Last year there was nearly a 35% price increase in agricultural commodities, according to the S&P GSCI Index. So far this has translated into only minimal food inflation for Americans, but regardless, I think most of us would agree that groceries are far too expensive. Soda pop, chips and processed foods may be cheap to come by, but trying to eat healthy these days can cost an arm and a leg. And if you adhere to a special diet like gluten-free or vegan, be prepared to sell your first-born!
In turn, a number of banks have been rolling out credit cards with grocery reward programs over the last several years as a way to drum up business… and it’s working. During the first quarter of 2011, their popularity has been second only to gas cards with rewards (for obvious reasons) on my company’s website.
But for the low to moderate spender, there really hasn’t been a spectacular card for the grocery category. Why? Because of spending tiers and rotating categories. There’s the Chase Freedom and Discover More, which do give 5% at grocery stores, but the drawback is they only do so for a few months out of the year. My review of the American Express Blue Cash explains why its 5% on groceries only makes sense for big spenders; annual spending under $6,500 will only earn 1% on grocery/gas/drugstores and 1/2% everywhere else.
Well it looks like American Express is trying to fill the void with the launch of their two new Blue Cash credit cards. Here’s a brief overview of each:
Blue Cash Everyday: Get 3% cash back at supermarkets, 2% cash back at gas stations and department stores, and 1% cash back on all other purchases. No spend minimum, no enrollment, and no rotating categories. Cash back will be awarded in the form of Reward Dollars, which can be converted to cash back, gift cards or merchandise.
Blue Cash Preferred: This version has a $75 annual fee. It gives 6% cash back at supermarkets, 3% cash back at gas stations and department stores, and 1% back everywhere else. Cash back will be also be awarded in the form of Reward Dollars.
These two cards were literally just launched – I have been unable to locate any press releases from American Express and the only way I became aware of them was through a member on CreditCardForum who noticed the new cards on the AmEx website this morning. A Google search for the full card names in quotations yielded zero results for the “Preferred” version and only two for the “Everyday” version. Therefore, I think it’s safe to conclude they are only doing a soft launch with them for now.
Worth it or not?
Although I haven’t had a chance to personally review these two new versions of the AmEx Blue Cash, I predict they will be popular.
For light spenders, the no annual fee “Everyday” version will probably make more sense than the $75 “Preferred” version. For groceries, you would have to spend $2,500 before the additional 3% would equal the annual fee. However you may reach that break even point faster with the extra 1% on gas and department stores. Whatever the case, I would say both of these cards will likely be a better value than the American Express Blue Sky rewards program, which gives approximately 1.33% regardless of category.
Disclosure: CreditCardForum.com has affiliate relationships with the card issuers mentioned in this article: American Express, Discover and Chase. Although we do advertise the Blue Cash and Blue Sky, at the time of writing we do not have any advertising relationship for the Blue Cash Everyday or Blue Cash Preferred (the two credit cards this article is primarily about).