As we continue with round one of Credit Card Madness it is time to start comparing low annual fee credit cards. This next set of card comparisons all have annual fees under $100/year. I am continuing to review cards by issuer as it should lead to a fairly interesting round 2 of competition. For the first round of low annual fee cards I’ll compare the American Express Blue Cash Preferred vs. the American Express Everyday Preferred cards. I previously reviewed the no annual fee versions of these cards and the no fee Blue Cash card took that round. Now, we’ll see if the Blue Cash Preferred also has the upper hand when compared to the EveryDay Preferred card from Amex.
American Express Blue Cash Preferred
Considering the Blue Cash card won the previous matchup I think it’s only fair to start with the Blue Cash preferred card. Blue Cash Preferred is an enhanced version of the Blue Cash card from American Express. All purchases earn Cash Back, but the card also offers bonus Cash Back opportunities. Similar to the standard Blue Cash card, cash back can only be redeemed in the form of statement credits. Additionally, the card comes with a $95 annual fee which is not waived for the first year of card membership.
Key Benefits
- 6% Cash Back, limited to $360 ($6,000 in purchases) annually at US Grocery Stores.
- 3% unlimited Cash Back on all purchases at US Gas Stations and US Department Stores.
- 1% unlimited Cash Back on all other qualifying purchases.
- $150 Cash Back after making $1,000 worth of purchases in the first 90 days following account opening.
- Additionally, valid until 5/03/17 applicants earn 10% Cash Back at US Restaurants for the first 6 months of card membership, limited to $200 Cash Back.
- You also get several Travel and Shopping benefits through American Express card member services.
- $95 Annual Fee, not waived the first year.
Benefits Overview
First, if anyone is considering opening this card it is important to do so before 5/3/17. This way new card holders earn an additional $200 cash back on restaurants purchases. After the promotional period ends, all restaurant purchases drop back down to earning just 1% cash back. By maximizing the current restaurant benefit card holders also should earn the $150 sign-up bonus. Together, new card holders should earn $350 in cash back quite easily. Then all card holders should make sure to maximize the 6% cash back at grocery stores. At this point, new card holders earn $710 in cash back after spending just $8,000 in the first year.
Next, it is difficult to predict how much card holders earn each year based on unique spending patterns. Anyone considering this card should analyze their personal spending habits to make sure they’ll get maximum benefit from the 6% US Grocery Store purchases. If you also spend a considerable amount of annual spend on gas and at department stores this card is worth opening.
American Express Blue Cash Preferred Summary
The combined current sign-up bonuses alone make this card very appealing. $750 in cash back the first year will easily offset the $95 annual fee. Going forward however, customers should consider their spending habits before opening this card. All travel, restaurant, and entertainment spending earns just 1% cash back. If you tend to spend avoid spending at grocery stores, gas stations, or department stores this card is definitely not a great fit for you. Lastly, Cash Back can only be redeemed in the form of statement credits which frustrates to some customers.
American Express Everyday Preferred
When this card first hit the market a few years ago I remember how excited I was. I was excited because the card represented an end of debit cards. I continually tell my friends and family members to stop using debit cards or cash. Once I’ve talked their ear off about the benefits of using a credit card, they’ll ask which card to open. For a while I only recommended the American Express Everyday Preferred card to friends. I recommended the card purely because it encourages card holders to use the card on all everyday purchases. In the meantime, card holders earn valuable Membership Rewards points from American Express. There are several other benefits though that make this card especially worthwhile.
Key Benefits
- Current sign-up bonus: 15,000 Membership Rewards points after spending $1,000 in the first 90 days.
- 3X Membership Rewards points on the first $6,000 spent annually at US Supermarket purchases. 1X MR points on all purchases after that.
- Unlimited 2X Membership Rewards points on all US Gas Station purchases.
- 1X Membership Rewards points on all other purchases.
- 50% Extra Points after you use your card 30 or more times in a billing cycle.
- $95 Annual Fee, not waived the first year.
Benefits Overview
The above benefits are slightly harder to quantify than the Blue Cash Preferred card, but I’ll do my best and try to make as few assumptions as possible.
First, the 15,000 Membership Reward points sign-up bonus. I personally value Membership Reward points at the same $0.015 that I value all flexible rewards currencies. Because of that, the sign-up bonus is worth $225.
Next, let’s assume card holders are going to maximize the annual US supermarket spend and the 50% month-end points bonus. Doing so earns 18,000 MR points from the $6,000 spend and a bonus of 9,000 MR points for meeting the billing cycle transaction requirements. In total, card holders earn at least 27,000 MR points annually. At $0.015 the 27,000 points are worth at least $405.
Now, as I mentioned before I am going to try to minimize the assumptions that I make, but let’s assume card holders spend enough in a year to earn just 22,000 points (excluding the supermarket spend). Assuming they also hit the 50% billing cycle bonuses throughout the year, Everyday Preferred card holders earn a total of 33,000 points. Then, adding the 27,000 points from supermarket spending, we get to approximately 60,000 MR points earned in a year. I don’t think this is too far of a stretch personally.
What are 60,000 MR Points Worth?
Next, if card holders earn 60,000 MR rewards points how much are they worth? Well, MR points transfer to various hotels and airlines directly. I would personally transfer MR points to Singapore Airlines KrisFlyer to redeem on a United flight from the lower 48 to Hawaii in business class for 30,000 points each way. Right now, that same ticket costs $2,150. So in this case, MR reward points are worth $0.035/point. There are other more valuable options, but this is one of the easier options out there.
American Express Everyday Preferred Summary
The Amex Everyday Preferred card is best for those who foresee themselves using the card for 30 or more purchases each year. The 50% MR point bonus adds up fairly quickly, especially if you find a way to manufacture spending by paying bills with the card. As you can see from the analysis above, it is much harder to place a firm value on the total value you can get out of this card. Generally, opening a rewards credit card is a longer term investment for a significant goal in the future.
I personally find it somewhat frustrating that the 3X bonus category is limited to just US Supermarkets and is further limited to just $6,000 in annual spending. I also find it surprising that the 2X bonus category is limited to just US Gas stations. With that, it is time to declare a winner…
And The Winner Is?
In this case the answer is obvious to me. I give this match-up to the American Express Everyday Preferred card. In the long-term, I believe majority of consumers, who plan out smart reward point redemptions, get far more value from the American Express Everyday Preferred card than from the Blue Cash Preferred card. Considering both cards come with a $95 annual fee, I believe customers are looking for maximum value over simplicity. Consumers looking for simplicity, their best bet would be a no annual fee credit card over one with a fee. At face value the Blue Cash Preferred card seems like the better option, but in the long run the American Express Everyday Preferred is significantly more valuable.
Featured Images Courtesy of American Express
