Preferred® Card from American Express as my primary card of choice for groceries (by far, the biggest expense category I charge by credit card).
So I wanted to share the results on whether my quest for 6% cash back on groceries paid off (or didn’t).
Realizing that around 60% of my typical credit card purchases were at supermarkets, I went on the hunt for a card that could offer more cash back in that category. What’s sweeter for a frugal rewards card hacker than extra cash back on common grocery purchases that you were going to make anyways? (a man’s gotta eat!)
At the conclusion of my search, two cards jumped out as being far superior to any others on the market in this category (and they just so happen to be closely related):
- The aforementioned Blue Cash Preferred.
- The Blue Cash Preferred’s sister card, Blue Cash Everyday® Card from American Express.
Amex Blue Preferred vs. Everyday Benefits
What’s the difference between the two cards? (highlighted in bold below)
Blue Preferred highlights:
- 6% cash back at US supermarkets, up to $6,000 per year in purchases
- 3% cash back at US gas stations and select US department stores
- 1% cash back on other purchases
- Get $150 back after you spend $1,000 on purchases on your new Card in your first 3 months of cardmembership. You will receive $150 back in the form of a statement credit.
- $95 annual fee
You can find out more about this card and APPLY HERE.
Blue Everyday highlights:
- 3% cash back at US supermarkets, up to $6,000 per year in purchases
- 2% cash back at US gas stations and select US department stores
- 1% cash back on other purchases
- Get $100 back after you spend $1,000 on purchases on your new Card in your first 3 months of cardmembership. You will receive $100 back in the form of a statement credit.
- No annual fee
You can find out more about this card and APPLY HERE.
The 1% difference on gas stations and department stores was not a big differentiator, nor was the $150 vs. $100 sign-on bonus. The 6% vs. 3% on supermarkets was. As was the $95 annual fee.
I have never paid for a credit card with an annual fee and always held a negative view towards those with an annual fee (who likes certain credit card fees?). However, after crunching the numbers, I determined the Blue Preferred would deliver a better overall return, even with the $75 annual fee. Would these #’s play out in reality?
Blue Preferred Cash Back After 1-Year
Crunching numbers is one thing. But how would the cards play out in real life?
Here’s a screenshot of my rewards earnings over the year:
You can see my earnings had a huge jump from Jan to Feb., as I received my reward bonus (and redeemed it as a statement credit). Then, they steadily increased between $35-$45 per month each month, as I purchased groceries each week.
For more granularity, I live in a 2-person home (my wife and I) and we buy our groceries at Trader Joes, Whole Foods, Meijer (includes all toiletries, over-the-counter medicine, pet supplies), Kroger (for a rare unscheduled run), and Costco. We also eat at home 99% of the time. Dining out expenses probably average $25/month.
My total “groceries” (supermarket) category expenses in my year end review, according to AmEx, was $6,446.87. How common is this? According to the U.S. Bureau of Labor Statistics, the average American spent $3,624 on groceries over the course of a year. A couple would average approximately twice that, or $7,248.
This means that I just passed the $6,000, 6% cap and received the full $360 cash back for the “supermarket” category (and 1%, or $4.46 on the remaining $446.87 in spend for that category).
Note that each retailer you purchase from has a classification code that determines what category it falls in to. What retailer purchases fell in to Amex’s “groceries” category for me? Trader Joes, Whole Foods, Meijer, and Kroger.
The lone exception was Costco, which fell in to the “wholesale stores” category, and I only received 1% cash back on (btw, yes, you can use this card at Costco and are not limited to only using the Costco AmEx, which also delivers 1% cash back on Costco purchases).
Blue Preferred vs. Everyday Results
What happens when comparing the two cards (and a typical no-annual-fee 1% cash back card like Discover It) when looking at the first $6,000 in grocery expenses?
Blue Preferred:
- year 1: $360 cash back + $150 bonus – $95 annual fee = $415
- subsequent years: $360 cash back – $95 annual fee = $265
If you have similar grocery expenses or more
Blue Everyday:
- year 1: $180 cash back + $100 bonus = $280
- subsequent years: $180 cash back = $180
1% Cash Back card:
- year 1: $60 cash back = $60
- subsequent years: $60 cash back = $60
This calculation doesn’t include the additional 3% cash back benefits in the gas and department store categories that you get with Blue Preferred, which make the card even more beneficial.
If you haven’t already, you may want to re-think that anti-annual fee sentiment!
