Credit Cards Tips for You

Blue Cash has long been American Express’s primary cash back credit card for consumers. Like most credit cards, it has undergone significant changes over the years. Some have been good; others less so. Fortunately, the most recent Blue Cash makeover has resulted in the creation of two high-yielding cash back credit cards that are particularly appealing to families and high spending consumers: the no annual fee Blue Cash Everyday card and its very rich counterpart, Blue Cash Preferred.

Both versions of Blue Cash offer well above average cash back rates on groceries and gas. With Blue Cash Everyday, all purchases earn at least 1%, while groceries earn 3% cash back and gas earns 2% cash back. This is superior to most cash back cards, though the 3% earned on groceries with the Blue Cash Everyday card pales in comparison to the 6% that can be earned with Blue Cash Preferred. Gas purchases also earn 3% instead of 2% and department store purchases also get 3%.

The difference in return on grocery spending is huge, particularly for families. However, in order to earn the 6% offered with Blue Cash Preferred, there is a $75 annual fee that must be paid. This fee may seem steep, but it only takes $25 of weekly grocery spending, or about $1300, to earn back the annual fee in rewards. Many families spend this monthly, so the cost of this annual fee can essentially be wiped out quickly, with all other rewards coming as pure profit.

Because of the 6% grocery cash back factor, it really makes little sense to choose the Blue Cash Everyday card unless grocery expenses are non-existent. The real value is in the Preferred Card.

Consumers who always pay their bills in full every month and spend heavily on gas and groceries will have a hard time finding a rewards card that provides better value than Blue Cash Preferred. Unfortunately, the same is not true for consumers who carry balances from month to month. Both versions of Blue Cash come with above average interest rates that start in the high teens. Yes, these cards do come with 0% introductory periods, but once those expire, the long term rates are significantly higher than what is offered on most 0% APR credit cards and even many cash back credit cards.

Because of the above average long term interest rate, both Blue Cash Everyday and Blue Cash Preferred need to be used judiciously by those who carry balances. One option is to only use a Blue Cash card for purchases that can be paid in full at the end of the month while using a lower rate card for purchases that won’t be repaid immediately. However, if using multiple cards isn’t an appealing option, then consumers who carry balances from month to month should stick with a lower rate rewards credit card.

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