I’m actually considering a cash back credit card for certain spend categories…

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While I think most consumers prefer cash back credit cards over points earning credit cards (at least in theory), I’ve always preferred the latter. Most consumers aren’t able to extract the maximum value out of points given how complicated the systems can be, while those of us that know how they work can get some spectacular value for our points.

I value most of the better mileage/points currencies at 1.5-2.0 cents per point, while I’ve found most consumers value points closer to a cent each, since they consider redeeming points for gift cards to be about the best value out there.

That being said, there are some cash back credit cards that are tempting even for someone like me, which I’ve added to the “Best Credit Card Offers” page of the blog. They’re as follows:

Blue Cash Preferred® Card from American Express Application

This is probably the most tempting card of all if it matches your spend patterns. The card offers cash back at U.S. stand-alone supermarkets (up to $6,000, and 1% thereafter), 3% cash back on gasoline at U.S. stand-alone gas stations and select major department stores; 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. Cash back is earned only on eligible purchases. The card offers 150 Reward Dollars after spending $1,000 within three months, and comes with a $75 annual fee.

The part that I’m personally interested in is the 6% cash back at supermarkets, the 3% cash back at department stores, and possibly the 3% cash back at gas stations. The 6% at supermarkets is a no brainer, as is the 3% at department stores, as I don’t have a card that would otherwise accrue bonus points for department store spend. For gas I’d otherwise use my American Express Premier Rewards Gold card, which offers two Membership Rewards points per dollar spent on gas. Ultimately I value Membership Rewards points at slightly above 1.5 cents each so I’d probably still use the Premier Rewards Gold card, but others might value them differently.

With 6% cash back you have to spend $1,250 per year at supermarkets to break even (not factoring in the $150 sign-up bonus, which essentially pays your annual fee for the first two years). Of course I’m trying to think creatively in regards to purchasing gift cards at supermarkets to accrue the 6% cash back, though the T&Cs read (in part) as follows:

Each eligible purchase shall qualify for a reward of 6, 3, or 1% of the purchase amount as follows: 6% for eligible purchases at supermarkets (excluding superstores and warehouse clubs), 3% for eligible purchases at department stores and for automobile gasoline purchased at stand-alone gas stations, and 1% for all other eligible purchases posted to your account. Eligible Purchases means purchases for goods and services minus returns and other credits. Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of American Express Travelers Cheques, purchases or reloading of American Express prepaid cards or purchases of other cash equivalents. Additional terms and conditions apply.

I don’t really have much experience with gift cards, though does anyone know if the above is standard AmEx language, or whether in practice you could actually earn cash back on gift card purchases (restaurant, gas, etc.)? It’s not something I’ve ever done, though I’d think that if you buy a gift card along with groceries they wouldn’t really have a way of breaking up the bill, right? It would certainly be tough to beat 6% cash back on gift cards for places you’d otherwise spend money at anyway.

Anyway, if you’re going for a cash back card, this one is pretty compelling in the above categories.

Blue Cash Everyday® Card from American Express Application

This is the most basic version of the above card, given that it has no annual fee. The card offers a sign-up bonus of 100 Reward Dollars after spending $1,000 within three months, and offers 3% cash back at U.S. stand-alone supermarkets (up to $6,000, and 1% thereafter), 2% cash back on gasoline at U.S. stand-alone gas stations and select major department stores; 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. Cash back is earned only on eligible purchases.

None of those bonuses are tempting enough to make me stop using a mileage earning credit card, though for those of you that want a cash back card, that’s a pretty compelling offering with no annual fee, in my opinion.

American Express Costco Card Application

For those of you that have a Costco membership and value cash back, the Costco American Express is great as well, as it has no annual fee and offers 3% cash back on gas (on up to $3,000 spend), 2% cash back on dining and travel, and 1% cash back on everything else. Again, none of those amounts are enough to get me to switch spend to the card, though it’s another really solid cash back card for those of you in that camp.

(Tip of the hat to Frugal Travel Guy)

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Comments

  1. says

    It was probably in a queue and just auto posted, but who knows, maybe he is up right now trying to book an aspirational award in QF F.

  2. Paul says

    @Lucky-I think you are absolutely right!! I have both a cash back card and the sapphire card and I view them both the same-1 cent per point. I never do award travel since I need every flight to qualify for status and never use hotel reward points since I need every stay to qualify for status. End result is I have an obscene amount of points.

