Posted by: John S Kiernan

Rating: 4.6 / 5

The Verdict: One of the market’s elite everyday offers, the Blue Cash Preferred Credit Card from American Express provides an impressive rewards package aimed at some of the most common consumer-spending categories. In addition to a $150 initial bonus for spending at least $1,000 during the first three months your account is open and 10% cash back on restaurant expenses in the first 6 months (up to $200), you will earn 6% cash back on the first $6,000 in supermarket purchases that you make each year (1% thereafter), 3% cash back at gas stations and select department stores, and 1% cash back on everything else. Blue Cash Preferred has financing chops, too, offering 0% introductory interest rates on new purchases and balance transfers for the first 12 months. But it does come at a cost, charging a 3% balance-transfer fee and a $95 annual fee.

This steep fixed cost means that the Blue Cash Preferred Card is ill-suited to someone who infrequently pays with plastic, as it would be difficult to earn enough rewards to cover the annual fee. But if you’re prepared to make it your primary spending vehicle, and groceries and gas are among your biggest expenses, then Blue Cash Preferred certainly warrants a closer look. And though it’s not necessarily an offer to seek out for financing purposes, it’s far from a liability and actually lends itself quite well to helping you both earn rewards and avoid interest on a big-ticket purchase that will take more than a few months to pay off.

We’ll take a closer look at the ins and outs of this offer below, in addition to seeing how the Blue Cash Preferred Card compares to its no annual fee sibling, Amex EveryDay.

The Highlights

• $150 Initial Bonus: Spending at least $1,000 during the first three months that you have the Blue Cash Preferred Card will score you a $150 statement credit. That’s nearly 47% more than the average initial cash-back bonus of $102.26, according to WalletHub’s latest Credit Card Landscape Report. 

• Up To 6% Cash Back: At 6%, Blue Cash Preferred’s maximum cash-back earning rate certainly is high. However, it’s important to note that it applies only to the first $6,000 in supermarket purchases you make each year. That means this particular component of your rewards package can earn you no more than $360 in cash back each year. On the bright side, if you’re thinking that you don’t spend $6,000 on groceries each year – the average person spends just $3,977, after all – you’ll be pleased to hear that the 6% earning rate does indeed apply to gift cards purchased at supermarkets.

  When you factor in the 3% cash back earned at gas stations and select department stores as well as the 1% cash back you’ll get everywhere else, the average person is looking at earning roughly $1,235 over the first two years of use, after subtracting the annual fee and assuming they manage to spend the full $6,000 at supermarkets.

  By the way, superstores, warehouse stores and wholesale clubs (e.g., Costco, Walmart and Target) do not qualify as supermarkets, gas stations or department stores. If you’re curious about the meaning of “select” department stores, it refers to U.S. locations of the following chains:

Bealls (not affiliated with Bealls Florida) Belk Bloomingdale's Bon-Ton Stores Boscov's Century 21 Dillard's JCPenney (JCP)

Kohl's Lord & Taylor Macy's Neiman Marcus Nordstrom Saks Fifth Avenue Sears Stein Mart

• 0% Financing For 12 Months: Blue Cash Preferred is your ticket to a vacation from interest charges, offering 0% financing on new purchases and balance transfers for the first 12 months your account is open. The new-purchase part figures to be more financially advantageous given the card’s 3% balance transfer fee (see The Lowlights below), but either intro rate could indeed save you money. Just make sure to use a credit-card calculator to confirm your ability to save and plan the monthly payments you’ll need to make in order to be debt-free by the time high regular interest rates take effect.

The Lowlights

• $95 Annual Fee: The Blue Cash Preferred Card’s most glaring weakness is the fact that it takes from you before giving back. Sure, the rewards that you stand to earn and the interest charges you figure to avoid will help you quickly recoup your investment in this plastic, but you’re still paying 466% more per year than the average credit card charges ($16.78). That’s what prevents applying for this card from being a no-brainer. 

