Stand Alone Supermarkets: Amex Blue Cash Capping Grocery Rewards at $6,000

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Brace yourselves, American Express Blue Cash cardholders. We’re sad to report the Blue Cash will now impose a $6,000 cap on grocery bonus rewards, effective November 1stfor new customers and upon renewal in 2013 for existing customers. Alas, what’s good doesn’t last. But does this mean you should write off the Blue Cash altogether? Not so fast. For all that you can’t rewards-hack to your heart’s content anymore, the Blue Cash is still a great way to get rewards on a good majority of your spending.

Capped is the new blue

Blue Cash Preferred cardholders used to earn an unlimited 6% cash back at standalone grocery stores and 3% on gas and department stores, while Blue Cash Everyday cardholders earned 3% and 2%, respectively. With unparalleled rewards rates on the most typical expenses, the uncapped Blue Cash was a steal for anyone who eats or drives. Which is exactly why it couldn’t last. One main draw of the Blue Cash was that you could earn 6% rewards on almost anything, by purchasing gift cards at the supermarket checkout line. By paying for prepaid cards at the register, you could earn the sky-high rewards rate on Amazon, Starbucks, whatever. And that’s still feasible. In 2011, the average consumer spent$3,800 on groceries, leaving $2,200 for gift card purchases. According to an email from an American Express spokeswoman, few people get close to the $6,000 cap:

The cap preserves our ability to continue rewarding our Cardmembers at 3% and 6% cash back for their supermarket purchases on these cards. We set the cap at $6,000 because it more than covers what the majority of Cardmembers are spending on supermarket purchases.

Left implied is the “…if you’re playing fair.” When it comes down to it, hacks are hacks, and loopholes close. Still, 6% rewards on $6,000 is fairly substantial.

What is a stand-alone grocery store, anyway?

Stores whose primary product is food – such as Safeway, Whole Foods and Stop & Shop – can, generally speaking, be considered stand-alone grocery stores. On the other hand, warehouses like Costco or megastores like Walmart or Target (which sell produce, but don’t consider it their main offer) don’t count. An explanation from American Express Canada might give some insight:

Purchases at merchants where [grocery] sales are not their primary business (including superstores, wholesale clubs, alcohol retailers and general merchandise retailers) and purchases at sponsors do not qualify for the earn rate in this category.

Blue Cash versus the competition

In any case, many other groceries rewards cards impose caps as well. Here’s how the Blue Cash cards stack up against major grocery cards: Bank Americard Cash Rewards

Bank of America BankAmericard Cash Rewards Visa Signature Credit Card
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on Bank of America's
secure website

The Bank Americard Cash Rewards, the closest equivalent to the Blue Cash Everyday, earns 3% on groceries and 2% on gas up to $1,500 in combined spending per quarter. The Everyday wins out for a few reasons:

  1. Only groceries are capped. The Bank Americard limits your bonus rewards on both gas and groceries.
  2. The Bank Americard limits combined purchases. Let’s say you spend $1,500 on gas in a given quarter, and only afterwards spend money on groceries. You’d be stuck earning the 2% gas rewards rate instead of the higher 3% groceries rate.
  3. Longer capping period. The Bank Americard limits your rewards to $1,500 spent per quarter, or $6,000 per year – the same as the Everyday. But let’s say you spent $1,000 in two quarters and $2,000 in two quarters. With the Bank Americard, you’d earn rewards only on $5,000, whereas on the Everyday you’d earn rewards on the full $6,000.

Nerd note: If you’re a Bank of America® banking customer, you’ll have the opportunity to earn a points dividend of 25%, 50% or 75% through the Preferred Rewards program. The bonus you’ll receive depends on the type of account you have and the total amount of your assets. But even if you don’t qualify for Preferred Rewards status, just having a Bank of America® checking or savings account will give you a boost: You’ll get a 10% dividend on the points you redeem into your account.

The 5% bonus cards

Chase Freedom - $100 Cash Back Credit Card
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on Chase's
secure website

US Bank Cash+(TM) Visa Signature(R) Card Credit Card
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on US Bank's
secure website

The Chase Freedom named groceries as one of its 5% rewards categories for Q2, subject to the rewards cap of $1,500 per quarter.The U.S. Bank Cash+ offers it as one of the categories on which you can earn 2% rewards. The U.S. Bank card lets you pick two categories from a rotating list to earn 5% rewards, and between gas, groceries or drugstores for 5% rewards. We’d assume that since it’s a 2% reward category, groceries are unlikely to show up on the Cash+’s 5% list. And between the rewards cap and having to leave your groceries to the vagrancies of fate, the Freedom isn’t a great choice for dependable grocery rewards. The Blue Cash will consistently give 6% or 3% rewards on groceries, and though there is a cap, it’s about the same as the Freedom’s cap on all bonus rewards.

