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Reader Robert asked the following question in the “Ask Lucky” forum:
I am looking for a cash back card. As I understand it I can use the Amex EveryDay® Preferred Credit Card to give me statement credit. This would give me an additional 50% bonus (over 30 transactions). Are the points given as a statement credit the same value as the cash back on the Blue Cash Preferred® Card from American Express? In other words, when used for statement credit is it 1 point per $1?
What makes this question interesting to me is that Robert takes a completely different approach towards credit cards than I do.
What I’m trying to get out of credit card spend are miles & points I can redeem towards travel (in particular aspirational travel), as opposed to cash back. Though understandably everyone is looking to be rewarded in different ways.
With that in mind, can a travel rewards card offer a better return on everyday spend than a cash back card?
Return on spend for both cards
- 3x points at U.S. supermarkets on up to $6,000 per year in purchases (then 1x), 2x points at U.S. gas stations, 1x points on other purchases
- Use your card 30 or more times on purchases in a billing period and get 50% more points on those purchases less returns and credits
Since I easily achieve the 30 transactions per month, this means I’m earning the following:
- 4.5x Membership Rewards points per dollar spent at U.S. supermarkets (on the first $6,000 per year)
- 3.0x Membership Rewards points per dollar spent at U.S. gas stations
- 1.5x Membership Rewards points per dollar spent on everything else
How does that compare to the Blue Cash Preferred? It has the following rewards structure:
- 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases
- 3% cash back 3% at U.S. gas stations & select U.S. dept stores
- 1% cash back on other purchases
Which is more rewarding if it’s cash you’re after?
Personally I value Membership Rewards points at ~1.8 cents each, given all the airline partners those points can be transferred to. By my valuation, you’re earning a significantly higher rate of return on the Amex EveryDay Preferred than on the Blue Cash Preferred.
But that’s not the case if it’s cash back you’re after. Each Membership Rewards point earned through the Amex EveryDay Preferred can be redeemed for a statement credit of 0.6 cents. That’s a terrible return, and roughly a third of what I value the points at.
That means on this card you’re basically earning a statement credit of 2.7% on supermarket spend, 1.8% on gas spend, and 0.6% on other spend, which means the Blue Cash Preferred is a much better option.
Alternative cash back cards
Big picture, if it’s cash back you want, I tend to think you’re better off with a card like the Citi® Double Cash Card, which offers 1% cash back when you make a purchase, and 1% cash back when you pay the bill. Assuming you pay on time, you’re earning a return of two cents per dollar, and the card has no annual fee.
But of course if you spend a lot on gas or supermarkets, there is value in the Blue Cash Preferred card as well, so it’s not a card I recommend ruling out.
While I consider the Amex EveryDay Preferred to be the single most rewarding card for everyday spend, it has an abysmal return if you’re looking for a statement credit, as points convert at a rate of 0.6 cents each. If it’s a statement credit you’re after, you’re better off with the Blue Cash Preferred, or my personal favorite cash back card, the Citi® Double Cash Card.