Update:

This seems to not apply to the first year you have the card, but will apply beginning 1/15/13 on your renewal date.  Happy 6% for the first year!  ;)

 

 

I saw some bad news today while reading InACents.com.  It seems that grocery purchases with the Amex Blue Cash Preferred card are getting more restrictive beginning on January 15, 2013.  Currently, when paying for groceries at stand alone grocery stores, you receive 6% cash back for all of your purchases.  That is one of the best grocery discounts/rewards out there among all the credit cards that offer bonus points on grocery purchases.

Previously you could purchase as much as you wanted at stand alone grocery stores and get the 6% cash back bonus.  As you may guess, many people were not only purchasing groceries at the grocery store, but they were purchasing gift cards as well.  This enabled people to get not only 6% cash back on groceries, but also on the gift cards sold at the grocery stores (gas, food, clothing retailers, and even MasterCard/Visa/Amex gift cards).  Now people are getting notices on their October statements that inform them as of 1/15/13, there will be a $6,000 yearly cap on the 6% cash back at stand alone grocery stores.  After hitting the $6,000 limit, the cash back will drop to 1% at stand alone grocery stores.  The $6,000 limit averages out to $500 per month on groceries.  That is probably a reasonable limit for typical families that purchase just groceries at grocery stores (though many families spend more than that), but it will certainly put a serious limit on the gift card gig.

It is still up to $360 cash back on grocery purchases each year, so that more than off-sets the $75 annual fee, but I’m sad to see this new limit.  I don’t have this card, but I have read that the new language also excludes prepaid cards.  I’m not sure how they will know what is being purchased at the grocery stores, but be aware of that new language that is reportedly included.

One thing that can help with the new limit is to have two people in the family get the card.  That increases your combined limit to $12,000 per year.  Another idea is to supplement with cards like the Chase Freedom that had grocery stores as a quarterly 5x bonus category during 2012.  That bonus is also capped, but when you start combining limits with different cards you can still do pretty well.  Of course the Ink Bold and Ink Plus are very useful for gift cards at 5x Ultimate Reward points at office supply stores (which I prefer to 6% cash back).  I haven’t read anything that indicated the Blue Cash Everyday card has a new limit.  That card has no annual fee and offers 3% back at grocery stores – which of course is only half as generous as it’s cousin the Blue Cash Preferred Card.

I think many of us feel that this gift card gravy train is too good to go on forever.  We are already starting to feel the pinch, and it won’t shock me to see further restrictions regarding the purchase of some of these gift cards with credit cards.  Anything that seems to good to be true probably will be in the long run.  However, I will keep on doing what I am doing in the short run.

Have you gotten a notice regarding your Blue Cash Preferred Card?  How does this impact your “grocery” strategy at all?

Posted by Mommy Points | 33 Comments

33 Responses to “Cap Introduced for 6% Cash Back Grocery Store Purchases With Amex Blue Cash Preferred”

  1. is the limit on cash back $6000 per year or 6% of $6000. I just want to make sure of the exact wording.

  2. Rayn says:

    I do not have the blue preferred mostly because I cannot justify that $75 annual fee.
    With the $6,000 cap now, the $75 annual fee is just ridiculously high.
    If anyone remember, before the blue preferred was introduced, Amex has a product named blus cash. The card has a very low cash back rate until you have spent $5,000 in one year and give you a decent 5% grocery etc and 1.5% everything else cashback.
    Comparing with the old $5,000 threshold, the $6,000 cap is just too …

  3. Mikes says:

    I think it is in everybody’s overall best interest that these type of abusive uses are capped. Surely AMEX and Chase can’t put up with this forever, and it seems like the other alternative is to remove these large category bonuses altogether. I certainly don’t want to see that happen.

    It will be interesting to see how Ink Bold deals with this. The legitimate spend at an office store must have a much wider range. Will they allow you to send in a receipt if you spend $3k on furniture in one shot and raise the annual cap by $3k for that year?

  4. Ray says:

    Let’s not forget…the card also gives back 3% for gas (now approaching $5/gallon here in California) and certain dept stores, plus 1% back for everything else. For people that do not want to bother with the credit card point programs out there, I still think the Amex Blue is worth it, even with the $75/yr fee.