• Above-Average APR: If you get approved for Blue Cash Preferred, you will be assigned an APR that could be anywhere from 13.49% to 23.49%, depending on your exact creditworthiness. Not only is the low end of this range above the 13.16% average charged by “excellent-credit” credit cards, but the high end is even above the 22% average for “fair-credit” credit cards, according to WalletHub Landscape Reports. The result is plastic that will prove quite expensive if you carry a balance from month to month after the 0% introductory term concludes. 

• 3% Balance Transfer Fee: Although this card does offer a 0% introductory interest rate on balance transfers for the first 12 months, its suitability to the task is diminished by the fact that you will be charged a fee equal to 3% of whatever balance you transfer. It might still be less expensive than carrying the balance on your current credit card, but this fee knocks Blue Cash Preferred down a few pegs in the hierarchy of balance-transfer credit cards.

Other Things To Consider

• Free ShopRunner Membership: Your American Express Blue Cash Preferred Card scores you free two-day shipping for items purchased through the service, which offers products from more than 140 stores and thousands of brands. You can sign up for the benefit here. Ordinarily, a ShopRunner membership will cost you $79 per year or $8.95 per month. 

• $25 Cash-Back Redemption Requirement: You need at least $25 in rewards to redeem your earnings for cash back or gift cards, and statement credits only come in increments of $25. That means you’ll have to wait longer than you should to enjoy the fruits of your spending, and it necessitates careful timing to maximize the amount you are able to redeem. 

• 2.7% Foreign Transaction Fee: American Express already has one strike against it when it comes to international spending, as its cards are accepted in far fewer countries (130+) than Visa and MasterCard (200+ each). The fact that it charges a fee equal to 2.7% of any purchase made outside of the U.S., whether you’re traveling abroad or just shopping from an internationally based merchant, is strike number two. It is higher than the 1.97% market-average foreign transaction fee and a deal breaker for any frequent traveler. 

• No Annual Fee For Authorized Users: Some rewards cards charge annual fees to authorized users in recognition of the fact that they have the same earning privileges as primary accountholders and should thus foot some of the bill. Blue Cash Preferred is not among them. You can add an unspecified number of authorized users, whose spending will yield rewards for you, without paying extra. This doesn’t necessarily mean that you should rush to add authorized users, as doing so still poses distinct risks, but it’s certainly a feature worth knowing about.

Compared To The Competition

In order to help you finalize your decision regarding whether you would actually prefer to use Blue Cash Preferred over other options for which you can expect to get approved, we compared it to some of the most prominent alternatives. You can check out the results below.  

Blue Cash Preferred

Blue Cash Everyday

Blue Cash Everyday is essentially a toned-down version of Blue Cash Preferred. Instead of a $150 initial bonus, Blue Cash Everyday offers $100. Instead of 6% cash back on your first $6,000 in annual supermarket purchases, you get 3% (then 1% thereafter). And instead of 3% cash back at gas stations and department stores, you get 2%. Most importantly, however, Everyday eliminates Preferred’s annual fee entirely.

Other than that, they’re the same. Both Blue Cash Preferred and Blue Cash Everyday require excellent credit for approval. Both offer 0% introductory interest rates on new purchases and balance transfers for the first 12 months. And both advertise a regular APR between 13.49% and 23.49%.

So your decision therefore rests upon whether you spend enough each year to make paying for Blue Cash Preferred’s added earning power worthwhile. And you only need to earn an additional $25 to meet that mark for the first year, considering the discrepancy between these cards’ initial bonuses. That could be accomplished by spending as little as $417 at the supermarket. So if you plan to spend enough to qualify for either card’s initial bonus, it’s fair to say that you will be better off opting for Blue Cash Preferred. The average person, who makes roughly $28,523 in credit card-eligible charges each year, would net at least $180 (and as much as $382) more with Blue Cash Preferred over the first two years.

