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# Maximize Credit Card Cash Back at the Grocery Store

Four years ago, I upgraded my old American Express Blue Cash card to the American Express Preferred 6% Cash Back Credit Card [1].

However, all calculations need updating, and when I recently had to pay the \$75 annual fee for my American Express Preferred card, it was time to reevaluate! As a rule, I keep very few cards with annual fees, and only those that are earning back the fee plus additional rewards I can’t easily earn on another card.

We featured the American Express 5% Cash Back Credit Card [2] last week, and I promised to do a more in depth comparison to see which card will win over our grocery purchases in the long run.

### How Much Do You Spend Annually on Groceries?

Last year we spent about \$6000 on groceries. However, I needed to drill down a little further in my Quicken [3] report to see that over half of our groceries were purchased at Costco. Costco purchases are excluded as grocery stores, so they go on my Fidelity Credit Card [4].

If I spend \$3000 in groceries (\$57 per week), my rewards are:

• Blue Cash card: \$30 (1%)
• Blue Cash Preferred card: \$105 (6% = \$180- \$75 annual fee)
• Blue Cash Everyday: \$90 (3%, \$0 annual fee)

On the surface it looks like the Preferred card is still the winner, with the annual fee. Our break-even point to maximize credit card cash back between the Preferred and Everyday card was spending at least \$209 each month on groceries.

### Adjust Calculation for Spending Tiers

There’s just one problem with this calculation, it fails to account for clearing of the \$6500 tier during my \$2,075+ Application Spree to Stockpile 0% Credit Cards [5]. I used the card for purchases to pick up 0% money with no cost.

Since the tier is already cleared, it makes my future earnings on this card during my reward year:

• Blue Cash card: \$150 (5%)
• Blue Cash Preferred card: \$105
• Blue Cash Everyday: \$90

Obviously, clearing the \$6500 tier was a special case with the 0% offer, but it does make the Old Blue Cash card the clear winner. This doesn’t even factor in the gas station rewards which are now also earned at 5%.

One of the reasons I picked up the preferred card in the beginning was to buy gift cards at the grocery store [1] and earn 6% cash back. However, since the \$6,000 spending cap was put in place, the value of it significantly declined. Instead, I find loading my Target Prepaid Redcard [6] more lucrative and convenient.

It’s clear to me based on the math that I needed to downgrade my preferred card. In general I like to convert credit cards instead of paying annual fees [7] rather than canceling cards. Because I will easily clear the tiers on the old cash card for 2 reward years (based on the 15 month 0% offer), I would need the preferred card to earn much more than the \$15 over the everyday card to make up for 2 years of paying the annual fee.

In addition, since there are opportunities for quarterly earnings [8] in these categories (the Chase Freedom [9] card for groceries and the Discover It [10] card for gas this quarter), it makes the difference even smaller!

When I called to downgrade my card American Express informed me they will refund the annual fee on the preferred card if you call within 60 days of the charge. After that, they will give you the prorated difference. I was beyond the 60 days but asked for a full refund since we hadn’t used the card since the annual fee charge, and they agreed. It never hurts to ask!

Have you downgraded your American Express Preferred card? If so, what is your card of choice at the grocery store now?