American Express Blue Cash vs. Rotating 5% Cash Back Credit Cards
The American Express Blue Cash family delivers rewards for “everyday” purchases. The Blue Cash Everyday and Blue Cash Preferred give, respectively, 6% and 3% on groceries, 3% and 2% on gas and department stores, and 1% everything else. The Preferred comes with an annual fee of $75, but we believe that the additional rewards for the Preferred outweight the annual fee for typical households.
But why should we care about these two cards when there are a number of credit cards out there promising 5% cash back on all kinds of different categories?
The Blue Cash cards differ from most of these rewards credit cards in that they have no spending threshold, rewards cap, or rotating bonus categories. We weren’t blown away by the complexity of the old Blue Cash, but the newcomers have done away with many of the old card’s hurdles. So we’ve pitted the Blue Cash Preferred up against some of these 5% rewards cards to see which is best, and who would benefit most from these cards.
While the more frugal among us will prefer the no-fee Everyday, we believe the Blue Cash Preferred’s better rewards rates are a no-brainer for most cardholders (if all you put on your card was $50 of groceries a week, you’d still be better off with the Preferred). So we’re going to focus on the Preferred, as it faces the Discover it, the Citi Dividend Platinum Select, and the Chase Freedom, all of which offer 5% back on a set of categories like dining, home improvement and travel that change every quarter. You’ll need to enroll each quarter to receive the additional rewards, and some have caps on bonus or overall rewards. The Discover it and Chase Freedom limit 5% cash back rewards to $1,500 spent per quarter, while the Citi caps total rewards at $300 cash back per year.
So which one’s better?
It turns out that for most people, the Preferred is the best rewards credit card. Even though an individual might spend more on, say, travel or entertainment, people tend to spend quite a bit of money on food and gas. Further, the department store category encompasses everything from TV’s to socks to kites, earning 3% back on a wide variety of purchases.
However, the social butterflies out there are better off with the Chase Freedom, which often gives rewards on restaurants and department stores and comes with high spending caps. The Discover it is great for online shopping, but the Citi Dividend is limited by the $300 overall cap in almost every case. The AmEx Blue Cash Preferred is great for suburbanites who drive and buy groceries for the whole family, but not ideal for those who spend more on clothes or eating out.
In the end, we’ll stick with our original assessment of the AmEx Blue Cash: great for SUV drivers and those who need multiple shopping carts when they go to the grocery store, not so great for twenty-something city dwellers.