    When I can use cash back for hotel or flights, its money in my pocket while points is just more points….

  3. Bob says

    I’ve had this card for a year now, and I can assure you that you will earn 6% cash back on all gift card purchases from grocery stores. AMEX doesn’t care what you purchase. AMEX only cares how they code the store. I have used the card at a wide variety of grocery stores and had a problem only one time at one store. For all other purchases I have received 6%.
    I have made many hundreds of dollars in gift card purchases.

  4. says

    1.5 cent per MR point? Even with the current 50% bonus to BA. I value Avios at 1.7 cents, so I value MR right now at 2.55 cents.

    But I do have some great Avios choices with upcoming trips LAX-HNL and intra-Australia and intra-South America.

    I think the math is a bit off on needing to spend $1,250 at the grocery store to break even on the $75 fee. You’d normally earn 2x points there with an Ink Bold, which is worth about 4 cents. With the 6% card, you get 6 cents.

    So you are earning 2 extra cents per dollar. That means you have to spend $3,750 at the grocery store to break even.

    Minor quibbles. I really enjoyed the post; I need to look into cash back cards.

  5. says

    Agree with Bob. I can’t even fathom how Amex would come to know WHAT you purchased at the grocery, whether it be food or gift cards. I usually throw in a few gas cards with my weekly grocery purchases and have always gotten the bonus.

  6. gomike says

    The Costco business card give 4% on gas, why even mention the personal card?

  7. Brad says

    Free Money Finance is a big proponent of this card and did several test purchases at his local grocery store to see if he got 6% cash back. He did get 6% cash back whether he was buying just gift cards or mixing in gift cards with his purchase.

    One thing my wife and I do is to buy $50 QuikTrip gift cards at Publix. Then we are effectively getting 6% back on gas.

  8. Paul says

    I find that I usually don’t have the time or organization to use the optimal card for various situations, and I don’t have an aspirational reward focus.

    As I result, I end up using my Capital One Venture card a lot, which earns a simple 2% cash back. The cash back can only be applied to purchases related to trips, but the agents are very liberal about that (besides the obvious expenses, they credit for fuel/restaurant spend if you tell them it was an expense on a trip).

  9. Stvr says

    This post reads like you’re trolling for affiliate $$$. Are you really considering getting a Costco card? What are you talking about? I thought this blog was about miles and points.

    TROLL ALERT

  10. lucky says

    @ Stvr — I made it pretty clear that the only card above that interests me is the Blue Cash Preferred with the 6% supermarkets and 3% department stores. I made it pretty clear that the other cards don’t meet my personal needs, but may interest others.

  11. Caleb B says

    Can this be converted to MR points similar to the way the Chase Freedom card can convert to UR points?

  12. Craig says

    One thing to note on Costco, unless I am mistaken, you must use AMEX to pay in store and at the pump.

  13. Cheaplee says

    If you are considering the Costco card, try the Fidelity Amex instead – 2% everywhere, no fees, get paid every 5000 points ($50)directly into your Fidelity account. Fidelity Visa is 1.5% to $15k and 2% beyond that. I would the 6% at supermarkets but I get 5% off with Target’s debit card already at their supermarket.

  14. Miles says

    The Penfed (Pentagon Fed Credit Union) Visa gives an automatic 5% cashback on gasoline purchases. No muss, no fuss, the rebate is automatically added to your credit card account.

    Some gasoline stations won’t accept Amex, and I’ve heard that some classify themselves as “food stores” if they sell snacks. Those are not issues with the Penfed card…every station I go to results in the cashback.

    I keep the card in my car and use it for every gasoline buy.

  15. Murphy says

    To add on what Miles said…

    PenFed has a few nice cards. One offers 5 points on gas and 3 points at supermarkets, and another offer 5 points on airfare. Both cards have no annual fee and no foreign transaction fees. Points can be redeemed for more than 1 cent each, so it’s actually more than 5%.

  16. Stevie G says

    When I try to apply for the American Express Blue Cash Preferred Card Application, I get the following error message: “We apologize that the offer you are looking for may no longer be available. Click here to learn more and apply for the current offer.” is anyone else seeing this?

  17. lucky says

    @ Stevie G — This sometimes happens with AmEx links. I suggest trying a different browser, making sure you’re logged out of your AmEx account, or clearing your cookies. Any of those should do the trick.

    Let me know if you still have issues, please!

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