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This morning I wrote a post about which credit cards I use for different bonus categories. The number of cards offering lucrative bonus categories has increased significantly over the past few years, so the decision of which credit card to use has required more thought as well.
On that post, reader Jyoti left the following comment:
This is helpful! I see the Amex EverydaySM Preferred has an annual fee of $95 – how would you calculate the cost/benefit of getting this card just for the grocery bonus? Also – I looked on the site – it looks like it is just 3x bonus for the grocery category?
Credit card spend at grocery stores is an interesting topic, given that American Express seems to have a stronghold on offering bonuses in that category.
For example, when it comes to airfare, the Citi Prestige® Card, Citi ThankYou® Premier Card, and Premier Rewards Gold Card from American Express all offer triple points, while the Chase Sapphire Preferred® Card offers double points. So you really can’t go wrong, regardless of which option you select.
Similarly, for dining, the Citi ThankYou® Premier Card, Premier Rewards Gold Card from American Express, and Chase Sapphire Preferred® Card all offer double points on US dining, so the best card for your circumstances depends on which points currency you value most.
Which cards offer the best return on groceries?
But that’s not the case with grocery store purchases. There are no Chase or Citi cards accruing flexible points currencies which consistently offer bonus points on grocery store purchases. However, there are several American Express cards offering bonus points at grocery stores:
- Amex EveryDay® Preferred Credit Card offers 3x points at U.S. standalone supermarkets, up to $6,000 per year, then 1%
- Amex EveryDay® Credit Card offers 2x points at U.S.standalone supermarkets, up to $6,000 per year, then 1%
- Blue Cash Preferred® Card from American Express offers 6% cash back at U.S. standalone supermarkets, up to $6,000 per year, then 1%
- Blue Cash Everyday® Card from American Express offers 3% cash back at U.S. standalone supermarkets, up to $6,000 per year, then 1%
- Premier Rewards Gold Card from American Express offers 2x points at U.S. standalone supermarkets
- Hilton Honors Surpass Card from American Express offers 6x HHonors points at U.S. standalone supermarkets
Crunching the numbers on the best
Of those cards the Amex EveryDay® Preferred Credit Card and Blue Cash Preferred® Card from American Express are the most compelling, in my opinion. I value Membership Rewards points at ~1.8 cents each, so three Membership Rewards points per dollar spent is like a 5.4% return to me.
That being said, the Amex EveryDay Preferred Card offers a 50% points bonus when you make 30 transactions per billing cycle. That means assuming you make those transactions, you’d be earning a return of 4.5 Membership Rewards points per dollar spent. At a value of 1.8 cents each, that’s a return of 8.1%.
Amex EveryDay vs. EveryDay Preferred?
Getting back to the original question, let’s look at the actual breakeven point of the Amex EveryDay® Preferred Credit Card if you were going to use it exclusively for grocery store purchases. The card has a $95 annual fee. I value Membership Rewards points at 1.8 cents each, so by my valuation you’d have to generate an incremental ~5,300 Membership Rewards points to break even, compared to the next best alternative.
Let’s assume the alternative is using the Amex EveryDay® Credit Card, which offers 2x points at grocery stores but doesn’t have an annual fee.
Here’s how those two cards compare when it comes to grocery store spend:
- 3x points per dollar spent at grocery stores
- 4.5x points per dollar spent at grocery stores with 30 transactions per billing cycle (50% points bonus)
- 8.1% return (with 30 transactions per billing cycle)
- 2x points per dollar spent at grocery stores
- 2.4x points per dollar spent at grocery stores with 20 transactions per billing cycle (20% points bonus)
- 4.3% return (with 20 transactions per billing cycle)
So if optimizing both cards, the difference in return is 3.8%. In order to cover that $95 annual fee, you’d have to spend $2,500 on groceries per year on the Amex EveryDay® Preferred Credit to come out ahead over the Amex EveryDay® Credit Card.
Assuming you aren’t able to complete the 20-30 transactions per billing cycle required to earn the 20-50% points bonus, then the difference in return is 1.8% (the difference between earning 2x and 3x points per dollar spent). In that instance, you’d have to spend ~$5,300 at grocery stores per year to justify the card.
It’s quite tough to directly quantify the breakeven point for grocery spend on the Amex EveryDay® Preferred Credit. That’s because:
- The return you get on the card varies based on whether you’re able to get 30 transactions per billing cycle or not
- It depends which other card you’re using as the basis of comparison in establishing the breakeven point; given how few cards have bonus categories for grocery store purchases, that’s not always so straightforward
But all things considered it doesn’t take much grocery store spend to come out ahead with the Amex EveryDay® Preferred Credit. Assuming you can complete 30 transactions per billing cycle and qualify for the 50% points bonus, this isn’t just the most lucrative card for grocery store purchases, but also arguably the most lucrative for everyday spend… at least it’s what I use nowadays.
Non-Affiliate Product Disclaimer: The information for the AmEx Everyday Preferred has been collected independently by One Mile At A Time. The card details on this page have not been reviewed or provided by the card issuer.