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

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In June 2016, Costco ended its partnership with American Express, and the TrueEarnings® Card from Costco and American Express was discontinued. Costco’s new co-branded credit card is the Costco Anywhere Visa®Card, issued by Citi.

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 $95, which is offset by its signup bonus: Special Offer - Earn 5% cash back on eligible travel purchases in the first 6 months, up to $200. Plus, earn $150 back after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply The Blue Cash Everyday® Card from American Express also has a bonus: Special Offer - Earn 5% cash back on eligible travel purchases in the first 6 months, up to $200. Plus, earn $100 back after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply If you spend $61 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: Special Offer - Earn 5% cash back on eligible travel purchases in the first 6 months, up to $200. Plus, earn $150 back after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply 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 Special Offer - Earn 5% cash back on eligible travel purchases in the first 6 months, up to $200. Plus, earn $100 back after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply Special Offer - Earn 5% cash back on eligible travel purchases in the first 6 months, up to $200. Plus, earn $150 back after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply 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 $95 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%