Everyday Rewards: Costco American Express vs. AmEx Blue Cash Preferred - NerdWallet
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Everyday Rewards: Costco American Express vs. AmEx Blue Cash Preferred

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Editor’s Note: On March 31, 2016, Costco will stop partnering with American Express and TrueEarnings® Card from Costco and American Express will be discontinued. Citi, Costco’s new partner, will send TrueEarnings® Card from Costco and American Express cardholders a new Visa card co-branded by Costco as a replacement.

American Express now offers two new Blue Cash cards: the Blue Cash Everyday® Card from American Express and the Blue Cash Preferred® Card from American Express. The entire Blue Cash line-up is tailored towards family spending: gas, groceries, typical household purchases. We favor the Blue Cash Preferred® Card from American Express over the Blue Cash Everyday® Card from American Express, since you get a much higher rewards rate for its annual fee of $75, which is offset by its signup bonus: Get $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit. The Blue Cash Everyday® Card from American Express also has a bonus: Get $100 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $100 back in the form of a statement credit. If you spend $50 a week on groceries, you’ll more than make up for the Blue Cash Preferred® Card from American Express’s annual fee.

Looking at these rewards categories, the question we had is how the Blue Cash Everyday® Card from American Express and the Blue Cash Preferred® Card from American Express compare to the issuer’s other family-friendly card: the TrueEarnings® Card from Costco and American Express, which in addition to being a great gas credit card, also privileges travel purchases.

The bottom line: Most people will do better with the Blue Cash Preferred® Card from American Express: it gives a whopping 6% back on up to $6k spent on  groceries (then 1%) and includes gas and department store purchases in its rewards categories, so you’ll earn extra cash back when you shop for clothing/home furnishings/household items at Target, when you buy groceries for a family of four at Safeway, and when you fill up while running your errands.

However, frequent Costco shoppers – particularly those who buy most of their gas there – will prefer the TrueEarnings® Card from Costco and American Express. Neither of the Blue Cash cards earn bonus rewards on Costco gas, while the TrueEarnings® Card from Costco and American Express does. The TrueEarnings® Card from Costco and American Express also pays out in once-a-year Costco vouchers, which have to be redeemed in-store, either for Costco goods or for cash.

So which one is best for you? Depends where you buy your gas

The deciding factor will be where you buy your gas: if you fill up primarily at Costco, you’ll be getting 3% back on gas with the TrueEarnings® Card from Costco and American Express rather than 1% with the Blue Cash. In fact, for all you Hummer owners out there, the TrueEarnings® Card from Costco and American Express is one of the best gas rewards credit cards around.

Beyond gas, the TrueEarnings® Card from Costco and American Express also bonuses for spending on restaurants and travel, while the Blue Cash cards favor department stores and supermarkets. So a frequent traveler by land and air who dines out often might find the TrueEarnings to be a better deal. However, in order to make the Costco card worth it, you’d need to spend twice as much money dining out as you do on buying groceries, and spend $3 on travel for every $2 on department stores.

For those who don’t spend as heavily on the gas-travel-restaurant trinity, the Blue Cash Preferred® Card from American Express is a clear winner with its 6% back on up to $6k spent on groceries a year and unlimited 3% on department stores, which encompass everything from T-shirts to bikes to toilet paper. Unlike the TrueEarnings® Card from Costco and American Express, the Blue Cash Preferred® Card from American Express offers a signup bonus: Get $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit. And rewards are paid out in cold hard cash back, whenever you’ve earned $25, rather than Costco vouchers you’ll only get once a year.

If you aren’t driving an SUV, feeding your spouse and 2.5 kids, or buying sundries at Target, you should probably take a look at one of the rotating-category rewards credit cards, like the Chase Freedom®.

