Blue Cash Preferred from American Express will soon offer extra bonuses on streaming service and transit purchases. Are they worth it? Read on to see if they are right for you.
Dear Cashing In,
I read that the American Express Blue Cash Preferred card is changing some of its reward categories. I like getting cash back, but I’m not sure this card makes sense for me. Is it worth it? – Amy
For the last couple of years now, credit card companies have been slowly altering their rewards to appeal to millennials. Some issuers are busting out new cards. Others are tweaking the way they operate.
In the old days of credit card rewards, many of the benefits were aimed squarely at business travelers – big spenders who take plane flights regularly and stay in hotels. The cards were designed to help them turbocharge their frequent flyer miles and hotel points for when they wanted to go on vacation.
See related: Best travel credit cards
Over time, though, rewards became more diverse, appealing to broader categories of spending, including grocery stores, department stores, gas, restaurants and many others. Because people’s spending habits differ, cards that might make sense for one person might not make sense for another.
Why card issuers are targeting millennials now
The pivot toward millennials reflects the reality that the generation is not composed of happy-go-lucky, beer-drinking, scooter-riding hipsters with no money. Rather, many are professionals with good careers and high incomes – precisely the target that card companies would like to count on as customers.
Some of the cards aimed at the younger generation include:
- Uber Visa Card, which offers 4 points per dollar spent on dining, 3X on hotels, vacation rentals and airfare and 2X on online purchases.
- The Goldman Sachs Apple Card, announced in March, which will offer 3 percent back on Apple purchases and 2 percent on charges using Apple Pay. A recent survey found more than 20 percent of millennials intend to apply for the Apple card, even though a lot of analysts have found its perks lacking compared with other cards.
Amex Blue Cash Preferred joins wave of upgrades
Now, we have these changes to the Blue Cash Preferred® Card from American Express. The shift is particularly notable because it comes from American Express, which for decades worked to portray its cards as ideal for traveling business executives.
For years, the card, which has a $95-per-year annual fee, had the following benefits:
- 6 percent cash back up to $6,000 per year at U.S. supermarkets; 1 percent thereafter.
- 3 percent at U.S. gas stations.
- 1 percent on all else.
Starting May 9, 2019, though, the Blue Cash Preferred is adding category-spending bonuses in two areas:
- 6 percent on select U.S. streaming services, such as Netflix, HBO and Hulu.
- 3 percent transit, including parking, tolls, trains and ride-sharing services like Uber and Lyft.
At the same time, the cash back bonus on U.S. department stores has been removed from the card’s benefits package.
Liz Bergman, American Express’ vice president of lending products explained: “We launched the card in 2011 around this idea of everyday categories. What every day meant in 2011 is different from what every day means today.”
Is the updated Blue Cash Preferred card worth it?
As usual, when evaluating a new card, you need to examine your spending and the way you want to earn rewards.
Cash back is a popular option. But the new category bonuses might amount to less than they seem, because you might not actually spend too much money on those categories.
For instance, the basic Netflix plan costs $9 a month. If you put that charge on the Blue Cash Preferred, that would earn you only $6.48 in cash over the course of a year.
Of course, that amount is better than nothing. But there are other cards that might align with your spending habits better.
The Wells Fargo Propel American Express® card, for example, offers 3 points per dollar spent on dining, travel and transit, gas station purchases and select streaming services. Plus, the card offers a sign-up bonus of 20,000 points if you spend $1,000 in the first three months.
Sure, the bonuses are not as generous as those from the Amex Blue Cash Preferred Card, and it doesn’t offer grocery store cash back – but the Wells Fargo Propel Amex card doesn’t charge an annual fee.
If you’d rather eat out than dine in and the prospect of shelling out an annual fee makes you think twice, the Propel card might be a good alternative.
Size up the offer. If you’re thinking about a new card, be sure to shop around and apply for the card that best matches your spending habits. Otherwise, a different card might be better for you.