We Americans love to spend money and we love our credit card rewards. However, most Americans have a credit card that earns 1% cash back. However, there is another option out there: The American Express Blue Cash Preferred® card. This card provides 6% cash back on groceries, 3% cash back on gas at the pump, and 1% cash back on all other purchases. You might be surprised, 6% cash back on groceries is a lot! But the high rewards come at a price – a \$75 annual fee. Also, you have to consider that you might spend a limited amount on groceries.

So the question is, does it pay off to get the American Express Blue Cash Preferred® card considering the \$75? The goal is to find out how much you would have to spend to make a profit by having the card compared to a regular credit card.

## Groceries - Break Even

As can be seen in the example below, assuming that you only use your American Express Blue Cash Preferred® card on groceries, you would have to spend \$1500 annually to break even. Every dollar spent after that would mean additional rewards for you. Most households spend more than \$1500 dollars annually on groceries, thereby making it worth to consider. However, for many singles it might be worth going through the receipts for the past year and estimate whether you meet the threshold. Bear in mind that the card does not earn you 6% if you buy groceries at stores that are not stand alone grocery stores, e.g. Walmart or Target.

 Cash Back Rewards Earned Groceries 6% \$90 Groceries 1% (\$15) Annual fee (\$75) Total \$0

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## Average U.S. Consumer Spending

So knowing that \$1500 spent on groceries is the breakeven point, would it be worth changing credit cards for an average family? Below is an example for the average American family based on the average U.S. household spending according to the U.S. Bureau of Statistics[1].

 Annual Amount Spent Cash Back Rewards Earned Groceries \$3,465 6% \$208 Gas \$2,384 3% \$72 Regular credit card \$5,849 1% (\$58) Annual fee (\$75) Extra earnings \$146

As can be seen above, by using the Blue Cash Preferred® card from American Express the typical U.S. household could net a reward of \$146 additional reward dollars compared to if they used their regular reward cards. The most important thing to consider when switching credit cards, is whether it is really worth switching to a card that has an annual fee. If you do switch, be sure to always use the card. And if you no longer use the card, be sure to cancel the card to avoid paying the fee year after year for a "service" that you do not use.