  5. Curtis says:

    Crap! There goes part of my plan for manufacturing fuel points. Some of you can balk at the $75/yr fee, but when you get a net $285/yr/card kick back, that is still worth it. Right now just the wife has one, but sounds like I will add one to my next churn too.

  6. smitty06 says:

    You dont have to be abusing perks to spend more than 6k in one year. I bet most families spend more than that (way more if you like to buy organic or shop at Whole Foods). It seems like the limit should be more like 10k.

  7. Curtis says:

    @smitty06 – agree, $6k seems low for a good sized family if you are really just buying groceries. If it was just real groceries for my wife and I (no kids), then $500/mo is exactly what we budget. No room for Central Market/Whole Foods in that though!

  8. mommypoints says:

    -Fuel points are a great extra perk of getting gift cards at grocery stores. I love 4x fuel points time!
    -I agree that $500/month isn’t sufficient for larger families or if you shop at Whole Foods type stores. We get our meat and veggies from primarily local sources and still spend $500 on other groceries and we are just a family of three.
    -I also agree the card may still be worth it, just not as great a deal as it was before.

  9. I still have the old version of the card — the Amex Blue Cash with no annual fee and 5% back on groceries after hitting a spending minimum ($6000, I believe). It has been great for our family and I’m so glad I wasn’t tempted to switch to the new version of the card!

    Bummer that folks got a little too greedy on the gift card trick… I never took advantage because keeping up with all the gift cards is more than I want to add to my “to do” list!

  10. Chad M says:

    @MP, thanks for the heads up! I have the Blue Cash Everyday and was thinking of switching to the Preferred version next year. This will make me think twice.

  11. Nicole says:

    Hi Mommy Points – unrelated to this post, but just wanted to thank you for getting me into the travel/credit card game last year. I was perusing some random blogs and stumbled on your write-up of the Grand Slam (may it rest in peace for now!). I was hooked, and couldn’t stop reading. Next thing I knew I had thousands upon thousands of miles and hotel points, and I barely fly!

    Thank you for making it so easy to get started, and for being so encouraging to all your readers and commenters. I’ve traveled to places I never thought possible because of it :)

  12. Curtis says:

    To do some math… the non-Preferred card with 3% back on groceries (unlimited) is free, while Preferred is 6% back up to $6k with $75/yr fee. So your breakeven point is $9500 in spend. Any more than that, it’s worth it to keep NON-Preferred. Any less go with Preferred. ($360 max/yr PFD – $75 fee = $285 * .03 = $9600). Course this is if you have one account.

  13. Curtis says:

    Oops, that should be $9500…

  14. dubaych says:

    We switched to the new card after calculating that we spend enough on groceries to make more than $75 back in the first $5000 of spend, making everything beyond that gravy relative to the old card. Partner and I each have the card and still probably still spend more than $1000 per month on legit grocery purchases. I guess now at least I won’t feel guilty using Freedom when groceries are the bonus category.

  15. Curtis says:

    And I just realized I did not explain that right… Kickback breakeven is $6k on 6% PFD card after $75 fee = $9500 on 3% non-PFD card. So use 6% PFD card UP TO $6k, but if you spend over $9500 then use non-PFD. Sorry! I don’t like the 3% either way though because many other miles/points are worth far more than that when used properly.

  16. DealsSeeker says:

    I ordered one of these for my mom, but she only got the 3% card. Then, she tried using it at her local Shoprite, and they don’t accept Amex cards, what a waste!!

  17. Mikes says:

    I agree that the 6k limit is on the low side for this crowd, but surely that’s a #firstworldproblem. Not just that, I’d bet half the families in America would be overjoyed to have a $500/mo grocery budget.

    Look at is this way: The cap is certainly being put into place to curb abuse. Money has gone into other pockets through the transfer of spending into this category via the purchase of GCs at grocery stores. Money will now fail to arrive in our pockets if we exceed the new cap. Not exactly a direct transfer, but I’ll agree with MP: that does make me sad.

    Of course, there is still time to rack up a few thousand worth of GCs from the store itself to use after the new terms start…

  18. Dave says:

    On Fatwallet they say you only get the cap after your first anniversary, so my card that I got in August won’t be capped until August 2013. I’ll see what my statement says in a few days. Also, the 3% no fee version has the same cap.

    My plan is to get a card for my wife. 1K a month + maybe Freedom/Discover rotators would suffice.

  19. Teri says:

    Do you know if credit card companies check to see what you actually purchase in each transaction, especially when it’s within a high bonus category? Thank!!

