The Insider Picks team writes about stuff we think you’ll like. Business Insider has affiliate partnerships, so we get a share of the revenue from your purchase.
- With 3% back at US supermarkets (on up to $6,000 per year in purchases, then 1%) and 2% back at US gas stations, the Blue Cash Everyday® Card from American Express earns the average American household $149 back annually on everyday essentials.
- With no annual fee and a $150 welcome bonus that has an easy threshold to reach (spend $1,000 in the first three months), this card is profitable almost immediately.
Both are well-designed everyday cash-back cards from AmEx, with the big differentiator being spending limit. If you are a big spender, particularly if you spend more than $3,200 annually on US supermarket purchases, you might consider the Blue Cash Preferred, which gives you 6% back at US supermarkets up to $6,000 (then 1%), with a $95 annual fee.
If you want to earn rewards at US supermarkets and US gas stations, but don’t think you spend enough to justify an annual fee, then Blue Cash Everyday is a great option for you.
Perks of the AmEx Blue Cash Everyday
The AmEx Blue Cash Everyday is the company’s response to cards like the Bank of America Cash Back Rewards credit card or Discover it Cash Back card, which focus on providing cash back for essential purchases. The card’s rewards structure is highly advantageous to those who place a premium on groceries, with the 3% back at US supermarkets beating the flat 1-2% most cash-back cards offer.
But the premium comes with trade-off, as outside of US gas stations and US supermarkets (and select department stores in the US), the card has a flat 1% back. Some may prefer a card like Citi Double Cash Card, which has 2% cash back spread evenly across merchant categories. The AmEx Blue Cash Everyday card additionally has a $6,000 limit at US supermarkets, after which the cash-back rate goes to 1%.
With thresholds and tiered percentages, it might feel confusing to determine if you should get this card, the more expensive Preferred version, or a more general cash-back card.
We decided to break it down for you.
The first question is whether to get the AmEx Blue Cash Preferred or Blue Cash Everyday card. Both cards have similar earning structures, with the Preferred card earning 6% at US supermarkets and 3% at US gas stations, in exchange for a $95 annual fee. Both cards have the same $6,000 hard limit on their supermarket rewards, after which they both go to 1%.
What this means is if you spend more than $3,200 a year on US supermarket purchases ($266 a month) your increased spending will compensate for the $95 annual fee, and every dollar above that is profitable for you. In this case it’s worth considering the Blue Cash Preferred card over the Blue Cash Everyday.
The next question is whether to take advantage of the Blue Cash Everyday’s high US gas and supermarket earn rate, or get a more general cash-back rewards card. For calculations, we’re going to assume a 1.5% flat cash back for general cards, as that’s a rate offered in several competing zero annual fee cards like Wells Fargo Cash Wise Visa® Card and Capital One Quicksilver Cash Rewards Credit Card.
While this question ultimately depends on your personal purchase behavior, we ran through some consumer benchmarks to give some general guidance:
The average American household spends $4,049 on groceries, and $1,400 on gas annually, which amounts to $81 in cash back at a standard 1.5% and $149 in savings on the AmEx Blue Everyday card — a $68 difference. In order to make a general cash-back card more profitable in this instance, you would need an additional $13,600 in non-grocery and -gas spending. And this is assuming you aren’t charging any of that amount to travel or hotel card.
In other words, if you imagine spending less than $20,000 annually on cash-back card you use for gas and supermarket purchases in the US, it’s worth looking into the Blue Cash Everyday.
Why get an AmEx card?
For some, the allure of getting a Blue Cash Everyday card is to add the benefits of an American Express card to their wallet. One of the first credit card programs to add extensive benefits for its members, there are several perks AmEx cardholders have come to expect from the card:
- Extended warranty and purchase protection — The AmEx Blue Cash Everyday card will extend warranties of items under $10,000 up to five years, and covers purchases up to $1,000 if they are damaged or lost, during the first 120 days of purchase.
- Travel accident insurance — The AmEx Blue Cash Everyday card will cover up to $250,000 in accidents involving loss of life or limb on trips booked through the card.
- Rental car coverage and roadside assistance — Rental cars booked through the card come with damage or theft insurance up to $50,000. Additionally, the card comes with Roadside Assistance Hotline, a 24-hour dispatch hotline that can send a tow operator or locksmiths (with fees) to emergency situations.
- American Express presales — Cardholders receive presale access to several concerts and games a year. These come at no additional cost, but require enrollment.
- ShopRunner — American Express cardholders get free membership to ShopRunner, an Amazon Prime-like service with free two-day shipping and free returns from hundreds of retailers.
So should I get the card?
If you’re looking for a card to use at US gas stations and US supermarkets, we’d put the AmEx Blue Cash Everyday card on par with any of the others. At 3% and 2% cash back respectively, it’s one of the best zero-annual-fee cards for essential shopping, and comes with a host of benefits exclusive to AmEx card holders.
If you’re a higher-tier grocery shopper (over $3,200 annually) you might consider it worth it to take the $95 annual fee for the Blue Cash Preferred card. If you’re an average grocery spender, but plan on putting more than $20,000 annually on a cash-back card, you might consider Citi Double Cash. Those with an Amazon Prime membership and high loyalty to Whole Foods might consider the 5% cash back from Amazon Prime Rewards Visa Signature Card.
Ultimately, we’d highly recommend the AmEx Blue Cash Everyday. With a great earning structure, no annual fee, and $150 welcome bonus for just $1,000 in spending in the first three months, it’s profitable almost immediately.
Source: Business insider