Question- AmEx Blue- 6% on groceries

[tralfamadorian]

For the most part I feel like I have my spending pretty optimized and my credit card usage dialed down for maximum cash back.

What I currently use:

Chase Freedom/Discover It: rotating 5% categories, often the same categories but not always.
Barclays Uber: 4% restaurants, free phone insurance.
Chase Amazon: 5% Amazon/WF.
Citi Double Cash: 2% everywhere.

I was going to sign up for the AmEx blue cash preferred for the 6% on groceries until I saw that it has a $95/yr fee. Given that I can get groceries now at 2% with the citi, the delta between the two is 4% and the break even point is $198/mo in grocery spending. However, usually at least one quarter of the rotating 5% categories for the chase freedom and/or discover it is groceries, so for one quarter the delta is only 1%. This brings the average break even point to $244/mo in groceries.

This is above what many of us aim for in grocery spending (myself included). What am I missing here? Did I flub the math? Are folks finding a way to avoid the $95 fee? Or is the AmEx blue cash preferred not all it's cracked up to be?

[Bracken_Joy]

Gifts cards from grocery stores to places that are normally 1% rewards for me tip the scales, personally. Your math will vary of course though. I also got a sign up bonus with it that essentially paid the first two years of fees. I also spend a lot more on groceries though, so... I might not be the best example ;)

[IsThisAGoodUsername]

Keep in mind that the terms are:
You will earn a reward of 6% on the first $6,000 of eligible purchases in a calendar year at supermarkets located in the U.S. (superstores and warehouse clubs are not considered supermarkets); 3% on eligible purchases of gasoline at gas stations located in the U.S. (superstores, supermarkets and warehouse clubs that sell gasoline are not considered gas stations; and 1% on all other eligible purchases. Additional terms apply.
https://www.americanexpress.com/us/credit-cards/card-application/apply/prospect/terms/blue-cash-preferred-credit-card/25330-10-0#offer-terms

So you're looking at a max of 6% of $6,000 = $360 at that capped rate.

If you're churning several cards, this might be a welcome additional to your arsenal for rewards...

[terran]

There's also the bluecash everyday for 3% on groceries without the annual fee. Whether or not that extra 1% for 3/4 of the time is worth adding another card is up to you though.

[nalor511]

If you count the annual fee, and assume you're maxing out the $6k grocerty spend, the BCP actually only gives you 4.4% on groceries. For what it's worth.

[Radagast]

Gifts cards from grocery stores to places that are normally 1% rewards for me tip the scales, personally.

Yup, it's really that. If you have a gas powered vehicle and a Kroger affiliate grocer nearby, wait till they have their 4 fuel point gift card weekends and you will get the 4.4% of any gift card, plus $1 per gallon per $250 gift card per tank of gas fuel discount. I use mine for lots of Home Depot cards.

[tralfamadorian]

Gifts cards from grocery stores to places that are normally 1% rewards for me tip the scales, personally.

Yup, it's really that. If you have a gas powered vehicle and a Kroger affiliate grocer nearby, wait till they have their 4 fuel point gift card weekends and you will get the 4.4% of any gift card, plus $1 per gallon per $250 gift card per tank of gas fuel discount. I use mine for lots of Home Depot cards.

Thank you @Bracken_Joy and @Radagast ! This is exactly what I was missing.

[frugalecon]

I have averaged $150/year in value for the Amex Offers that are posted periodically, basically these are statement credits for using the card at various merchants. Think $25 off a $75 restaurant check, or $15 off a $50 purchase at Home Depot. Many of them are junky, but I have found enough that are worth using to more than offset the annual fee for the last five years. YMMV, but combined with the 6% back in groceries it has been a sweet deal.

[chemistk]

Also don't forget that there is a generous amount back on gas, too. For us, and even with the annual fee, the cash back we receive from this card covers the annual fee as well as the fee our Sapphire Preferred.

[geekette]

Yeah, the points for the gas discount at Kroger (now Harris Teeter in our area), plus 6% on prescriptions (and they add gas rewards points as well) makes the $95 worthwhile for us.  The Amex rewards are a bonus if you keep on top of them (lately it's been 10% back on internet and car insurance).

