There are all kinds of credit cards with rewards out there, like access to VIP lounges or 2% cash back when you fill your gas tank. But if you’re a millennial — or you spend like one — American Express may have just the card you need. The Amex Blue Cash Preferred Card is about to offer rewards in all kinds of new categories, and if you use services like Lyft or Netflix, you’ll get to reap the benefits.
Beginning May 9, cardholders will earn extra cash back on streaming and ride-share services — purchases you’re probably already charging to a credit card, but not earning cash for. But as with all things in life, nothing comes for free — American Express’ Blue Cash Preferred Card has an annual fee of $95. It’s good to keep this in mind, though the card’s latest sign-up bonus and high cash-back rates will probably offset your fee.
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You Might Actually Use These Blue Cash Preferred Card Rewards
The Blue Cash Preferred Card’s new cash-back categories are pretty impressive: Cardholders get 6% cash back on supermarket purchases — which is already a lot higher than many other cards. Soon, that staggeringly high cash-back rate will apply to subscription fees for over 20 U.S. streaming services, including Amazon Prime Video, YouTube, Netflix, HBO, Apple Music, Pandora, Amazon Kindle Unlimited and Audible. The 3% cash-back tier, which previously applied to gas purchases, will now also apply to Lyft and Uber rides, plus parking, tolls and train fares. All other purchases will still earn 1% cash back.
Outside of these expanded cash-back offers, Amex has substantially upped the card’s welcome bonus. New cardholders earn $250 back after they spend $1,000 in the first three months — which would cover the annual fee for two years and then some. This marks a $50 boost from its previous new cardholder bonus, according to MarketWatch.
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So What Are the Downsides?
There aren’t many reasons to skip this card if you stream content or take the occasional Uber. Still, there are several fees are associated with this American Express credit card that you should keep in mind. In addition to the $95 annual fee, the balance transfer fee and cash advance fee are both $5 or 3% of the amount of each transfer, whichever is greater. And there’s a foreign transaction fee of 2.7% on each transaction, so you might think twice about using this card when you travel. It’s also worth noting that there’s a 0% intro APR on purchases and balance transfers for the first 12 months, after which your APR will range from 15.24% to 26.24%, based on creditworthiness and other factors.
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Blue Cash Preferred vs. Blue Cash Everyday
It can get confusing when you compare similar cards. American Express also offers an Everyday Card under the Blue Cash umbrella, which is a cash-back card with no annual fee. Remember: The Blue Cash Everyday Card won’t be changing its rewards categories, at least not right now. But it might be a better option for those who want to earn cash back without having to worry about paying an annual fee. With the Everyday Card, you earn 3% cash back at supermarkets, 2% cash back at gas stations and department stores, and 1% cash back on all other purchases.
The potential to earn cash back is higher with the Preferred Card, so I think it’s worth it to do the math to see if your purchases would make up for the annual fee.
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The Bottom Line on the Blue Cash Preferred Card
The Amex Blue Cash Preferred Card’s new reward categories are appealing — and it’s always great to get “free” money — but it’s important to be realistic about how much cash back you’ll actually earn. So I went ahead and crunched the numbers. The average Los Angeles resident spends $64 a month on Uber, according to a survey by Empower, which would amount to $1.92 in cash back at a 3% cash-back rate. The amount the average American spends on streaming services is even less — $29 a month, according to a study commissioned by Vindicia, which would amount to $1.74 in cash back at a 6% cash-back rate.
Of course, these are just two of the categories you’ll earn cash back on, and the original supermarket category could actually be the most lucrative. The 6% cash-back rate is capped at $6,000 worth of grocery purchases for the year, but that would add up to $360 if you maxed it out.
With any credit card, it’s important to be aware of the fees associated with it, as well as the interest rate. The Blue Cash Preferred Card from American Express has an APR that can go as high as 26.24%, so it’s important to always pay your balance in full so you don’t get stuck paying off balances with significant interest added on, which can negate any perks. But cash back on the things you already spend money on? That makes a lot of sense to me.
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Editorial Note: This content is not provided by American Express. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been endorsed by American Express.