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Many times, cash back rewards programs can be greatly beneficial for consumers. But sometimes, these programs are not as attractive as they appear to be.
Take Blue Cash from American Express as an example. The card promotes an impressive maximum rate of 5% on “everyday pruchases,” which it classifies as groceries, gasoline, and drugstore items. When comparing it to standard 1% cash back rates offered by other cards, it seems like a great deal.
But here’s the catch: you only receive this 5% rate after your first $6,500 in charges on your card in a given year. You will also qualifiy for a cash back rate of 1.25% on all other purchases.
Until you reach that $6,500 threshhold, you’ll only get 1% cash back on gas, phramacy items, and groceries – and a miniscule .5% on all other purchases. So it all depends on how much you plan on using the card. If you plan on spending less than $6,500 (or even just $8,000 or $9,000) annually, you’re probably better off choosing a credit card without spending tiers such as the Discover More Card.
With that said…
For many people Blue Cash from American Express is still one of the best cards out there even with this $6500 threshold. What most people do is just use the card to pay off bills that they would normally just pay for in cash. I think it goes without saying that you should never carry a balance on a rewards card, and Blue Cash is no exception – so make sure to then pay off your balance immediatly. This will help you quickly get over the $6,500 threshold to start earning 5% cash back.
For those of you who are still struggling to decide if this is an appropriate card for you, the American Express website has a benefit calculator which shows you how much cash back you could receive based on your spending habits.