Final Thoughts:
The Blue Cash Preferred Card comfortably surpasses the Blue Cash Everyday card and 1% cards on supermarket purchases in net cash back for most users, despite the $95 annual fee. For me, it brought an additional $355 cash back in year 1 and will bring $205 each subsequent year. Just for buying the groceries I was already buying! Your mileage may vary, of course, depending on where you shop and how much you spend annually.
If you have a large family, it might actually pay off to use both, hitting the Blue Preferred 6% cap, then moving on to the Blue Everyday.
As always, pay off your monthly statements in full and don’t use your card just for rewards benefits, that’s just silly.
You can find out more and apply for these 2 cards HERE and HERE, respectively.
Disclosure: This content is not provided or commissioned by American Express. Any opinions, analyses, reviews or evaluations provided here are mine alone, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through Advertiser affiliate programs. I am an American Express cardholder, as highlighted in this post.
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Great breakdown. My wife and I have been contemplating switching cards recently and this is good information. I think the big thing for me is figuring out whether the annual fee is worth it on a card. Sometimes it is the best option, which your own personal experience shows above.
I ordered the card based on your previous review of it, but due to a unmentioned difficulty. From what I’ve read and heard, American Express is accepted the least places of all the major credit card companies because of its high fees. I actually got rejected at a lunch restaurant my first week with it. I had to pull out my BoA Visa card to pay for it.
This means that my cash back will be spread over multiple credit cards, and will accumulate slower. I had planned to only have one credit card. Having multiple cards makes it harder for me to track how I’m spending and how much I owe.
I’ve never been turned down by a grocery store with an AmEx in the 6 years I’ve been using an AmEx. Maybe 5% of restaurants don’t take AmEx, but most do.
In my experience, it depends on the area you’re in – I live in a somewhat rural area and try to use my Blue Cash Everday as much as I can on groceries. However, Aldi doesn’t accept credit cards at all, a small-chain grocery store only accepts Visa/Mastercard, and the largest chain in the area (Martin’s) just started accepting AmEx cards within the past year.
I’ve had similar experiences trying to use my corporate AmEx card while traveling to rural small towns (2 hours from any major airport) – I’d say that only about 1/2 of the non-chain restaurants in the areas I’ve visited will actually accept AmEx.
I actually use Blue Cash everyday as my sole credit card but I did know of the benefits of preferred until you pointed them out here. Thanks for the post
Great Review. Thanks for putting numbers to everything. I filled out and turned in my application yesterday.
I got an offer for the Blue Everyday card which offers a $150 bonus on it and does not have the annual fee.
I am with you on the dislike for having an annual fee. I don’t spend that much at the super market to get ahead much with the preferred. I spend about $50 a week or $2600 a year..
I’ve never owned an AMex card and have heard a lot of similar on the issue with them being less accepted at stores so I want to get familiar with it first and perhaps I will move forward with a preferred card in the future.
Nice. Credit card rewards are great aren’t they? I currently use an Amazon Rewards card and I haven’t had to pay for a single diaper in my 19 month old daughter’s life.
If I were to move to this card, I would want to close one of my other cards (but not my longest history card). Should I close a card before I apply for this one, or vice versa?
Groceries are our biggest expense and we mainly shop at Trader Joes and Whole Foods. Thanks for the breakdown!
That is up to you, but this article may provide some guidance: https://20somethingfinance.com/open-cancel-credit-card-impact-on-credit-score/
Great. Thanks!
I actually do the same thing. I also buy giftcards from the grocery store so that I can get 6% back on gas, stores like Home Depot, Starbucks, etc.
Where do you research the cards? I’m taking a job with a huge commute this year and would love to find a card that will help me offset that cost. But when I google, so much advertising comes up that I’m having a hard time figuring out where to go. Any good sites that might break it down for me? (Yes, I realize I’m sort of lazy.)
G.E miller, do you plan on moving to the new EveryDay cards? You’ll get 4.5 on groceries and 3 on gas (assuming you make 30 purchases every month). Should be a bit of an increase on the cash back you got from the blue cash preferred cards.
I know this is an old post, but there is a current promotion from AMEX and Whole foods for an extra 2% cashback on whole foods purchases (totaling 8%). IDK how many people here shop at whole foods, but it is something to look into. This is good through Feb 15, 2015. https://www.americanexpress.com/us/content/whole-foods-and-blue-cash/index.html