Category Blue Cash Everyday® Card from American Express Blue Cash Preferred® Card from American Express TrueEarnings® Card from Costco and American Express
Signing bonus Get $100 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $100 back in the form of a statement credit. Get $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit. Earn cash back: 3% US gas stations up to $4,000 per year in purchases; 2% US restaurants & eligible travel; 1% other purchases. See details.
Annual fee $0 $75 None, but $50 Costco membership required
Base Rewards 1% 1% 1%
Groceries 3%** 6%** 1%
Gas (non-Costco) 2% 3% 3%***
Gas (Costco) 1% 1% 3%***
Department Stores 2% 3% 1%
Restaurants 1% 1% 2%
Travel 1% 1% 2%
Rewards Cash back Cash back Costco voucher, redeemable for cash
Rewards redeemed Anytime Anytime Once a year

**Up to $6,000 spent annually; otherwise 1%
***Up to $4,000 spent annually; otherwise 1%

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  • disqust101

    Amex Blue wins hands down in EVERY category. You get 6% at grocery stores and can buy Visa and Amex gift cards that you can use for all your spend – including gasoline.

    • Anne Fischer

      can you actually buy gift cards at the grocery store and use them to buy gas and get the 6% off?

      • Thee Gooch

        Yes. They are coded as groceries since they were purchased at a store that is coded as a grocery store.

      • Nazzy17

        Yes, but if you buy the Amex gift card, you pay additional $6 transaction fee so it doesn’t make sense

    • travelgeek121

      umm… except you typically pay about $105-$110 for a $100 visa gift card. Kind of negates your reward money

  • disqust101

    Amex Blue wins hands down in EVERY category. You get 6% at grocery stores and can buy Visa and Amex gift cards that you can use for all your spend – including gasoline.

  • disqust101

    Amex Blue wins hands down in EVERY category. You get 6% at grocery stores and can buy Visa and Amex gift cards that you can use for all your spend – including gasoline.

    • Anne Fischer

      can you actually buy gift cards at the grocery store and use them to buy gas and get the 6% off?

      • Komrad

        Yes. They are coded as groceries since they were purchased at a store that is coded as a grocery store.

      • Nazzy17

        Yes, but if you buy the Amex gift card, you pay additional $6 transaction fee so it doesn’t make sense

    • travelgeek121

      umm… except you typically pay about $105-$110 for a $100 visa gift card. Kind of negates your reward money

  • Jason Putnik

    This might be an obvious question, but are purchases at Costco, not including gas, considered groceries? Because if so, Blue Cash Preferred would be the obvious choice for me.

    • http://twitter.com/TheAshleyCarter Ashley

      No, the 6% off groceries refers to supermarkets, not “warehouses or superstores” so Costco is not included.

  • Jason Putnik

    This might be an obvious question, but are purchases at Costco, not including gas, considered groceries? Because if so, Blue Cash Preferred would be the obvious choice for me.

  • Jason Putnik

    This might be an obvious question, but are purchases at Costco, not including gas, considered groceries? Because if so, Blue Cash Preferred would be the obvious choice for me.

    • http://twitter.com/TheAshleyCarter Ashley

      No, the 6% off groceries refers to supermarkets, not “warehouses or superstores” so Costco is not included.

  • mary

    I have the Blue Cash Everyday card, and Costco (non-gas) purchases do NOT count as groceries

    • closingracer

      Because it isn’t … It is considered wholesale which it is

  • mary

    I have the Blue Cash Everyday card, and Costco (non-gas) purchases do NOT count as groceries

  • mary

    I have the Blue Cash Everyday card, and Costco (non-gas) purchases do NOT count as groceries

    • closingracer

      Because it isn’t … It is considered wholesale which it is

  • disqus_ZpnAIapZoM

    I have seen $150 signing bonus for Blue Cash Preferred through another credit card website.but I saw no mention of waiver of 1st year annual fee.

    • http://www.facebook.com/mdmangus Michael Mangus

      On my first statement it showed the $75 fee, so it is not waived. I also spent enough to get the $150 signing bonus on first statement too. So first year not waived other than treating the sign-up bonus towards it.

      • http://www.nerdwallet.com/ NerdWallet

        Thank for catching the error, Michael! We have updated accordingly. Though if you’re not averse to fees on principle, the higher rewards rate + signup bonus makes the Preferred pretty attractive.