  20. AK says:

    @ Curtis — $6000 is the limit for the fee-free Blue Cash Everyday card as well.

  21. Curtis says:

    @AK – thanks, I thought someone said that it was not capped. No bueno!

  22. cati says:

    I just received the news. We actually exclusively buy groceries for about 1600 a month. The cap at 500 is very small for us. This makes the card not that interesting anymore. I am now fishing for better cards, too bad this one gave us a credit inquiry for such a short period of cash back…

  23. JD says:

    What a bummer. My family has a grocery budget of around $1000 per month or $12000 per year, so I’m considering getting a second card in my wife’s name.

    I guess it’s time to shop around for other options again, I really liked the Amex because it wasn’t capped.

  24. Ken says:

    Shock Let me know if there better options
    Thanks

  25. Tea says:

    Does the cap apply to the 3% on gas or 2% at department stores?

    Ofir doesn’t than it may still be worth it for me…

  26. brian says:

    my wife and i both have the amex preferred, i do the majority of the shopping, anyone have an idea if she can add me as an authorized user on her account even though i currently have my own account? Thanks for the feedback!

  27. Chris says:

    Curtis, I don’t follow your math. The breakeven point is $2,500. If you spend 2,500 on a 6% cash back card you will receive $150. If you minus the 75 annual fee, you will be left with $75. If you have a 3% cash back card and spent the same amount ($2,500) you will get $75 cash back. So at that point you break even. So anything spent above $2,500 will be better spent on the 6% cash card.

  28. Chris says:

    If you are looking for the breakeven point referring to the max you can spent on the 6% card before the 3% card is more beneficial, the number is 11,250. At that point both cards rewards total is 337.50 (minus 75 for the 6% card). From that point 6% card is only giving 1% and the 3% card continues at 3%.

  29. RandomGuy says:

    All this confusing math is annoying me so I’m posting.
    First. Assume the 6K cap is only on the grocery category and that it applies to only the preferred card.

    BTW. If you don’t want to read the explanation just know that Chris is right :-)
    So for the PFD card you are getting 6% of 6K minus the 75 annual fee as money back.
    (.06*6000)-75 = 285/year

    A normal person would say: to figure out the break even point in cashback for the nonpreferred card you ask 3% of what is 285. Quick thinking shows that you get that by doing 285/.03 which gives you $9500.

    But here’s the thing. After you hit 6K spending on the PFD card, you are still getting 1% cash back. So for the 3500 you spent over 6K, you still gained $35.

    Clearly, $9500/year in groceries is not the break even point.

    Here’s the proper way to look at it. And once again, Chris arrived at the correct answer.

    6% cashback is clearly greater than 3% so for the first 6K in groceries you are getting more. Again, considering the yearly fee, $285 for the PFD card and $180 for the non preferred. So what you need to do is figure out how much more than 6K in purchases before the benefits are equal.

    285 + .01x = 180 + .03x.

    Solving yields 5250. 5250 + 6000 = 11250.

    BUT….
    The 6K limit applies to both cards.
    So like Chris said. anything past 2500 in spending and the preferred card is better. And that’s only taking groceries into account!

  30. jason miller says:

    Remember when you had to pay the balance off of American Express Cards every month in the 1980s? I looked at card giving back 6% and 3% with a $75 annual payment.

    I don’t know how that would benefit me from changing my Blue Cash, I spend $100,000 a year with this card, the low first $6500 with low cash back does not bother me. I blow past that on the first month. I tried the Amex Plum, Gold and other cards when they had caps on the cash back. Would I benefit by changing cards? I spend $25,000 on groceries with all that organic goodness and entertaining clients. If you have enough scale you and are not abusing the system with “Gift Card” buying, Amex is great to work with.

    Where people buying Amex, Master Card and Visa cash cards? I thought they put caps on those over a year ago. Visa had changed their rules because of the abuse, why was Amex so slow to catch the arbitrage bandits?

    I worked with a guy whose business bought $600,000 in parts for his Air Craft Business every month with a credit card. Some people like a discount, he liked airline miles and the IRS tried to challenge his Air Miles benefits as income but failed to convince the tax court years ago. What would you do with 8-9,000,000 plus airline miles a year, he got 1.5 miles per dollar spent and had his own personal concierge! I love this game!

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