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American Express Blue Cash vs. Rotating 5% Cash Back Credit Cards

April 29, 2011 Credit Cards
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Aw nerds! It looks like this offer has expired. Please visit NerdWallet’s Blue Cash Preferred® Card from American Express page for updated info.

The American Express Blue Cash family delivers rewards for “everyday” purchases. Blue Cash Preferred® Card from American Express and Blue Cash Everyday® Card from American Express give, respectively, 6% and 3% on groceries up to $6,000 per year in purchases (then 1%), 3% and 2% on gas and department stores, and 1% on everything else. The Blue Cash Preferred® Card from American Express comes with an annual fee of $95 ($75 if your application is received by 8/3/16) but we believe that the additional rewards outweigh 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 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 version, but the newcomers have done away with many of the old card’s hurdles. So we’ve pitted the Blue Cash Preferred® Card from American Express up against some of these 5% rewards cards to see which is best, and who would benefit most from these cards.

The players

While the more frugal among us will prefer the $0-annual-fee Blue Cash Everyday® Card from American Express, we believe the Blue Cash Preferred® Card from American Express’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 Blue Cash Preferred® Card from American Express). So we’re going to focus on the Blue Cash Preferred® Card from American Express, as it faces the Discover it® - Cashback Match™, the Citi® Dividend Platinum Select® Visa® Card , and the Chase Freedom®, all of which offer 5% back on a set of categories like gas stations, restaurants, select grocery stores and wholesale clubs 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® - Cashback Match™ and Chase Freedom® limit 5% cash back rewards to $1,500 spent per quarter, while the Citi® Dividend Platinum Select® Visa® Card caps total rewards at $300 cash back per year.

So which one’s better?

It turns out that for most people, the Blue Cash Preferred® Card from American Express 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® - Cashback Match™ is great for online shopping, but the Citi® Dividend Platinum Select® Visa® Card is limited by the $300 overall cap in almost every case. The Blue Cash Preferred® Card from American Express 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 Blue Cash Preferred® Card from American Express: 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.

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