  • disqus_ZpnAIapZoM

    I have seen $150 signing bonus for Blue Cash Preferred through another credit card website.but I saw no mention of waiver of 1st year annual fee.

  • disqus_ZpnAIapZoM

    I have seen $150 signing bonus for Blue Cash Preferred through another credit card website.but I saw no mention of waiver of 1st year annual fee.

    • http://www.facebook.com/mdmangus Michael Mangus

      On my first statement it showed the $75 fee, so it is not waived. I also spent enough to get the $150 signing bonus on first statement too. So first year not waived other than treating the sign-up bonus towards it.

      • http://www.nerdwallet.com/ NerdWallet

        Thank for catching the error, Michael! We have updated accordingly. Though if you’re not averse to fees on principle, the higher rewards rate + signup bonus makes the Preferred pretty attractive.

  • HopelesslyFaithful

    so what supermarkets does the preferred card work for? Jewel, Dominick, food lion, albertson, krogers, supervalue, and any others? Can anyone confirm which of those work or if all of them? Fresh market?

    • http://www.nerdwallet.com/ NerdWallet

      Hey there,

      The Blue Cash Preferred should work at most grocery chains, such as Safeway, Food Lion, Dominick’s, Jewel, Kroger’s, Trader Joe’s and Whole Foods; it won’t work at department stores that happen to sell fresh foods like Walmart or Target.

      • HopelesslyFaithful

        thanks i’ll confirm if it works at jewel next time i go and confirm what it works for

  • HopelesslyFaithful

    so what supermarkets does the preferred card work for? Jewel, Dominick, food lion, albertson, krogers, supervalue, and any others? Can anyone confirm which of those work or if all of them? Fresh market?

  • HopelesslyFaithful

    so what supermarkets does the preferred card work for? Jewel, Dominick, food lion, albertson, krogers, supervalue, and any others? Can anyone confirm which of those work or if all of them? Fresh market?

    • http://www.nerdwallet.com/ NerdWallet

      Hey there,

      The Blue Cash Preferred should work at most grocery chains, such as Safeway, Food Lion, Dominick’s, Jewel, Kroger’s, Trader Joe’s and Whole Foods; it won’t work at department stores that happen to sell fresh foods like Walmart or Target.

      • HopelesslyFaithful

        thanks i’ll confirm if it works at jewel next time i go and confirm what it works for

  • Jay Kresge

    I just wanted to clarify one error in the article. I had the Blue Cash preferred for about 2 years and stepped down to the Everyday last week. Target (like Wal-Mart) is classified as a warehouse/wholesaler, not a department store. You will not get the 2%/3% deparment store bonus on the Blue Cash cards for shopping at Target.
    This means that if you are primarily a Costco shopper, and you get your gas there exclusively, your Blue Cash is essentially 1% for normal purchases, 1% for groceries (at Costco), 1% for gas (at Costco), and 2% for department stores (JC Penny, Kohls, etc., there is a list on the Amex website). If you’re a person who wants to shop primarily at Costco, the best deals are the Costco card, or the Fidelity Amex (which is 2% on EVERYTHING). Unless you spend a ton on gas, that 3% on gas and 1% on all others isn’t going to balance out to 2%, so the Fidelity will be the best deal.

    • travelgeek121

      meant to post new post and not a reply

  • Jay Kresge

    I just wanted to clarify one error in the article. I had the Blue Cash preferred for about 2 years and stepped down to the Everyday last week. Target (like Wal-Mart) is classified as a warehouse/wholesaler, not a department store. You will not get the 2%/3% deparment store bonus on the Blue Cash cards for shopping at Target.
    This means that if you are primarily a Costco shopper, and you get your gas there exclusively, your Blue Cash is essentially 1% for normal purchases, 1% for groceries (at Costco), 1% for gas (at Costco), and 2% for department stores (JC Penny, Kohls, etc., there is a list on the Amex website). If you’re a person who wants to shop primarily at Costco, the best deals are the Costco card, or the Fidelity Amex (which is 2% on EVERYTHING). Unless you spend a ton on gas, that 3% on gas and 1% on all others isn’t going to balance out to 2%, so the Fidelity will be the best deal.