  • mike swanson

    I would think that many, if not most, Blue Cash Preferred cardholders easily spend $6000 in annual grocery purchases. This comes out to an average of only $500 spent on groceries a month and our family of two spends at least $600 on groceries a month! This is disappointing news.

    • BigD

      LOL….so glad that I didn’t fall for this BS and apply for this card. Now your favorite card isn’t so great now Nerdwallet!. Paying $75 annual fee for any credit card is a total ripoff and now Blue Cash cardholders are really going to lose out here and get their grocery spending capped at $6,000. They would not have capped it if they didn’t have a bunch of cardholders milking them dry. The saying always holds true, if its to good to be true, it probably is. Suckers!

      • NerdWallet

        Hi there, Big D:

        Unfortunately, if you’re a big groceries spender, it’s hard to do better (unless you stay at the Hilton). Here are our calculations:

        No other widely available card (that we know of) offers 6% rewards on groceries, or even 5% on a consistent basis. So we’ll compare the Blue Cash cards to a generic no-fee card that offers an unlimited 3% rewards on groceries (ignoring, for now, that the Preferred also earns an unlimited 3% on gas and department stores). How much would you have to spend on groceries before the Preferred’s rewards cap makes it worse than the no-fee?
        Preferred: 6% * $6,000 – $75 = $285
        Generic: 3% * $9,500 = $285

        You’d have to spend $9,500 on groceries annually (or about $180 per week) for an uncapped 3% card to outweigh the capped 6% Preferred card. The Preferred’s sweet spot is between $2,500 and $9,500 annually, or around $50-$180 per week. Any less than that, and you don’t make up for the $75 fee; any more and the $6,000 cap makes it less attractive than an unlimited 3% card. But.

        The upper limit is pretty much hypothetical. No major card gives an unlimited 3% rewards on groceries (anymore) except for the Hilton HHonors cards, one of which has no fee and one of which has a $75 annual fee. We base that 3% rewards rate on the assumption that you stay at the Hilton and will redeem your rewards there. If you do, fantastic, if not, your rewards rate drops dramatically. The potent combination of cash back, 3% on groceries and no rewards cap can no longer be found, so the Blue Cash is pretty much the best you can do.

        • BigD

          I hate the credit card companies just as much because they suck people in with to good to be true rewards and then dump it when deadbeats like Mr. Disqust above abuse it. This is why nothing lasts!

          • Steve

            Who’s the real sucker, the person taking advantage of the supposed loop holes, or the person who doesn’t?

        • Kevin

          Anyone who spends $6000 a year on grocery spending is crazy. To back up my post from a few days ago, I went shopping last night at both Kroger and Wal Mart, to compare prices. Almost every single item I looked at was cheaper at Wal Mart, by a huge margin. Peanut Butter: $5.50 at Kroger, $3.98 at Wal Mart. Bacon: $5.99 at Kroger, $3.98 at Wal Mart. Tissues: $2.79 at Kroger, $1.98 at Wal Mart. Bread: $3.29 at Kroger, $2.79 at Wal Mart. Just to name a few.

          I do not work for Wal Mart and have absolutely no desire to help their company. But the reality is that if you’re about saving money, there’s no better way to save than to shop at the big boxes. I’m not talking about Sam’s or Costco (I do NOT believe in shopping there), I’m talking about Target and Wal Mart, for the most part. I’m only getting 1% cashback on those purchases, but I’m saving $20-50 per week by shopping there over a traditional grocery store. You could give me a 10% grocery cashback card, and it still wouldn’t be enough to make up the difference.

          • silver6054

            Kevin says: Anyone who spends $6000 a year on grocery spending is crazy.

            Might that possibly depend on family size (and less so, food choices)

          • BigD

            I think what he is getting at is he shops more at Walmart/Target than grocery chains which are higher, so he is missing out on the 6% and does not spend $6,000/yr at grocery chains.

