American Express Blue Cash Everyday Card (no annual fee) vs Amex Blue Cash Preferred ($95 annual fee): which one makes more sense?

Don’t let Amex Blue Cash Preferred’s $95 fee dictate which card to choose.  Let’s dive deep and find out which card is right for your personal needs.

Why Amex Blue Cash?

-Competitive cash back offers for groceries,  gas, and department stores
-Free Fico® Score 8 every month based on Experian data
-Roadside Assistance Hotline
-Car Rental Loss and Damage Insurance
-Travel Accident Insurance
-Global Assist Hotline
-Return Protection & Extended Warranty

Why Not Amex Blue Cash?

-Grocery store spending is capped at $6,000 a year (then 1%)
-American Express is not as widely accepted as Visa
-Other credit cards with better offers?
-Foreign transaction fees of 2.7%
-High annual percentage rate
-Requires good credit score

First let’s evaluate the sign-up bonuses:

Amex Blue Cash Everyday

Amex Blue Cash Preferred

Earn $100 back after you spend $1,000 in purchases on your new Card in your first 3 months. Terms Apply. Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. Terms Apply. ($250 for targeted offer)
LIMITED TIME OFFER: Apply by 05/03/17 to earn 10% back at U.S. Restaurants on the Card within the first 6 months of Card Membership, up to $200 back. LIMITED TIME OFFER: Apply by 05/03/17 to earn 10% back at U.S. Restaurants on the Card within the first 6 months of Card Membership, up to $200 back.

It looks like the only difference is $50-$150 if you spend $1,000 or more in the first three months.  Thank you Omar Kadah for pointing the targeted offer of $250 out!

Next, let’s consider the rewards and categories:

Categories

Blue Cash Everyday Blue Cash Preferred

U.S. Grocery Store

3%* 6%*

U.S. Gas Stations

2% 3%

U.S. Department Stores

2%

3%

All Other Purchases 1%

1%

*Grocery Store rates up to the first $6,000 in purchases (then 1%)

It’s obvious that the preferred is the winner here in terms of percentages.  However, what spending habits will yield a better return from an Amex Blue Cash Everyday card?  Because of lower Gas Station and Department store returns, thus the potential to yield greater returns from other cards, we will focus on Grocery Store spending.  Let’s analyze.

Let’s look at grocery store spending:

  1. What is the break-even point for the $95 fee? We will assume that no other rewards cards will be used in lieu of the Preferred card.

Break Even Point:            .06 * x = $95

Isolate x:                            x = $1583.33

Spending $1583.33 annually, or $30.45 a week at grocery stores, Preferred cardholders will break even and cover the $95 annual fee.

  1. What is the break-even point for the $95? We will assume that the Blue Cash Everyday card will be used in lieu of the Preferred card.

Break Even Point:           .06 * x – $95 = .03 * x

Rearrange:                        .03 * x = $95

Isolate x:                            x = $3166.67

Accounting for only grocery store spending, if we spend more than $3166.67 a year, $263.89 a month, or $60.90 a week on groceries, we will benefit more from a Blue Cash Preferred (BCP) compared to the Blue Cash Everyday card.  Now, if we plan on putting gas and department stores purchases on the card, then the break-even point drops a little more.

  1. What is the maximum we can receive at 3% and 6% with the $6,000 limit? ($115.38 a week)

                             Blue Cash Everyday:       $6,000 * .03 = $180

                             Blue Cash Preferred:      $6,000 * .06 = $360 ($265 less annual fee)

As we can see, the Blue Cash Preferred card will better suit the needs of a family, where spending tends to be higher, whereas the Blue Cash Everyday card may yield better results for an individual.  There is no clear answer, as personal preferences or habits may skew choices.  For example, if an individual values flexibility, perhaps a non-annual fee card such as the Blue Cash Everyday card would be ideal.  If all grocery store spending will be run through this card, perhaps the $95 annual fee will be well justified for a Blue Cash Preferred.

Neat Tips:

-Gift cards count as purchases!  A gift card purchase at a supermarket will yield 3% with a Blue Cash Everyday or 6% with a Blue Cash Preferred cash back!
-Apply for a 3x Credit Limit Increase on Day 61!  No Hard Inquiry required!
-Upgrade or downgrade as needed


**Disclaimer: The writer is not an American Express rep nor is the writer paid by American Express.  This information was accrued when the writer was considering these cards.

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