American Express Blue Cash Preferred Review: Perhaps the Ultimate Family Card

The annual fee on the Blue Cash Preferred® Card from American Express sets a high bar for its rewards. You can clear it fairly easily if you regularly spend a lot at the supermarket, the gas pump, or on commuting. And if you earn the card's welcome offer for new cardholders, your first year-plus with the card will cost you nothing. Here are the card's top features:

Big supermarket rewards

The industry-leading cash-back rate at supermarkets is this card's primary allure. You get 6% cash back at U.S. supermarkets, on up to $6,000 a year in spending. After you hit the cap, supermarket spending earns 1%. Terms apply.

Assuming you spent $6,000 a year on groceries, you're looking at a whopping $360 in rewards just from that one spending category. This card's headline feature comes with a big caveat though. The 6% rewards are available only at U.S. supermarkets. American Express' definition of supermarkets excludes wholesale clubs such as Sam's Club, superstores like Target and Walmart, specialty food stores and others. So consider not only how much you spend on groceries, but also where you buy them.

Big rewards on eligible streaming services

Although that 6% on U.S. supermarket spending is capped at $6,000 annually, eligible U.S. streaming services have no cap on the 6% cash back. If you're all about cord-cutting and have one or more subscriptions to such services as Hulu, Netflix, Pandora or Spotify, you'll save money if you pay with the Blue Cash Preferred® Card from American Express. Granted, you’re unlikely to spend near as much on streaming as you do at supermarkets, but 6% is a huge percentage in cash back. American Express notes that if your streaming subscription is bundled with another product or service or billed by a third party, such as a cable or phone company, your purchase may not be eligible for the 6% back. Terms apply.

Transit rewards

The 3% cash back at U.S. gas stations is also among the highest you can get anywhere — and those rewards aren't capped. That's a boon for car commuters and owners of gas-guzzling vehicles. However, restrictions apply here, too.

The higher gas rewards are available only at traditional stand-alone gas stations. Warehouse clubs, superstores and supermarkets that sell gas don’t count, according to American Express. Terms apply.

American Express further sweetens the card's earning power for commuters by adding transit as a 3% bonus category. This includes spending on rideshares, tolls, taxis, buses, trains and parking. It's a potentially huge boon for those who rely daily on public transportation and other ways of getting around that don't require filling up at the pump. Terms apply.

Bonus offer for new cardholders

The Blue Cash Preferred® Card from American Express offers a welcome bonus, something that not all of its cash-back competitors do: Earn a $250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months. Terms Apply. That more than covers the annual fee for a while.

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MORE NERDY PERSPECTIVE

Even with its high rewards rates and welcome offer for new cardholders, the Blue Cash Preferred® Card from American Express isn't for everybody. Here are some potential drawbacks.

High annual fee

As with any card with an annual fee, you start the year in a hole. You have to earn enough rewards to pay the annual fee before you net any value.

With the mushy value propositions of some rewards, such as airline miles, airport lounge access and concierge service, calculating a break-even point can be cumbersome, inexact and changing. Not so with a cash-back card. It's all about the dollars.

Considering the rewards at U.S. supermarkets alone, you would need to spend about $31 per week in that category to break even on the annual fee. That's an accessible amount for most people, and it doesn't even consider elevated rewards on select U.S. streaming services, or purchases at U.S. gas stations and other forms of transit, which only hasten the break-even point.

The point is, many cardholders can erase the annual fee quickly. And again, if you meet the requirements of the welcome offer, your first-year annual fee is more than paid for. You can use our calculator below to determine whether this card is a good fit.

Still, some people don't like the idea of an annual fee under any circumstances. For them, there's a little-brother card, the Blue Cash Everyday® Card from American Express, which offers similar bonus categories without an annual fee. This card earns 3% cash back at U.S. supermarkets, at U.S. gas stations and on U.S. online retail purchases (on up to $6,000 per year in spending in each category). Other purchases earn 1% back. Terms apply. (see rates and fees).

The natural question is: At what spending level is the Blue Cash Preferred® Card from American Express a better deal? Using the same supermarket-only analysis, if you spend at least $61 per week at supermarkets, you’ll earn more with the Blue Cash Preferred® Card from American Express, even after the annual fee.

» COMPARE: How the Blue Cash cards stack up against each other

Other no-fee alternatives include the low-hassle Citi Double Cash® Card, which pays 2% cash back on all purchases — 1% when you make them and another 1% when you pay them off. Or consider the generous 5% rotating bonus rewards categories of the Chase Freedom Flex®.

Or if you dine out as much as you eat in, the Capital One Savor Cash Rewards Credit Card is a top choice. You'll earn 3% cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Walmart and Target); 8% cash back on Capital One Entertainment purchases; 5% back on hotels and rental cards booked through Capital One Travel (terms apply); and 1% on all other purchases.

Bonus rewards cap

For big households, a major drawback is the $6,000 cap each calendar year on U.S. supermarket spending eligible for the 6% reward. That means the most you could earn back at that level is $360 before additional supermarket purchases net you a mundane 1% back. Again, eligible U.S. streaming services earn 6% back, uncapped. Of course, you could monitor your rewards and switch to a different card at the supermarket after hitting the cap. One way to make the most of the Blue Cash Preferred® Card from American Express is by strategically using it with others.