[kpd905]

Getting 6% back on $6000 but then paying a $95 annual fee means you are really getting 4.42% back.  And that is only if you max out the $6000 every year.  If you only spend $3000 a year, that ends up being 2.83% back.

I see you already have Chase Freedom and Discover It.  That is pretty much a guaranteed 5% back on $3000 of groceries per year.  Just max out the category by buying grocery store gift cards.

If you have a spouse, get a 2nd Freedom and Discover It card, then you have 5% back on $6000 per year.  If no spouse, then you'll have to get creative for anything over $3000.

[LSUFanTX]

Gift cards are where you maximize this, especially with Kroger and the 4x fuel points specials they often run. I'll even bring empty gas cans to get the full 35 gallon limit to maximize the fuel points discount when redeeming.

IIRC the annual fee is charged on the anniversary of your enrollment but the $6000 limit on grocery purchases at 6% back resets based on calendar year. To squeeze a little more out you could max it out on both sides of Jan 1 and cancel before you get charged the second year's annual fee.

[bassman2003]

We use a combination of Chase Freedom and the Amex (no yearly fee, 3% on groceries, 2% on gas version).  Since Chase has a quarterly 5% category of groceries, and a category of gas, we effectively get an average of 3.5% on groceries and 2.75% on gas without having to worry about any yearly fees.  I'm sure other people have more optimized versions, but this works great for us.

[firestarter2018]

Make sure the grocery store(s) you primarily use actually code as "Groceries" or "Supermarket," otherwise you won't get the 6%.  AmEx codes my primary store (Fred Meyer) as a "Wholesale Store" because it offers toys and clothes and home goods, even though most people use it just for groceries.

Definitely something to double-check if you can before you apply for the card.

[doggyfizzle]

Make sure the grocery store(s) you primarily use actually code as "Groceries" or "Supermarket," otherwise you won't get the 6%.  AmEx codes my primary store (Fred Meyer) as a "Wholesale Store" because it offers toys and clothes and home goods, even though most people use it just for groceries.

Definitely something to double-check if you can before you apply for the card.

I second this about checking the MCC first.  My Visa card issued by my local credit union gets uncapped 3% cash back at grocery stores, and recognizes the MCC from my local WalMart Neighborhood Market as “Grocery” for the bonus, but my Amex Gold (4x at grocery and Blue Cash) only earn 1% or 1x at this location.  Prices between this store and my local Kroger and Vons more than make up the 3% vs 4x or 6%; Kroger is in fact almost always 15-20% more expensive than WalMart on staple items I buy. 

However, you can use the 6% to buy gift cards (for gas) when Kroger runs their bonus fuel point promotions and radically reduce your gasoline cost while also earning the statement credit from Amex.  I routinely earn $1 off a gallon up to 35 gallons with minimal effort when Ralph’s runs their gift card specials.

[tralfamadorian]

Well, Kroger is having a 4x fuel points gift card weekend so I pulled the trigger and signed up for the Amex. $250 in gift cards from a combination of Lowe’s, Netflix and Home Depot.

Now I just have to decide if it’s worth it to get four 5-gallon gas cans to get the full 35 gallons at $1 off (my car’s tank is ~18). Gas cans are more expensive than I anticipated!

[geekette]

Make sure the grocery store(s) you primarily use actually code as "Groceries" or "Supermarket," otherwise you won't get the 6%.  AmEx codes my primary store (Fred Meyer) as a "Wholesale Store" because it offers toys and clothes and home goods, even though most people use it just for groceries.

Definitely something to double-check if you can before you apply for the card.

I second this about checking the MCC first.  My Visa card issued by my local credit union gets uncapped 3% cash back at grocery stores, and recognizes the MCC from my local WalMart Neighborhood Market as “Grocery” for the bonus, but my Amex Gold (4x at grocery and Blue Cash) only earn 1% or 1x at this location.  Prices between this store and my local Kroger and Vons more than make up the 3% vs 4x or 6%; Kroger is in fact almost always 15-20% more expensive than WalMart on staple items I buy. 

It must depend on the individual store, since my local Wal-Mart Neighborhood Market is recognized as "grocery" for my Amex Blue Cash, getting me 6% off.