American Express Blue Cash Quick Review: Up To 5% Cash Back?
I keep seeing the American Express Blue Cash card winning “Best Best Cash-Rebate Card” from financial magazines like Kiplinger’s Personal Finance. A few people have asked about it, so here’s my quick review. What does “up to 5% cash back” really mean anyhow? Let’s dig up the fine print on the bottom of the application:
^”Everyday Purchases” are Eligible Purchases made at U.S. supermarkets, gas stations and drugstores, in each case that are not departments of superstores or warehouse clubs.
Until you spend at least $6,500 total on the card, you receive 1% on grocery/gas/drugstore purchases, and 0.5% on everything else. After you reach that point, you start earning the full 5% on grocery/gas/drugs and 1.5% on everything else. Your first $6,500 in spending is not retroactively boosted, only the amount over that threshold gets the 5%/1.5% rate.
5%/1.5% is pretty solid, but you have to first absorb that initial hit in the beginning. $6,500 a year is $540 a month, so if you don’t spend more than that each month then you’ll never even reach the happy tier. If you do charge more, the question then becomes - what is your actual average cashback percentage when everything is taken into account? I ran the numbers and here is the graph:
I kept things simple by keeping each category isolated from the other, so the 5% for “everyday” purchases only kicks in after $6,500 in “everyday” purchases. This isn’t a good approximation for most people, because in reality, the $6,500 limit will be hit by a combination of both “everyday” and “all else” purchases, so your actual cashback return for groceries and such should rise much earlier than shown in the graph. Once it does kick in, you get to 3%+ cash back in that category pretty quickly.
The “all other” graph rises much more gradually. In this category, you’ll need around $2,000 per month in spending to achieve an overall 1.25% back. $5,000 per month will get you to 1.4% overall back.
Quick Conclusions
If you (1) charge at least $1,000 per month regularly with the occasional spike for one-time purchases, (2) prefer simplicity and only want to use one card for all your expenses, and (3) don’t ever carry a balance or pay credit card interest, then I can agree that this is a pretty good card. The more you usually spend, the better your rewards percentage. (Obviously, don’t spend more just to get a few % back.) Most people who own this card report to me that they are pretty happy with it.
In addition, if you spend a lot on gas/groceries/drugstores and have enough total purchases to get past the $6,500 marker early in the year, you can do quite well with this card. But if you are a light spender, you will probably be better off with a card with no tiers.
Find more in Credit Cards, General | 3/7/08, 6:16am | Trackback
March 7th, 2008 at 7:06 am
Just as a data point, this past year my wife and I achieved an overall cash-back ratio of 1.95% using the AMEX Blue Cash card.
This percentage would be slightly higher if an AMEX were able to be the only card that we ever used, however there are several places we regularly do business with that do not accept AMEX.
March 7th, 2008 at 7:10 am
They also don’t count “departments of superstores” or “warehouse clubs”. I do 90% of my shopping at Walmart and Costco to get their lower prices. By the time I reach that $6,500, I would have fewer goods to show for my money, which would effectivley cancel-out that 5% rebate.
I only use cards that count all purchases (like the EmigrantDirect Mastercard (http://www.emigrantdirectmastercard.com/), so I can shop around for the lowest price AND get a rebate on top of that.
Costco only takes AMEX, but there are AMEX cards that offer rewards for all purchases, like the AAdvantage AMEX. Not as good as cash but at least you get something. This 5% card gives you nothing for Costco purchases.
March 7th, 2008 at 7:43 am
Odd, that’s almost exactly my ratio as well - 1.96% to be exact (still have 1 month to go). I had several big ticket items (grad school tuition, home renovations) that fell into the 1.5% bin & brought my percentage down. All-in-all, I’m very happy with the card.
My boss is able to make his mortgage payments on his card, nice perk if you can swing it…
March 7th, 2008 at 7:48 am
I am still getting 5% on every day purchases from the Chase Cash Rewards card up to $300/yr. With that card and 2% cash back from Citi Dividend cards for every day purchases that averages out to 3.5% back given spending of $1,000 per month on everyday purchases. This is a good card to keep in mind if Chase does away with the 5% back like Citi did with their everyday purchases.
March 7th, 2008 at 7:53 am
Just one other thought. Citi Driver’s Edge card gives back 6% on every day purchases for the first 12 months and 3% thereafter. So will apply for that card later this year when the Chase rewards are about to run out.
March 7th, 2008 at 8:32 am
I am in dire need of a new cash rewards card. I’ve just about reached my limit with my Chase Freedom visa. Instead of simply crediting my cash rewards towards next month’s balance, they insist on sending a check in the mail. Well, it’s been two months since they CLAIM to have mailed it and still no check. I haven’t been able to get anybody to do anything about it over the phone either. They keep saying “give it another week and call back if it doesn’t arrive.” I think I’m just going to cancel and get an AMEX card because Chase is ridiculous.