  • Medion

    I just wanted to clarify one error in the article. I had the Blue Cash preferred for about 2 years and stepped down to the Everyday last week. Target (like Wal-Mart) is classified as a warehouse/wholesaler, not a department store. You will not get the 2%/3% deparment store bonus on the Blue Cash cards for shopping at Target.
    This means that if you are primarily a Costco shopper, and you get your gas there exclusively, your Blue Cash is essentially 1% for normal purchases, 1% for groceries (at Costco), 1% for gas (at Costco), and 2% for department stores (JC Penny, Kohls, etc., there is a list on the Amex website). If you’re a person who wants to shop primarily at Costco, the best deals are the Costco card, or the Fidelity Amex (which is 2% on EVERYTHING). Unless you spend a ton on gas, that 3% on gas and 1% on all others isn’t going to balance out to 2%, so the Fidelity will be the best deal.

  • Thee Gooch

    My burning question is – which is better value for groceries in general? The CostCo/TrueEarnings duo, or the Grocery Store/Blue Cash duo?

  • Thee Gooch

    My burning question is – which is better value for groceries in general? The CostCo/TrueEarnings duo, or the Grocery Store/Blue Cash duo?

  • Komrad

    My burning question is – which is better value for groceries in general? The CostCo/TrueEarnings duo, or the Grocery Store/Blue Cash duo?

  • travelgeek121

    I currently have the Costco True-earnings. I was seriously contemplating the blue cash preferred but giving it much thought, I honestly don’t think it presents the best value to the true cost conscious nerd like myself.

    1st reason. Typical supermarkets that you will earn the 6% rebate on charge on average 45%-55% markups. A bargain store like Costco has a firm policy not to exceed 14%. 2nd reason Costco Gas is usually 10 cents per gallon cheaper than everyone in my area, plus I get 3% off their already low-priced gas (about another 11 cents per gallon right now). Not to mention they recently made every one of their gas stations top tier gasoline even on regular grade (if you research this, you will be pretty impressed).

    Bottom line is this. You will get a larger return with a card like blue cash preferred but you will be spending substantially more for your items in most cases. So are you really winning? Sure I will give you a 6% rebate if I can charge you 30-40% more up front!

    I do agree blue cash preferred is awesome if you are not a common Costco or superstore shopper. Or if you just don’t live near one and only shop at stores that would qualify under the 6% category. Otherwise the Costco deal is a no-brainer. Great quality goods, best prices up front and decent rewards program to top it all off.

  • travelgeek121

    I currently have the Costco True-earnings. I was seriously contemplating the blue cash preferred but giving it much thought, I honestly don’t think it presents the best value to the true cost conscious nerd like myself.

    1st reason. Typical supermarkets that you will earn the 6% rebate on charge on average 45%-55% markups. A bargain store like Costco has a firm policy not to exceed 14%. 2nd reason Costco Gas is usually 10 cents per gallon cheaper than everyone in my area, plus I get 3% off their already low-priced gas (about another 11 cents per gallon right now). Not to mention they recently made every one of their gas stations top tier gasoline even on regular grade (if you research this, you will be pretty impressed).

    Bottom line is this. You will get a larger return with a card like blue cash preferred but you will be spending substantially more for your items in most cases. So are you really winning? Sure I will give you a 6% rebate if I can charge you 30-40% more up front!

    I do agree blue cash preferred is awesome if you are not a common Costco or superstore shopper. Or if you just don’t live near one and only shop at stores that would qualify under the 6% category. Otherwise the Costco deal is a no-brainer. Great quality goods, best prices up front and decent rewards program to top it all off.

  • Chomps

    Which card gives the benefit of the Amazon prime? I am having a hard time finding the single asterisk (*)

    • http://www.nerdwallet.com/ NerdWallet

      Hi there, thanks for reaching out! Good catch on the asterisk – this card benefit is no longer available. We are working to update the article. Thanks again for your feedback!