          • fredfnord

            Wow. So you don’t believe in shopping at Costco (a company which sources responsibly, has a decent corporate responsibility rating, and treats its employees well) but are fine with Wal Mart (which destroys entire communities, treats its employees like crap (most Wal Mart employees make little enough to qualify for Medicaid, so the government pays for health care for Wal Mart’s employees), allows overseas workers to burn to death in order to save about a quarter of a cent per garment, and is just all around a vicious destructive force in the world?

            I can’t begin to imagine why.

        • BigD

          Nerdwallet you need to proofread your reviews more carefully. BOA Cash rewards is is 3% gas, 2% groceries which is complete opposite of Amex.

          • NerdWallet

            Big D:

            You’re completely right, good catch! The BankAmericard Cash Rewards gives 3% on gas and 2% on groceries (up to $1,500 spent cumulatively per quarter). Unfortunately, there really isn’t anything that’s up to the Preferred’s level – and I’m sure they know this, which is why they can get away with the cap.

      • disqust101

        BigD for Big Dummy, I presume? $75 fee was an absolute steal for unlimited purchases at grocery stores (which sell gift cards that effectively allows 5% CB on all your spend). Couple with Chase Ink and USBank Cash Plus and you virtually get everything at 5% cb.

        • BigD

          Actually your the dummy! Enough said.

          • disqust101

            “your” the dummy??? Oh my. As ignorant as a post…

          • BigD

            I bet you eat prunes every morning for breakfast and brag that you got 6% back too. Get lost ya cheapskate.

          • albert

            we are all here because we are all cheapskates, :) Just saying.

          • BigD

            umm, thats not something to be proud of. You are the prime reason why none of these reward programs last. Just saying. :)

        • mkc

          My boyfriend would buy those visa gift cards for $100 at the grocery store for gas and travel for work – points rack up fast that way. even with the $6,000 cap we still make 280 dollars/year after the fee. We also get cash back on a lot of other stuff so its more than just the $280 we get from the grocery store, the card will always be one of my favorites!

          • Steve

            Visa gift cards have a fee to buy them in grocery stores around me, it’s around 3-7% depending on the price, so you lose some of your cashback. You are better off checking to see what stores are in the area you travel, then buying area specific gift cards.

  • Kevin

    One thing to keep in mind is that grocery stores typically have much higher prices than big box stores. As a result, I don’t spend much at standalone grocery stores. I shop at grocery stores for fresh fruit, and very specific items. Everything else I purchase at Wal Mart (As much as I hate to endure it). They are cheaper than standalone grocery stores by at least 5-10% on most items, especially name-brands. Therefore, the Amex Blue Cash Everyday will work best for me, after my grandfathered Blue Cash card expires next winter.

    • Frank Hogan

      I agree with your assessment Kevin. I too choose to shop at the discount stores for product value as well as the Bank Americards 2% grocery rebate and 3% gas rebate. I also use the Fidelity AmEx Rewards for most other purchases.

    • Deeana Goets

      That is maybe true in rural areas but not big urban areas. My local Fresh Market stores are much cheaper than Walmart. Dairy is cheaper, eggs, meat, condiments. I have not found Walmart to be cost savings. I believe they still rely on their reputation to fool people into thinking they are cheaper. If you actually compare prices, it is not cheaper. Amazon subscribe and save saves me up to 50% on paper towels, toilet payper, and such with no taxes and free 2 day delivery. If you order 5 items you get 20%. I just bought on Amazon in Feb 2014, 16 Giant pack of Brownies papertowels for 11 bucks that is it. I am not affiliated with Amazon, just want to pass on the ways so save people some money.

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  • wash_st_native

    As of Jan 15th you can forget about 6% I just received a letter that the cash back drops to 3% for the 1st $6k and 1% after that. I just signed up for this card in August 2012 should have known better…

    • DL

      Nerdwallet, can you confirm this?

    • wash_st_native

      I just received a new letter earlier this week, (Dated Dec 21st) stating that they sent me the previous letter in error. Amex Blue Cash Preferred will continue at 6% until $6,000 is reached; after that, the reward drops to 1% for the remainder of the calendar year. This will go into effect on January 15, 2013. Sorry for Amex adding to the confusion…

  • plmom

    Just received our statement and it looks like they are able to distinguish between gift card purchases and grocery purchases at supermarkets as we didn’t get the full 6% off of our supermarket purchases (and we bought some gift cards.) Can you confirm if this is true? We’ve had a hard time communicating with their customer service reps as every time we call we seem to be connected to an un-knowledgeable call center overseas.

  • mrkkk

    I dont see that 6000 cap for my old – Blue cash card