March 7th, 2008 at 9:33 am
I’ve been searching for a good single rewards card, and discovered this one from Pentagon FCU. 5% on gas, 2% on groceries and 1.25% on everything else. You need to be a member to get the card. To qualify, you need to either have a military connection, or join the NMFA for $20. Then fund the account with $5 and you can get the card. For me, it should add up to about $500 a year in rewards, vs $350 with the Chase, and I can use just one card for everything. link
March 7th, 2008 at 9:41 am
but the real question is: how much more do you spend using plastic?
March 7th, 2008 at 9:49 am
John,
You don’t spend any more at all as long as you don’t carry a balance. Charging everything onto a rewards card and paying the balance in full each month helps you earn some free money.
March 7th, 2008 at 10:24 am
There is a Chase issued “Countrywide” card that is 1% back on everything. However the rewards is doubled if you put the payment towards a countrywide loan and just recently you could get the double reward posted to a countrywide savings account.
So its bascily a 2% for everything card if you open a countrywide savings account. Countrywide savings has a good rate too. Unfortnately the BoA merger will not doubt ruin it, but that’s still many months away.
March 7th, 2008 at 10:37 am
My cash back was very similar to Tim…1.92% for the year.
March 7th, 2008 at 12:10 pm
Cool post. I enjoy reading stuff about credit cards. AMEX Blue is a good choice for people who spend a lot and don’t want to juggle plastic for the optimal rewards. The tiers suck for people who don’t spend a lot though. If I was spending a ton I’d definitely consider it. For me, I prefer to use a combination of cards.
I think it is very easy to get >2% cash back as detailed in this terrific post on MMB –> http://www.mymoneyblog.com/arc.....hback.html
The downside of the 0% APR on purchases and 1%+ cash back is that the offers are only good for 12 months and then it’s time to switch cards. Many would consider it a PITA and therefore are understandably willing to accept lower rewards.
As for 5% on gas, groceries & drugs, there are a few cards which are not tiered and offer this level of cash back or more. Chase Cash was mentioned although this card is no longer available. The aforementioned Driver’s Edge card beats AMEX Blue on everyday purchases for the first 12 months and is wonderful if you drive a lot. Also, see FW and the discussion about the Associated Bank card which is basically the same as the old Citi Dividend.
March 7th, 2008 at 12:40 pm
Something else that makes this a worse deal is the cashback is only paid out once per year as a credit to your account. I think most people would prefer to get the cashback as soon as they hit some sort of threshold each month instead.
March 7th, 2008 at 8:23 pm
Personally I use my PenFed (http://www.penfed.org) card for everything. It’s 1.5% cash back on everything and gets rebated every month automatically applied to your statement balance. AmEx is great, but PenFed is king
March 8th, 2008 at 1:02 am
I have the amex blue, cust service is excellent.. and the cb rewards are great… i have about 100$ cb earned with 5 months to go at the 5/1.5%
March 8th, 2008 at 3:26 am
Warning:
I signed for this same card on Amex’s Small Business side in December 2006, the website gave the same information, that the 5/1 is for $6500+. And even though I rarely pay for “everyday expenses” with my business card, I was a better deal than the 1% cash back that I was getting. The only better offer at the time was Discover’s 1.5%, a card that wasn’t accepted by one of my major supliers. I remember getting the card in the mail, UPS 2nd Day, I had them deliver it to me in New York, when I read the disclosure I learned that the 5/1 goes down to 0.75/3 (if my memory serves me) after $15,000/ year. I checked the website and it had no mention. I called Amex furious, after many calls I was told that the website was wrong. I was not happy to have a hard credit pull for no reason. I was told that the Simply Cash Card would be a better bet for me becuase it had no cap. They were going to transfer me to it, but because Simply Cash was a brand new card, they either had to do a new application (another hard pull) or I had to wait until it was added to their computer system. It took me 6 months to get the Simply Cash(1% Flat). I ended up opening a CapitalOne Visa with 1% (plus 0.25% at the end of the year). My supplier stopped taking Amex, so I only used the Simply Cash for Fedex Shipments (Extra 5% off). The CapitalOne Serves its purpose, I pay it off 3 times a month because they only gave me a $7,000 Limit (Amex Gave me $35K), and Customer Service is India.
March 8th, 2008 at 4:15 am
I should really get one of those..
March 8th, 2008 at 8:52 am
I have used the Blue cash approx, with $12,500 in everyday purchases and $12000 in all other. I recieved a $642 credit to my account. calculating the exact purchases with my year end statement into almos any citi rewards card 5%/1% my year end bonus would have been $702 slightly higher for drivers edge first year card. I had $1300 in fraudulent charges on card and the process while financialy painless was horrific as far as the way their cuistomer service handled it. It went back and forth with atleast 6 interactions and phone interviews before it was resolved. A few years back I had the same situation with B of America and it was handled much better.
