Blue Cash Preferred Card from American Express Review: Is It a Good Option for You?
The Blue Cash Preferred Card from American Express is a cash rewards card that offers a series of big rewards rates on certain purchases as well as a $200 sign-up bonus.
What makes the card worth a second look is that the bonuses you can earn on groceries are high enough to where this card could get you more than $500 in yearly rewards. However, its annual fee cuts into the rewards total, which we’ll discuss in a few minutes.
To help you get a better understanding of what this card can offer, we’re going to examine how its rewards work, what its rates and fees are and how it compares to other cash rewards credit cards. Our conclusion section will cover the card’s overall strengths and weaknesses, as well as who we think it’s a good fit for.
Pros: 6x rewards on groceries, $605 in rewards per year and a $200 sign-up bonus.
Cons: $95 annual fee and a 29.99% penalty APR.
Estimated Yearly Cash Rewards: $605
|Sign-Up Bonus||Annual Fee||Regular APR|
|$200||$95||15.24% to 26.24%|
|Rewards Rate: 6x on groceries and streaming services, 3x on gas and transportation, 1x on everything else|
Nearly every time you make a purchase with your Blue Cash Preferred, American Express will calculate a certain amount of cash rewards and deposit them to your rewards balance. You can log into your AmEx account to view that balance.
Exactly how you earn those rewards is something that’s really interesting with this card. You see, there are three main types of cash-back cards. The Blue Cash Preferred gives you three different bonuses, similar to what you’d see with the Bank of America Cash Rewards Card.
Other cards do a flat rewards rate that’s the same for all purchases. The Citi Double Cash is a good example because it provides a 2% bonus on purchases.
The final type of card is the rotating-category card. The Discover it Cash Back and the Chase Freedom are good examples because they have a 1% flat rate and then a 5% purchase category that changes every quarter.
We’ll explain these various cards and their advantages/disadvantages later in this review. For now, we’ll analyze the Blue Cash Preferred’s three bonus categories:
- 6% back on groceries and streaming services
- 3% back on gas, parking, tolls, and rideshares
- 1% on everything else
This first category is by far the most lucrative one not only for the Blue Cash Preferred but for all major cash rewards cards. We would consider this rewards category the single best feature of the card. However, there’s another aspect of the card that negates the strength of this category, which we’ll talk about in the rates and fees section.
Based on the data we’ve gathered from the Bureau of Labor Statistics, we believe the average household spends about $4,363 on groceries. With 6% rewards, you’ll earn $261.78 in cash back.
A 2019 article from Forbes indicates that the average person pays $29 a month for streaming services. At that rate, you’d earn around $21 per year in rewards, for a total of around $283 a year in the 6% category.
Now, you need to know that American Express caps your 6% cash back at $6,000 in spending. Once you spend $6,000, your groceries and streaming rewards rate drops to 1%.
In other words, the most cash back you can earn at 6% is $360.
Gas and transportation purchases, on the other hand, will earn you 3% and have no cap. The BLS says that the average household spends around $1,939 a year on gas. Spending that amount will earn you $58.17 in cash back.
Transportation costs, on the other hand, is harder to pin down. An article from CNBC indicates that Uber and Lyft monthly costs range from $26 to $110 depending on where you live. Parking fees, tolls, subway cards and train tickets are in this category, too. Data here varies greatly by city, too. For sake of example, we’ll say the average monthly transportation cost is $75. Your yearly cash back would be $27.
In total, we see this category earning you around $85 a year.
One of the tips we’d like to give you is to sign up a spouse or partner as an authorized user. They’ll get their own card with the same number as yours that they can use to fill their tanks while they’re out, get rideshare or pay for other transportation costs. Taking this two-card approach means you can rack up gas rewards faster.
Assuming you spend the average amount on groceries and gas and that you spend around $30,000 a year on your card, then you’re looking at about $236.98 from the 1% cash back rate. For the year, we believe you can earn around $605 a year in cash rewards.
One more important way to earn rewards with this card is through what’s called a “sign-up bonus.” When you spend $1,000 within the first three months of owning the card, AmEx will deposit $200 to your rewards balance.
As long as your rewards balance is at least $25, you can transfer your cash rewards to your Blue Cash Preferred and they will appear as a statement credit. The AmEx fine print makes a point of saying that you can’t use your rewards to make your minimum payment.
In the previous section, we mentioned that this card can earn you $605 a year in cash rewards. When taken at face value, $605 is the most yearly rewards among the best cash rewards credit cards of 2019.
However, those cash rewards come at a cost. The following list of the Blue Cash Preferred’s rates and fees hint at the additional cost we’ll explain in detail after:
- Interest rate for purchases and balance transfers: 15.24%–26.24%
- Interest rate for cash advances: 27.49%
- Penalty interest rate: 29.99%
- Balance transfer/cash advance fee: $5 or 3%, whichever is greater
- Late/returned payment fee: Up to $39
- Annual fee: $95
Most cash back cards have no annual fee. This card does. You’re paying $95 a year to use the card, which cuts into the rewards you earn. So, even though you can earn $605 a year with this card, the annual fee drops the net cash back to $510.
Another key negative is the penalty APR. If you make one late payment or you have a returned payment, AmEx puts a 29.99% interest rate on your account. This rate lasts six months. It applies to any balances you add after the penalty kicks in.