Winner: Blue Cash Preferred  

   

Blue Cash Preferred

Citi Double Cash

The key to this matchup is how much you spend per year, what you buy and whether you pay your bill in full each month. Citi Double Cash does not charge an annual fee, and it offers 1% cash back on each purchase that you make as well as another 1% cash back on each dollar in corresponding monthly bill payments that you make. So, if rewards are your aim, the decision comes down to whether you will earn at least $75 more with Blue Cash Preferred than Citi Double Cash. As it turns out, the average person would actually reap roughly $68 more in net rewards earnings from Citi Double Cash over the first two years of use. This assumes that the cardholder pays his or her bill in full every month and spends only $3,977 at the supermarket each year (the national average amount). But if you assume the same overall budget yet $6,000 in annual supermarket expenses, then Blue Cash Preferred would come out on top by $134.

When it comes to financing, these two cards are not on even footing. Double Cash offers 0% introductory rates for balance transfers for the first 18 months and Blue Cash Preferred offers 0% introductory rates for new purchases and balance transfers for the first 12 months, and both charge a 3% balance transfer fee. Both offer the similar regular APR (13.49% - 23.49% (V) and 13.99% - 23.99% (V), respectively).

With all of that being said, the edge has to go to Double Cash because of its lower cost. To learn more, check out our in-depth Citi Double Cash review.

Winner: Citi Double Cash  

   

Blue Cash Preferred

Chase Sapphire Preferred

You can’t prefer both of these Preferred cards, and your decision ultimately comes down to whether you’d prefer a bigger initial bonus or better ongoing rewards. Chase Sapphire Preferred blows Blue Cash Preferred out of the water when it comes to upfront perks, offering 50,000 bonus points for spending $4,000 during the first three months. That bounty can be redeemed for up to $625 in travel booked through Chase Ultimate Rewards.

On an ongoing basis, it gives you 2 points per $1 spent on travel and dining and 1 point per $1 on everything else. That’s obviously not as attractive as the 6%-3%-1% structure that Blue Cash Preferred provides. However, taking both Blue Cash Preferred’s annual fee and Sapphire Preferred’s $95 annual fee (beginning in the second year) into account, the average person would earn about $266 more with Sapphire Preferred over the first two years of use.

Chase Sapphire Preferred doesn’t bring much to the table when it comes to financing, not offering 0% intro rates and charging interest at a rate of 16.49% to 23.49%. But if rewards are what you’re after and you’re in a position to redeem earnings for travel booked through Chase, Sapphire Preferred will yield more value than Blue Cash Preferred. For more information about the winner of this matchup, see our Chase Sapphire Preferred review.

Winner: Chase Sapphire Preferred  

   

Blue Cash Preferred

Barclaycard Arrival Plus

Barclaycard Arrival Plus is one of the best rewards cards on the market, offering a $400 initial bonus and the miles equivalent of 2.1% cash back on all purchases, provided that you redeem your earnings for travel-related expenses. Most major types of travel expenses qualify (e.g., airfare, hotel reservations, cruise tickets, rental cars and timeshares), and it doesn’t matter what company provides your accommodations or where you book them. Earnings are redeemable toward the cost of any purchase coded as being travel-oriented that you pay for with your card. When you consider these rewards — together with the card’s $89 annual fee beginning in the second year — through the prism of the average person’s spending habits, Arrival Plus would net $549 more earnings than Blue Cash Preferred over the first two years.

Barclaycard Arrival Plus is not well-suited to financing, however, as it does not offer 0% introductory interest and its regular rate ranges from 16.49% to 23.49%. Blue Cash Preferred is therefore only preferable if you are in the market for a big-ticket purchase or a balance transfer. For more information on the Arrival Plus Card, you can check out our complete Barclaycard Arrival Plus review.

Winner: Barclaycard Arrival Plus

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via Finance Xpress