March 8th, 2008 at 10:18 am
I have used my Blue Cash personal card for almost a year, not exclusively, but have managed to rack up $18,680 of general, and $4918 of bonus, for a grand total of $23,598. This resulted in pending (It has not quite been a year) cash back of $396.35. Amex’s website shows that the average person is using 15% bonus and 85% general, while I am using 21% bonus and 79% general. - ** I recently requested an interest rate adjustment and they said yes and instantly changed it from 18.9% to 12.9%. Nice! I am thinking of picking one up for the business as well.
March 8th, 2008 at 10:55 pm
thanks for the post. Every six months I see different credit card vendors giving some kind of deals for credit card reward. So should one keep on getting more credit cards? Managing so many becomes a nightmare and I have heard that cancelling messes with the credit score.
March 10th, 2008 at 7:03 am
FYI, the penfed card is not 1.5% back on everthing, it is 5% for gas and 1.25% for everything else.
March 10th, 2008 at 8:07 am
Seems like I change my financial plan every few days, depending on what brain storm I come up with next. I’ve got the regular American Express Blue (not cash back) with 15 month 0% interest and a credit line of $21,000. I was going to use it for some major dental work. Then I got the Citi Cash Returns with 5% back on everything for 3 months, so I’m using that for everything, and will pay it off every month, spacing the dental work charges out over the 3 months.
After the 3 months is over, I was going to apply for some other card with a great introductory cash back rate, but my new idea is to charge all my expenses on the Amex Blue with the 0%, and just make the minimum payments until next April when the 0% ends, then pay it off. In the mean time, my cash would be in my WaMu savings earning 4% (or whatever my next high interest savings account turns out to be).
Is charging everything on the 0% and leaving my money in savings just like getting 4% cash back, or is there something I’m missing? I paid off my house, and all my credit cards have a 0% apr, so I never pay any interest. Would this be the way to go, or is there a downside? Plus, I would be earning the rewards with American Express.
March 10th, 2008 at 8:53 am
Correction to my penfed post up top:
Visa Platinum Gas Cash Reward
• Earn 2% cash back on supermarket purchases*
• Earn 5.00% cash back from gas purchases paid at the pump
• Earn 1.25% cash back from all purchases** you make with the card during each billing cycle
• No Annual Fee
• Cash Rewards credited each month
March 10th, 2008 at 7:52 pm
My wife and I use Blue Cash and appreciate the convenience of charging everything on one card. Our card anniversary was in November, and we would appear to be on track for a rather sizable cash back rate this year — having blown through the $6500 tier in the first month (mostly buying furniture and paying other expenses for a new apartment).
Bill, Gary and others: how do you determine the percentage “everyday” purchases versus general? I’ve never been able to figure out how to track this precisely, or to determine how a specific merchant is being counted.
April 3rd, 2008 at 2:32 am
Out of curiosity–has anyone thought of a good purchase to make with a rewards card that can be easily sold for the same price (or returned for cash)? With a $10,000 credit limit, if this was done every month with 3% back, that would generate an additional $3600 per year (non-taxable?). I have thought about gold buillon, but the price fluctuation is not ideal for this. Something with a stable price that is easy to sell would be best. Any ideas?
April 10th, 2008 at 8:40 pm
I’ve been using this card for quite a while now. Here is some data from my own usage over the past 4 years.
Cash Back,Total Spent Percentage back
2007 $161 $11,742 1.37%
2006 $314 $16,494 1.90%
2005 $261 $16,269 1.60%
2004 $126 $12,139 1.04%
July 14th, 2008 at 1:09 am
When I signed up for the Amex Blue Cash card almost two years ago, I specifically asked the representative about the rebate tiers. I was told that when spending less than $6500 for the entire year, the lower tier rebate would apply, but as soon as you spend over $6500 then the entire amount of purchases for the entire year would accrue the higher rebate tier. That made sense because the rebate is calculated and credited at the end of the anniversary date. I think that the online info I read at that time also stated this same explanation that 5% would be earned if over $6500 were spent during the year. However, I just spoke to a representative and was told that it never worked that way; just the amount spent over $6500 was eligible for the 5% rebate. Major bummer! I like the idea presented by Eric Voight a couple of posts above to charge items to get over the first tier hump, then return or sell the items; that way essentially the program would work as it was first promoted to me. Just need to find that good idea of what to purchase and sell or return (returning would probably erase the eligibility for the tier purchases).
By the way, through mid-August 2008 you can increase the max rebate from 5% to 6% by enrolling in a special Amex program; I received a postcard with the info, or visit http://www.americanexpress.com/cash1500, or call 1-800-794-1308 as listed on that site and enter the promotion code 117870009 which is also listed on the site, then your account will be enrolled to get the extra 1% back when you spend over $1500 per month. Steep requirements, but if you have some major expenses, you can get a few extra bucks back.
One other thing; be careful where you make your gas purchases because many convenience stores are registered as some other category rather than “gas”, so you won’t get the 5% rebate from there ever. I’m not sure what Wal-mart’s gas station is considered. Rather than going there tonight for $3.84/gallon I went to Chevron for $3.96/gallon to ensure I got the 5% back, plus it was more convenient at the time.