AmEx says that the penalty APR applies to your account for at least six months. At the end of six months, they may remove the penalty rate if you make six months of on-time, unreturned payments.
The downside is the high APR. It can cost you a significant amount of money if you’re spending more than you earn. If this is you, you won’t be able to pay off new purchases and those purchases will get the penalty APR.
The “positive” side of the penalty APR is that it will only last six months if you make unreturned, on-time payments for six consecutive months.
Finally, the card’s lowest interest rate is pretty competitive, as we’ll point out in the next section. AmEx will most likely give this APR to you if your credit scores are above 700. Even though this is the best APR they offer, remember that carrying a balance will be expensive.
The following list shows you how much you’d pay in interest every year if you had certain average daily balances:
- $1,000 daily balance: $152 yearly interest
- $2,000 daily balance: $304 yearly interest
- $3,000 daily balance: $456 yearly interest
- $4,000 daily balance: $608 yearly interest
- $5,000 daily balance: $760 yearly interest
- $6,000 daily balance: $912 yearly interest
- $7,000 daily balance: $1,064 yearly interest
- $8,000 daily balance: $1,216 yearly interest
The Blue Cash Preferred is one of many cash back cards that you can sign up for. Among those “many” are some well-known cards from the major credit card issuers and banks in the country. The following table lists what we believe to be the six most popular cash back cards along with the Blue Cash Preferred:
|AmEx Blue Cash Preferred||Discover it Cash Back||Citi Double Cash||Bank of America Cash Rewards||Capital One Quicksilver||Chase Freedom Unlimited||Chase Freedom|
|Intro cash offer||$200 after $1,000 spend||Match on first-year cash back (avg. of $425)||None||$200 after $1,000 spend||$150 after $500 spend||Match on first-year cash back up to $20,000 (avg. of $300)||$150 after $500 spend|
|Rewards rate||6%/ 3%/ 1%||1% with 5% quarterly bonuses||2%||3%/ 2%/ 1%||1.5%||1.5%||1% with 5% quarterly bonuses|
|Yearly rewards on $30K spending||$605||$425||$600||$422||$450||$450||$425|
|Intro APR||0% for 12 months on purchases and balance transfers||0% for 14 months on purchases and balance transfers||0% for 18 months on balance transfers||0% for 12 months on purchases and balance transfers||0% for 15 months on purchases and balance transfers||0% for 15 months on purchases and balance transfers||0% for 15 months on purchases and balance transfers|
|Permanent APR||15.24%–26.24% (Penalty APR up to 29.99%)||14.24%–25.24%||14.49%–24.49% (Penalty APR up to 29.99%)||16.24%–26.24% (Penalty APR up to 29.99%)||16.24%–26.24%||17.24%–25.99%||17.24%–25.99%|
Because we’re talking about cash rewards cards, we believe the most important categories are the sign-up bonus and the yearly rewards.
The AmEx card’s sign-up bonus is the third-best of the group, as the first-year match of Discover it Cash Back and the Chase Freedom Unlimited can produce at least $300 in extra cash back. Because of this, we believe that AmEx’s sign-up bonus is slightly better than average.
As for yearly rewards, the AmEx presents a unique situation. Based on average spending numbers, we think it can earn you $605 a year. However, if you can spend $6,000 a year on groceries, that yearly rewards total goes up to around $682.
But, remember, you’re also paying a $95 annual fee. The yearly rewards are impressive but, when you subtract the $95 annual fee you pay, the net total drops to $510, or right around what you’d earn with the Chase Freedom Unlimited or Capital One Quicksilver.
Like the sign-up bonus, we believe that the Blue Cash Preferred’s yearly rewards are slightly above average.
Another factor we think is important to your experience is the AmEx card’s penalty APR. If you’re someone who tends to pay late and carries a balance, a penalty APR is something you want to avoid.
All the cards on this list use a penalty APR after your first late or returned payment. The advantage the AmEx card has is that they’ll remove the APR after six months with timely, successful payments. The Citi Double Cash and Bank of America Cash Rewards cards, however, apply the penalty APR indefinitely.
In our opinion, this chart shows that the American Express Blue Cash Preferred performs slightly better in several key areas but, overall, is a poor choice for someone who tends to make late payments.
Our research on this card indicates an interesting mix of strengths and weaknesses that have a significant impact on certain types of consumers.
First, we believe it has a strong rewards program that can earn you more cash back each year than all other major cards aside from the Citi Double Cash. However, this comes with a caveat. The card’s greatest strength is its grocery rewards.
If you aren’t spending at least $350 a month on groceries, then the card loses its value. If you have a family with a food budget of $500 or above, the card’s strength plays to your strengths because you’ll max out the 6% cash-back rate for grocery purchases.
Another strength of this card is its sign-up bonus. The Discover it Cash Back card offers the biggest sign-up bonus because of its matching rewards but Discover gives you those rewards after the first year. You have to wait 12 months to get them. The AmEx card, on the other hand, gives you the bonus eight to 12 weeks after you spend $1,000. Most households can spend $1,000 in less than a month.
The card’s downsides are its penalty APR and annual fee. As we pointed out earlier, if you’re someone who is going through financial difficulties, this isn’t a good choice.
If you make one late payment, the APR shoots up to 29.99%. If you’re spending more than you make, then you’ll rack up debt after the 29.99% APR is active and you’ll pay far more interest than you would with a card like the Chase Freedom Unlimited or Chase Freedom.