Best Cashback Amex Card?

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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

For those of you not familiar with the Amex EveryDay Preferred and Blue Cash Preferred, let’s recap the basic benefits.

The Amex EveryDay Preferred is my single favorite card for everyday spend, as it has the following rewards structure:

  • 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

Groceries-6
Both cards offer significant bonuses for supermarket 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.

Citi-Double

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.

Bottom line

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.

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Comments

  1. How about the Fidelity AMEX, especially since the question was about AMEX cards? Don’t get a commission for mentioning that one?

  2. I never use affiliate links, so I don’t mind if the blogger pushes any cards or doesn’t mention any. The bloggers do a great job of doing the grunt work for us. And I truly appreciate their efforts, even though I doubt it is out of magnanmity.

    Thank you

  3. Strangely the Fidelity Amex 2% cashback card was left off the list. No referral fees?

    This is a great card as there is no annual fee and is issued by BofA so even those on the Amex blacklist are eligible. And no 30 transaction nonsense.

  4. I use my Blue Cash Preferred for GCs & groceries only until I hit the $6K mark. Then I switch to a more lucrative CC until January 1 (this year I am using the WF cash back card, which is 5% on groceries + gas for the first six months). According to my math, I need to spend $1,300 on groceries before I break even on the $75 annual fee. Even with those parameters, I easily earn $300 cash back annually — and that is generally over the course of six months — which opens up the other half of the year for other cards.

  5. Ben,

    This review is compromised by not providing insight into the redemption point value variation for all travel reward point credit cards like the AMEX Everyday Preferred. Your assumption of an approximate value of 1.8 cents for Membership Rewards points sweeps away all of the nasty details such as many redemptions will have much less value which changes the conclusions rather dramatically. The AMEX Blue Cash Preferred card and the Citibank Double Cash card make a very effective pairing for cash back returns which run on autopilot. A more effective combination, which I use, is the original AMEX Blue Cash 5% cash back card paired with the Citibank Double Cash card. The Blue Cash card gets groceries, gas, drugstore, and big ticket items potentially requiring customer service due to extended warranties and the Double Cash card get all other spending.

  6. No mention of fees, nor about which card(s) protect MRs from expiring. I gues readers should look elsewhere for that information.

    Got in 15 links to cards howvever.

  7. JimT – I agree that it’s impossible to put a theoretical average value on what points/miles/cash back are worth to thousands of different people with different spending habits – travel habits/desires and similar. I personally have only used points/miles for front of the plane reward tickets on long or really long haul flights for a while. In the past – the points/miles were often worth much more than 1.8 cents each. That situation is changing today – at least when it comes to business fares on Delta to Europe – where the amount of points needed to get the reward tickets has gone up – and the cash fares go on decent sales from time to time. I recently bought a couple of business class tickets from JAX to Madrid – and my points would have been worth less than a penny had I used them to buy the tickets. So – at least as of today – I’m saving the points for travel to Asia. What I have observed when it comes to Delta is probably true on other airlines/routes as well.

    Note that front of the plane travel is important to us. Since we’re older. Also – my husband has mobility issues – wears a big leg brace – and walks with a cane. Flying in the back of the plane for 6-8-10+ hours would be torture for him.

    Now when we were younger – less rickety – more flexible – more resilient in terms of sleep deprivation and jet lag – I usually used our points for reward economy tickets on long haul flights. Especially if I could find planes with 2-3-2 seating configurations (which wasn’t that hard). This was before things like flat bed seats – crowding more and more people into economy – and similar. OTOH – if I could go back to being young – and hadn’t traveled a lot yet – I would probably go for more lower priced reward tickets – instead of fewer high priced ones.

    Another way to look at the value of points is not only where they will get you – and in what part of the plane – but how easy is it to get from X to Y when you want to go. I’m talking about things like seasonal availability – flight times – length of layover(s) – hubbing through nicer/less difficult airports – 2 or 3 stops versus 1 – things like that. The “cost” of the best flights can be a lot higher than the cost of the worst ones (or the best flights may not be available with reward tickets).

    Of course – for some people – “cash back” may be a better alternative than points/miles. Especially if they don’t travel frequently – are flying on routes that aren’t particularly expensive – etc. Or – if – for example – on a “big deal” trip – they prefer to pay cash instead of going through the machinations necessary to get a decent routing to the exact place they want to go when they want to go there. My husband and I are retired and have a lot of flexibility. Still – I would prefer to avoid a place like Stockholm in January – or a place like Istanbul these days. This is all very definitely a case of “YMMV”.

  8. Wow, some really snarky comments here.

    Ben, when you say standalone grocery stores, do you mean grocery stores excluding stores like Walmart and Target that sell groceries as well as everything else? Is there a master list somewhere that lists which grocery stores and gas stations qualify and which don’t?

  9. When it comes to my AMEX cards that have offered more than 1X bonus on grocery store buys – Costco doesn’t count as a “grocery store”. Walmart and Target and the like (other “superstores”) are treated the same as Costco. Here’s the AMEX link:

    https://www.americanexpress.com/us/content/rewards-info/retail.html

    Note that there are lots of different AMEX cards and different cards may have different rules. You should probably go through them individually to find out which might work the best for you.

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